BILL ANALYSIS Ó
AB 1280
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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
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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