(CN) - Banks that received billions of dollars in federal bailouts are charging unemployed people "service fees" for taking their unemployment payments, The Associated Press reported today. Thirty states have cut deals with banks, including Citigroup, Bank of America, JP Morgan Chase and US Bancorp, under which people on unemployment "have no choice but to use the debit cards," the AP reported.
The programs are drawing furious complaints from some lawmakers - and from the unemployed.
According to the Associated Press:
Some banks charge overdraft fees of $20, rather than rejecting charges;
Some banks earn interest on money they get after the state deposits it and before the unemployed ask for it;
The banks and credit card companies get 1% to 3% off the top of each transaction;
Banks and credit card companies refuse to say how much they are making from the deals.
States paid only $4 million in unemployment payments through debit cards in 2003, but that amount increased by 70,000% in 4 years, to $2.8 billion in 2007, the AP reported.
States like the deal because the banks may charge them nothing: the banks collect their money from the unemployed.
One angry unemployed man told the AP that Bank of America charged him twice just to call it and ask how much he had in his account.
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