Blumenthal Statement On CFPB’s Action To Protect Employees From Predatory Payroll Card Practices

(Washington, DC) – Today, U.S. Senator Richard Blumenthal (D-Conn.) issued the following statement after the Consumer Financial Protection Bureau (CFPB) released new guidance for employers and financial institutions that provide “payroll cards,” which employees can use to receive wages in lieu of payroll checks or direct deposits:

“Today’s guidance from the CFPB, which comes in response to a letter I led earlier this year, will help protect millions of vulnerable, low-income workers from illegal payroll card practices. As the CFPB has now made clear, employers who provide payroll cards must allow their employees to opt out and must clearly disclose all fees in advance. When employees face hidden fees or are inappropriately pressured into using a high-cost payroll card, household income and families suffer. Now, employers who issue payroll cards in good faith can keep their payroll systems on the right side of the law, and workers who receive them will know their rights if they are nickeled and dimed or illegally deprived of the ability to opt out.

“Going forward, I urge the CFPB to use its upcoming rulemaking on prepaid cards to further examine issues of excessive fees, employer responsibilities, and commissions from financial institutions that create conflict of interest for employers.”

In July, Blumenthal, leading a group of 15 other senators, sent a letter to CFPB and the Department of Labor calling on the agencies to investigate the fees and practices associated with payroll cards. The following senators signed on to the letter: Schumer, Manchin, Harkin, Boxer, Durbin, Stabenow, Menendez, Cardin, Casey, Merkley, Schatz, Heinrich, Warren, Warner, and Franken.