The State of Texas House of Representatives PO. BOX 2910 70U1 HARWIN, SUITE 230 AUSTIN, TEXAS 7768-290 6 ‘intr Scott Hochberg ited DISTRICT 137 EMAIL scott hochbergethouse.state.beus TO: Members of the 81st Texas Legislature FROM: State Representative Scott Hochberg DATE: May 22, 2009 SUBJECT: — House Bill 1196 Banks are not telling the truth about HB 1196 Banks say: HB 1196, in its current form, would mandate burdensome requirements and institute price controls that could shut down employer payroll card programs currently offered by banks in the State of Texas. Truth: There are no "price controls" in HB 1196. Banks can set fees at whatever level they want. But, HB 1196 prohibits banks from charging employees for getting paid their wages by the ‘employer, and charging employees for a single transaction to get their wages in cash from the card. No working Texan should haye to pay a fee to Chase get their wages. Under current Texas law, Chase and others can charge unlimited fees for such things as, “loading” the card with the worker's wages, withdrawing the wages in a single withdrawal, or leaving the money on the card "too long". HB 1196 would prohibit these specific fees, while requiring disclosure of all others. Banks say: Employees benefit from the safety, security, and convenience features of a payroll card. Truth: Absolutely. This bill recognizes the value of payroll pay cards as a legitimate benefit to employees who do not have bank accounts. HB 1196 sets up common-sense rules to make sure employees wages are protected.Banks say: ‘While there are many free services available to the user of a payroll card, there are some fees associated with certain repeat uses. However, the payroll card program, including associated benefits and fees, is fully disclosed, in writing, to each employee before they choose to enroll in the program. Truth: While this may be true for some paycard programs, it is not true for all, and there is currently nothing in Texas law that requires disclosure or limits fees. HB 1196 would require all paycard providers to disclose fees in writing, and would prohibit fees for "loading" the employees wages on the card or for withdrawing the wages in a single transaction. In their correspondence with Rep. Hochberg. Chase has demanded the right to impose such fees, to get a piece of each worker's paycheck every week. Banks say: Several sections of HB 1196 (61.153, 155, 156, and 160) are either in conflict with, inconsistent with, or duplicate existing federal regulations that govern the operations and disclosure requirements of payroll card programs. Banks already comply with Federal Reserve Regulation E and Regulation P, which govern various aspects of bank products and services, including payroll card programs. Truth: Chase and the other banks have not provided any examples of provisions of HB 1196 that are in conflict with federal law. If they had, Rep. Hochberg would have made any necessary changes. Instead they have argued that Texas should simply rely on the federal government to protect Texas employees. Banks say: The payroll card program is a voluntary program; therefore, the State should not mandate how the program is offered and what fees are permissible, Truth: Chase has opposed language in the bill that allows employees to opt out of the payeard program. Chase is currently promoting other legislation that would reuire state employees to choose to be paid by either paycards or direct deposit only. For someone without a bank account in their own name, this leaves paycards as the only way to get paid. It is misleading to say that the program is voluntary while opposing provisions that require it to be voluntary. There was no testimony against HB 1196 in the House. The Texas Bankers Association testified FOR HB 1196, requesting one technical change which was then made in the committee substitute. The only opposition appeared when large, out-of- state banks decided that they would rather have NO REGULATION than agree to sensible provisions to protect workers’ wages.