BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1280
                                                                  Page  1

          Date of Hearing:   May 15, 2013

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

              AB 1280 (John Perez) - As Introduced:  February 22, 2013 

          Policy Committee:                              Human  
          ServicesVote:5 - 0 

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          This bill extends federal consumer protection standards to state  
          benefits deposited into prepaid card accounts.  Specifically,  
          this bill: 

          1)Requires direct deposit of CalWORKs benefits, when direct  
            deposit is requested to be made only to the recipient's  
            qualifying account at a financial institution.

          2)Requires that unemployment compensation benefit payments be  
            deposited only into an account that meets the requirements of  
            a qualifying account for deposit of public assistance payments  
            when direct deposit is requested.

          3)Prohibits a person or entity that issues, maintains or manages  
            a prepaid card account from accepting or facilitating direct  
            deposit of unemployment compensation benefits or public  
            assistance benefits to a prepaid card account that does not  
            meet the definition of qualifying account.

          4)Provides that prepaid card or prepaid card account shall have  
            the same definition as provided in federal Electronic Funds  
            Transfer Act (EFTA) regulations regarding general use  
            reloadable cards.

           FISCAL EFFECT  

          Costs associated with this legislation should be minor and  
          absorbable within existing resources. 

           COMMENTS  








                                                                  AB 1280
                                                                  Page  2


           1)Rationale  . This bill seeks to align state law with federal law  
            governing the transfer or deposit of federal benefits into  
            prepaid card accounts. By aligning with federal requirements  
            and establishing criteria for prepaid card accounts used for  
            this purpose, this bill protects families receiving state cash  
            benefits, and helps them avoid being subject to excessive fees  
            or the inappropriate practices of certain financial  
            institutions.

           2)Prepaid cards  . Under the federal Electronic Funds Transfer  
            Act, a prepaid card is generally defined as a card or other  
            payment code or device that is purchased or loaded, on a  
            prepaid basis, and is redeemable for the purchase of goods or  
            services, or cash withdrawal at an ATM.  In some cases,  
            prepaid cards can be reloaded for purchases or withdrawals.  
            Many people who have exhausted credit cards or the ability to  
            obtain new credit cards, or even those who don't feel  
            comfortable using traditional bank accounts, have turned to  
            using prepaid cards as a means of keeping their spending  
            within feasible limits while having the purchase and  
            withdrawal freedom of a commercial debit or credit card.  

            The appeal of prepaid cards for a CalWORKs recipient may be  
            the flexibility the card allows to meet basic needs.  For  
            example, whereas an electronic benefit transfer (EBT) card  
            cannot be used to make an online utility bill payment, a  
            prepaid card often can be used for that purpose.  

           Analysis Prepared by  :    Julie Salley-Gray / APPR. / (916)  
          319-2081