By Julian Hattem - 09/12/13 06:18 PM EDT
The CFPB said that it “has heard reports” of employers only using the cards, especially in the retail and food service sectors.
The consumer watchdog’s guidance comes two months after the CFPB received a letter from 16 Senate Democrats expressing concerns that employers might be taking advantage of their workers and pressuring them to use the cards. According to a report in The New York Times, businesses can sometimes receive commissions for getting their employees to use the payroll cards.
“As the CFPB has now made clear, employers who provide payroll cards must allow their employees to opt out and must clearly disclose all fees in advance,” Sen. Richard BlumenthalRichard BlumenthalSupreme Court wrestles with corruption law Lawmaker calls for probe into 'unusual' Amazon cruise deaths Carter pledges probe of sex assault testimony MORE (D-Conn.), who signed the original letter, said in a statement.
“When employees face hidden fees or are inappropriately pressured into using a high-cost payroll card, household income and families suffer. Now, employers who issue payroll cards in good faith can keep their payroll systems on the right side of the law, and workers who receive them will know their rights if they are nickeled and dimed or illegally deprived of the ability to opt out.”