Prepaid debit cards are controversial enough on their own, so the fact that a Pennsylvania McDonald's allegedly pays their employees with them was bound to kick up some bad press.
Natalie Gunshannon, 27, claims in a lawsuit that she opened her first paycheck from a short-lived gig at McDonald's to find a Chase prepaid debit card instead of a proper paycheck, Philly.com's Bill O'Boyle reports:
Her future earnings would be deposited into the debit card account and she could access her money from there. Gunshannon never signed the card and when she returned to work she asked her supervisor if she could be paid by check or by direct deposit. She was told the card was the only option.
Like most prepaid debit cards, Gunshannon's alleged card was a pretty bum deal. The card fees included $1.50 for ATM withdrawals, $5 for over-the-counter cash withdrawals, $1 per balance inquiry, $0.75 per online bill payment and $15 for lost/stolen card.
The single mother has since quit the job and launched a class action lawsuit against the franchise. The Consumerist points out that under Section 3 of the Pennsylvania Wage Payment and Collection Law (PDF), employees are supposed to be paid their wages on a regular basis and that “the wages shall be paid in lawful money of the United States or check.”
Given the fact that law was probably written well before prepaid debit cards were all the rage, it will be interesting to see how her case pans out.
In the meantime, there's likely no stopping the rise of the prepaid debit card in America.
Today, you can get everything from student loans to your tax refund on a prepaid debit card if you want, and celebrities have clamored to lend their faces to the business, including the likes of Justin Bieber, Suze Orman, and George Lopez.
They're aggressively marketed as the perfect way for people with bad or no credit to get all the benefits of using plastic without the line of credit part. But the fees can be crushing, especially to someone who can't afford to lose a few bucks here and there.
On top of that, they "have no credit-building value, regardless of what their marketing may suggest," says John Ulzheimer of SmartCredit.com.
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