CFPB Unemployment Benefit Payment

On Jun. 17, CFPB reported on revised guidance issued by the DoL.

  • CPFB reported DoL released revised Unemployment insurance program letter to clarify how State workforce agencies deliver unemployment benefits payments to consumers.
  • Incorporated insights from CFPB research on junk fees and other consumer risks in public benefits and prepaid cards, ensured critical consumer protections incorporated.
  • DoL Guidance
  • Reminded that requiring recipients to receive unemployment payments on a State-administered debit card, even if they have option of moving funds later, violates law.
  • Consumer cannot be required to have account at specific institution to receive benefit.
  • For majority of States that have prepaid debit card program in place to pay out benefits, this means recipients must have at least one alternative to a prepaid card.
  • Guidance also provided a roadmap for States to improve their prepaid card offerings.
  • States should negotiate prepaid debit card contracts to reduce/eliminate junk fees so that all unemployment recipients have reasonable access to the full value of benefits.
  • CFPB Actions
  • The CFPB will continue to monitor the market for prepaid cards used to distribute unemployment insurance and other public benefits and hold card issuers accountable.
  • Also, will be analyzing how States and prepaid card companies react to these changes.

Regulators CFPB; DoL
Entity Types Bank; CNSM; Ins; MSB; Thrift
Reference CFPB: PR, 6/17/2024; DoL: Lt 34-09, 5/31/2024
Functions Compliance; Financial; HR; Legal; Market Conduct; Operations; Product Administration; Research; Risk
Countries United States of America
Category Central Government; National Regulator
Products Banking; Cards; Deposits; Insurance; Payments
Regions Am
Rule Type Guidance
Rule Date 6/17/2024
Effective Date 6/17/2024
Rule Id 216162
Linked to N/A
Reg. Last Update 6/17/2024
Report Section US Consumer

Last substantive update on 06/20/2024