Payroll Cards vs. GPRs

plastic cardsPayroll cards received a lot of press over the summer with the lawsuit filed against a McDonald’s franchisee for giving its employees their pay on this type of plastic payment card.  The focus has been on the fees, in which case a recent blog by Jennifer Rusie of Ogletree Deakins, lays out what employers need to consider when thinking about or using payroll cards to pay their employees.

Apart from the various state labor laws which dictate whether or not an employer can provide pay using payroll cards and thereby warning employers not to violate these laws by pushing payroll cards, there is another view on payroll cards that bears discussion and may put even more control back in the hands of the employees.  GPRs, or general purpose reloadable prepaid cards, are currently under review by the CFPB and will likely extend those same Reg E payroll requirements to GPRs soon–which means in the eyes of Reg E, payroll and GPRs will look the same.

But, will this be the case for the user, in this case the employee?  What will be the ripple effect to the payroll card industry?  It seems that GPRs are far more adaptable and usable for consumers , whether unbanked, underbanked, fully banked, than payroll cards today.  A GPR holder is able to arrange to have not only their paycheck, but also other monies, including government issued benefits (if federal, provided the card meets DOT requirements) into the account.  These cards also allow other checks to be deposited, in some cases, offer remote deposit capture.  Basically, GPR card accounts offer the same functions as a checking account, and many are going beyond this with the adoption of convenient technologies.  Payroll cards, at least from my most recent informal survey, do not offer the same ability to deposit monies from sources apart from the employer, and may be limited to use only with an existing employer.

With these considerations, it seems as though the CFPB’s recent bulletin warning against the exclusive use of payroll cards may be rendered moot, or at least less significant, as more consumers (when Reg E is extended to GPRs) will see the value in choosing their own prepaid card to obtain their pay.  

All Online Bill Pay Isn’t the Same

billpayimgOnline bill pay is supposed to be convenient, and don’t get me wrong, it is.  BUT-I wonder if I am the only one still trying to figure out when to arrange to pay bills, at least when using online bill pay.  What’s most frustrating is, it doesn’t seem like much has been done to make online bill payment much easier in terms of figuring out when payments need to be scheduled on the payor’s end and then figuring out when the payments actually clear with the payee. Basically, online bill pay seems to only have substituted the need to take out paper checks and the roll of stamps.  It should be much better than that.

I recently opened up an account with a local credit union, and made my first online bill payment for a credit card bill last month.  I arranged for the bill payment to take place on the due date, which is how I had arranged for payment through my other bank account.  Much to my surprise, when I receive my current month’s statement for the credit card, there was a $25 late fee assessed.  The payment wasn’t “received” by the credit card company until the following day.  (The payment dates were business days)

Of course there are a number of irritating issues that arise from this:

1. That all electronic transfers posted from one’s financial institution to a payee (here, the credit card company) isn’t “immediate.”  (save this topic for another blog)

2. That the period of time differed so widely for the payment to clear between my new credit union and my other bank.

3.  That the disclosures on the number of days to clear a payment with my do not make it simple enough to understand when to schedule a payment.  My bank states “Earliest Date of Delivery” when I schedule a delivery date–so I know a payment would arrive in time.

Of course, there are a number of alternatives cropping up right now to replace a financial institution’s bill payment service, but ultimately, a bank or credit union’s online bill payment service should be easier and most straightforward.

This marks the end of my online bill payment rant.  What better solutions have you found?

New additions to CA Data Breach Law


I’ll try to use this blog to sum up some of relevant results of California’s recent legislative session.  For today’s blog, which is also the inaugural post, the focus is on the expansion of California’s Data Breach Notification Law.

SB 46, which was signed by Governor Brown last week, expands the definition of personal information in California’s Data Breach Notification Law (Cal Civ Code 1798.29 and 1798.82). The law will require notice when a California resident’s username or email address is breached, or reasonably believed to have been breached, with its password or security question and answer that provides access to an online account.

There is a also a new method for how notice is to be provided for this new category of personal information:

1.  If no other personal information has been breached, notice can be provided in an electronic or other form to “direct the person whose personal information has been breached to promptly change his or her password and security question or answer, as applicable, or to take other steps appropriate to protect the online account with the agency and all other online accounts for which the person uses the same user name or email address and password or security question or answer.”

2.  If the breach involves login credentials of an email account, then the notice cannot be made to the email address but rather by other methods, including “by clear and conspicuous notice delivered to the resident online when the resident is connected to the online account from an Internet Protocol address or online location from which the agency knows the resident customarily accesses the account.”

Attorney General Harris released the office’s first report in 2012 on data breaches, with a few recommendations: 1. Encrypt personal information when moving or sending outside of the secure network 2. Review and tighten internal security controls 3. Make breach notices easier to read. 4.  Expand data breach law to include passwords. (Check)

Bottom line, if you own or license this new category of computerized unencrypted personal information, be prepared by year’s end, as SB 46 goes into effect January 1, 2014.

This blog is for general information and educational purposes, not to provide legal advice. If you need legal advice, please consult with a qualified attorney.  

On Track

My goal has been to officially launch next Monday, Sept 16, and it looks like we are on track…

My blog will discuss a variety of consumer finance, money and privacy issues, with a sprinkling of other interesting topics that may come along the way.  The primary focus is to help navigate what may be coming down the pike in the ways of regulation, rules and best practices for fintechs, entrepreneurs, and other small businesses.