Axne: Don’t charge fees if COVID-19 stimulus is paid through debit cards

Lawmakers are asking whether Treasury plans to again use prepaid debit cards for the new round of coronavirus stimulus payments. (Photo via MetaBank)

If Americans are going to receive the latest coronavirus stimulus payment through a government-provided debit card, they should not have to pay fees, Rep. Cindy Axne said in a letter to the Treasury Department and Internal Revenue Service.

Congress has approved new stimulus payments of up to $600 per individual. Axne and nine colleagues from the House Financial Services Committee wrote to the federal agencies, asking whether they plan to use debit cards to make the direct payments.

“If so,” the lawmakers wrote, “we ask that you explain how you plan to improve communication, ensure there are no fees for the user, and simplify the agreement they have to sign, removing any mandatory arbitration clauses.”

The Treasury introduced prepaid debit cards during the last round of coronavirus stimulus payments authorized under the CARES Act. The cards were issued last spring to millions of Americans, while paper checks were issued to others. The cards, issued through a private vendor, came with numerous restrictions and fees.

About 200 Iowans contacted the Iowa Attorney General’s Office with concerns about the cards and many said they threw the cards away, thinking they were a scam.

Head shot of Cindy Axne
U.S. Rep. Cindy Axne is a Democrat who represents Iowa’s 3rd Congressional District.

After Iowa Capital Dispatch reported on the fees, Axne and other Democratic members of the House Financial Services Committee sought a waiver of many of the fees and a simplified card user agreement. The Treasury eventually waived the $7.50 card replacement fee, lifted the limit on how much of the balance the user could transfer to a bank account, and improved communications. Some fees, including for the use of “out of network” ATMs, remained.

If the debit cards are used for the new round of payments, Axne and other committee members are seeking a complete elimination of the fees associated with using the card or transferring its balance.

The lawmakers also called for better public communication of plans to use the debit cards and how to use it. “We hope better communication will reduce confusion and prevent people cutting up their debit cards again because they believed this was a scam,” the letter states.

In addition, the lawmakers are seeking to simplify the cardholder agreement that recipients were required to sign and eliminate any arbitration clause, used last time to prevent card recipients from forming a class action suit in case of problems with the card.

Signers of the letter also included: Reps. Sean Casten, D-Ill.; Madeleine Dean, D-Penn.;  Bill Foster, D-Ill., Vicente Gonzalez, D-Texas; Denny Heck, D-Wash., William Lacy Clay, D-Mo.; Al Lawson, D-Fla.; Stephen Lynch, D-Mass; Rashida Tlaib, D-Mich., and Jennifer Wexton, D-Va.

The U.S. House voted this week to expand the direct payments to up to $2,000 per individual, but the Republican-controlled Senate has not yet agreed to bring it up. Senate Majority Leader Mitch McConnell, R-Ky., on Tuesday blocked a Democratic move for an immediate vote on the larger stimulus payment.