House Dems demand fee waivers for new stimulus cards

Nearly a dozen Democratic lawmakers on the House Financial Services Committee have asked the Trump administration to waive fees and simplify the terms on debit cards for the upcoming round of stimulus payments.

In a letter sent on Tuesday to the Treasury Department and the Internal Revenue Service, Reps. Cindy Axne of Iowa, Rashida Tlaib of Michigan and nine other members of the panel said changes are needed to make it easier to use the cards if they are to be sent out again.

Congress approved a new round of $600 payments, which was signed into law on Sunday. The House has since passed a measure to increase the payments to $2,000, which has some support in the Republican-controlled Senate, but it's unclear whether the bill will be approved.

About 4 million prepaid debit cards were sent out in May for the last round of payments. MetaBank, which has served as the Treasury Department's financial agent for its U.S. debit card program since 2016, mailed out those cards. The Sioux Falls, S.D., bank was the issuer and Money Network Financial was the service provider.

While the cards were intended to get funds to those with no access to a bank account faster than paper checks, critics said the cards came with fees and complicated language that need to be changed this time around.

A Treasury spokesperson did not immediately comment on the letter.

No fees were charged on the first out-of-network ATM withdrawals, but $2 were charged for each additional one. A fee of 25 cents was charged each time a recipient checked the balance. Another $7.50 was charged to anyone who threw the card away thinking it was fraudulent and asked for a replacement.

The lawmakers asked “to remove all costs to use these cards” or to ease restrictions to make it easier to transfer the entire balance to a checking account if a recipient has access to one.

“These cards are intended to provide support for Americans during COVID-19, and any fees are likely to simply add insult to injury,” the lawmakers said in their letter.

The debit cards also carried additional fees for merchants processing the cards for transactions. Though the lawmakers did not specifically mention these fees in the letter, the surge in remote purchases has rekindled a fight among merchants, card issuers and the Federal Reserve over whether rules governing debit card processing fees are being sidestepped during the pandemic.

The lawmakers also asked that mandatory arbitration clauses in the terms of the original cards be removed to make a potential class-action complaint “a more efficient way to resolve disputes.” The lawmakers argued that many recipients will likely run into problems given the number of cards expected to be sent out.

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