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Payroll Cards Are Under Scrutiny by New York’s Attorney General

Payroll Cards Are Under Scrutiny by New York’s Attorney GeneralDealB%k/NY TIMES: Payroll Cards Are Under Scrutiny by New York’s Attorney General

New York’s top prosecutor is investigating some of the state’s largest employers over their use of A.T.M.-style cards to pay their hourly employees.

The New York attorney general, Eric T. Schneiderman, has sent letters seeking information to about 20 employers, including McDonald’s, Walgreen and Wal-Mart, say people briefed on the matter.

The inquiry by Mr. Schneiderman comes as a growing number of companies are abandoning paper paychecks and direct deposit to offer prepaid cards. But consumer lawyers, employees, and state and federal regulators have said that in the vast majority of cases, use of the cards can generate a range of fees — 50 cents for a balance inquiry and $2.25 for an out-of-network A.T.M. Those fees can quickly devour the pay of part-time and low-wage workers.

And many employees say that they have no alternative. Even at companies where there is a choice, it is often elusive. Worried about imperiling their jobs, some employees say they are terrified of requesting another option, according to interviews with consumer advocates. Other employees say that they are automatically enrolled in the payroll-card programs and forced to navigate a bureaucratic maze if they want to opt out.

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