Employers Should Proceed With Caution In Using Payroll Cards

On September 12, 2013, the Consumer Financial Protection Bureau (CFPB) published CFPB Bulletin 2013-10. The stated purpose of this publication was "to reiterate the application of the Electronic Fund Transfer Act (EFTA) and Regulation E, which implements the EFTA, to payroll card accounts. " However, the agency's press release that accompanied its new bulletin was more pointed.

The release was entitled CFPB Bulletin Warns Employers Against Exclusive Use of Payroll Cards. It explained that the agency was publishing the bulletin for a specific reason: "The CFPB has heard reports of employers, particularly in the retail and food service industries, distributing wages solely through payroll cards." Further, the agency claims to have received complaints of unexpected fees for activities such as ATM use, teller withdrawals and balance inquiries.  Thus, in addition to simply reiterating basic rules applicable to payroll cards, the bulletin also announced that "in exercising