The rich ripping off the poors

How Poor Families Lose Millions in Welfare Benefits to California's Biggest Banks (Click here to read more)

Stephanie Mencimer

March 25, 2014

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It's expensive to be poor. A new report out from the California Reinvestment Coalition concludes that the big banks are charging some of California's poorest families hefty ATM fees to access monthly benefits from the state welfare program known as CalWORKs, skimming at least $19 million a year, the group estimates, from this taxpayer-funded program.

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The average CalWORKs family is an adult with two children who gets $510 a month worth of benefits, or about $6,120 a year. That's not enough to live on, not even close, and the benefits are 8 percent lower now than they were in 2011. On top of that, accessing the funds costs them as much as $4 per ATM transaction, fees they really don't have any alternative but to pay. That's because California doesn't ask its vendors to do much by way of accommodating the recipients. A $69 million contract with Xerox to administer an electronic benefit transfer card system has helped make these EBT cards the default way to deliver public assistance, and there's no state requirement that banks waive ATM fees for people who use them.

In a press release, Andrea Luquetta, author of the report, explained:

For families trying to escape poverty, these fees siphon away money that could be used for school supplies, transportation or medicine. The current system leads too many people to pay fees just to access the very benefits they need to survive. It is a diversion of taxpayer dollars away from their intended use of supporting families. That's why we're calling on the state, banks, county offices, and nonprofit partners to work together to address this pressing issue.