I recently upgraded to a new phone and received a $70 rebate from my carrier, Verizon. I dutifully and self-satisfiedly applied for my rebate, congratulating myself for disappointing Verizon's obvious expectation that I would forget to do so, or miss the expiration date. A month later, I received a pre-paid debit card worth $70.
So now I have to worry about forgetting to use it! Fie on you, Verizon!
Verizon dispensed with checks in favor of rebate cards last September. It's obvious why. Verizon and/or Citi are banking on the fact that I will forget to use the card, or will have trouble using every last penny of it, or will be so laggard in spending it that they will be allowed to start charging me a "maintenance fee."
Per the card's fine print:
Subject to applicable law, a monthly maintenance fee of $3 (USD) applies but is waived for the first twelve months after the card is issued. Thereafter monthly maintenance fees are waived for an additional three months if the card is used in any given month.
I live in California, where there are laws against such fees, but not everyone is so lucky. And it could be worse: My Verizon rebate card can be exchanged for cash, or used to pay my Verizon bill online. I'm just glad I wasn't one of the poor saps who received an AT&T rebate card last year -- those cards could not be exchanged for cash and expired in just 120 days. After New York State Attorney General Andrew Cuomo went on the warpath, AT&T agreed to pay $2.6 million "to settle allegations of deceptive advertising."
The prepaid debit card industry is rife with abuse, as documented by a report from Consumer's Union released earlier this month. But despite the carping from advocates and attorney generals the industry's momentum seems unstoppable. The Social Security Administration has started using them, and just today, the Wall Street Journal reported that Wal-Mart is about to begin paying its employees with debit cards.
Wal-Mart Stores Inc., the nation's largest private employer, is eliminating paper payroll checks in the U.S., transferring workers' earnings to a debit card if they decline direct deposit to a bank.
Wal-Mart is the biggest company yet to make the move that it said will save paper and money. It estimates the move will save 257,572 pounds of paper a year. It declined to specify the savings but said the shift will reduce its payroll costs.
OK, so Wal-Mart is saving trees. Yay. But here's the best part:
Though the debit cards save companies money by reducing payroll costs, consumer advocates have criticized some card programs, noting that workers are often charged fees to access their money or even check balances.
MasterCard, however, said First Data Corp., which will process the transactions, agreed with Wal-Mart to offer some of the lowest fees available among such cards, and noted that many workers already pay fees for cashing checks. It said employees' first ATM transaction a pay period is free; subsequent ones cost $2 each.
The lowest fees available? How about no fees whatsoever -- since these are worker paychecks that we're talking about! It's just outrageous -- we are being nickle-and-dimed to death by the very institutions we saved from drowning in their own folly just a few months ago. They survived their credit crunch. Will we survive ours?