The CFPB published a bulletin on Thursday reminding employers that they cannot require employees to accept wages via a payroll card and detailing federal consumer protections applicable to payroll cards.
“Employees must have options when it comes to how they receive their wages,” CFPB Director Richard Cordray said. “Today’s release warns employers that they cannot mandate that their employees receive wages on a payroll card. And for those employees who choose to receive wages on a payroll card, they are entitled to certain federal protections.”
The CFPB pointed to reports of employers requiring employees to have payroll cards, which is prohibited by federal law. Payroll cards full under the CFPB’s jurisdiction through the Electronic Fund Transfer Act and Regulation E. State law generally designates which alternate methods must be available to employees.
Additionally, the CFPB has received complaints over payroll cards regarding unexpected fees for ATM use, teller withdrawals and checking the balance of a card.
Federal law stipulates that payroll cardholders must receive disclosures of any fees in writing and in a form that consumers may keep. The issuer must also provide periodic statements or make account balances and 60-day histories available by phone and online, as well as in writing, if requested.
Cardholders’ liability for unauthorized use of their payroll cards is limited, if the unauthorized use is reported within a certain amount of time. If a cardholder reports an account error, the financial institution is required to respond so long as the report is received within a certain time period.