Card fees are sore spot for unemployed

When the State of West Virginia started paying unemployment benefits on a debit card instead of by check, Charles House thought the new system would make it easier for him to pay his bills while he attends Shepherd University and searches for another job.

House, 23, used to be a security guard for STS in Berkeley Springs, but was laid off a few months ago.

When he first signed up for unemployment, House received checks that he simply deposited in his bank account.

The state's Workforce West Virginia agency, which hands out unemployment benefits and helps with job hunting, switched their method of payment to debit cards in March.

After using the card for a month, House said there are fees for just about every use of the card, which is a VISA debit card issued by JP Morgan Chase.

Trying to avoid fees

Most charges are connected to the use of a non-Chase automatic teller machine (ATM) to withdraw money from the card or check an account balance.

The nearest Chase bank is more that 100 miles from Morgan County, according to the company's website. There are only a few Chase locations in West Virginia and they are near Charleston and Wheeling.

In Morgan County, the only place the debit cards can be used freely is at an ATM machine is at the Berkeley Springs 7-11.

But while Chase doesn't charge for use of the ATM, the owner of the machine – Allpoint — adds a user fee.

House said checking his card balance cost 25 cents. Withdrawing a large sum of money from the card there would cost him $3.75.

Jobless West Virginians are told by Workforce West Virginia that they can use the bank cards at Chase banks, WesBanco and Allpoint ATM machines.

WesBanco branches are found mostly in the Morgantown-Fairmont area, while Allpoint ATMs can be found at 7-11 stores.

Several of the Allpoint machines in the Eastern Panhandle at located inside adult clubs and casinos in Martinsburg, according to the company's ATM locator service.

"The only time a fee is not charged at all is when the customer uses a Chase-owned ATM," said Jama Jarrett, spokesperson for Workforce West Virginia.

In-person teller transactions inside banks that display the VISA logo are exempt from charges, according to Jarrett and the state's contract with Chase.

While this doesn't afford users around-the-clock access to their money, it can save them a transaction fee.

The state also says there should be no fee when cardholders use the state's debit card to make direct purchases at a retailer that takes VISA, like department stores and gas stations.

Since House uses his unemployment benefits to pay bills, he has to transfer the money somehow from the state's debit card to his checking account. He thought he'd be able to do this online, but can't for free.

He's not the only West Virginian to find the benefit card's fees and restrictions an aggravation.

State to offer choices

Jarrett said last week that the assorted fees to use the unemployment card have frustrated enough unemployed state residents that her agency will begin offering the option to have benefits deposited directly into their bank accounts, starting December 1.

If neither of these options is acceptable to benefit recipients, the state can still issue an old-fashioned unemployment check, she said.

According to Jarrett, 69,433 unemployed West Virginians are using the debit cards. She didn't know exactly how many of Morgan County's 560 unemployed residents are using debit cards since the state doesn't track the number by county.

House said his benefits will soon run out, but he plans to get his remaining payments by direct deposit. He's concerned for those who are new to the unemployment process.

"Everyone that's new to the unemployment system might get screwed with these fees if they haven't done their own homework about how it works," House said.

Saving state money

The move away from issuing paper checks was seen as a way to save the state money on check printing, staff handling and postage. The state expects to save $340,000 a year by using the debit card system.

Using debit cards is also thought to be a more secure way to get benefits to people, and can be more user-friendly for unemployed people who don't have a bank account, Jarrett said.

Those residents used to face large fees from check-cashing businesses when they tried to get their money.

Jarrett said the state has no plans to negotiate with Chase to change the fee structure for the cards, or to widen the bank networks where they may be used for free. Maybe Chase will add more banks in West Virginia, she said.

JP Morgan Chase won the card service contract in July 2008, coming in with the lowest bid of seven companies. The company has an open-ended contract to continue managing the unemployment card system.

Among state requirements for the electronic card service was that unemployed persons wouldn't be hit with extensive bank fees or surcharges.

Until Chase widens their bank network, anyone trying to withdraw their unemployment benefits at a West Virginia ATM machine will see their safety net depleted a little each time.