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Government watch
Navigating the Regulatory Waters
“We share the IRS’s perspective that stopping identity theft tax refund fraud isn’t the industry’s problem or the IRS’s problem to solve alone, but it is our collective problem to solve by working closely together,” Fauss says.
“We really look forward to helping establish this new financial services working group as part of the new collaboration between the IRS and the industry.”
N.Y. Payroll Card Bill
& DOL Rulemaking
Payroll card providers are facing a dual threat in the state of New York. In April 2015, New York Attorney General Eric T. Schneider- man proposed a problematic payroll card bill, a version of which was introduced in the senate and assembly. The proposed legislation enables employees to elect how to receive wages—via payroll card, direct deposit or check—and mandates that employees receive clear and appropriate notice of
payroll card program terms and conditions, including potential fees and how to avoid them; prohibits certain types of fees, and requires employers to use card programs with at least one surcharge-free ATM network; among other stipula- tions. This bill was not passed before the legislative session ended in late June.
In addition, on May 27, 2015, the state’s Department of Labor (DOL) published draft regulations for businesses that pay workers with debit cards. The regulations include a prohibition on employers profit- ing from card programs or passing along associated costs to their employees. The rules also require employee consent to being paid by debit card and written disclosures, including locations employees can access their wages at no charge in “reasonable proximity” to employ- ees’ home or work.
The DOL’s proposed rule also prohibits fees for inactivity,
overdraft, declined transactions and receiving paper transaction statements; requires a seven-day waiting period for employees to decide if they want their pay on a card; and provides error resolution and limitation of liability rights that are inconsistent with Reg. E, according to the NBPCA. Many
of the prohibited fees relate to services that easily can be avoided by the employee and are unrelated to full and free access to wages, the association suggests. The result, according to Fauss, is essentially a mandate that one group of employees is provided with free banking services. Further- more, he says it’s not a case of forcing providers to accept lower margins on an already thin-margin product. Compliance with the requirements of the rule will, in most cases, cause providers to offer payroll card products at a loss, which is an unsustainable business model. Without substan- tial revisions to the final rule, the association believes many provid- ers will stop offering payroll cards in New York, harming New York workers by depriving them of the many benefits of payroll cards.
Full Steam Ahead
While the industry awaits calmer waters on the federal and state level, the NBPCA will continue
its government and media out- reach to address these issues
and more as they arise. Stay tuned to Paybefore.com for updates
on the latest regulatory and legislative activity that could affect your business.
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