BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1280|
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THIRD READING
Bill No: AB 1280
Author: John A. Pérez (D)
Amended: 8/20/13 in Senate
Vote: 21
SENATE HUMAN SERVICES COMMITTEE : 6-0, 6/11/13
AYES: Yee, Berryhill, Emmerson, Evans, Liu, Wright
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 74-0, 5/23/13 (Consent) - See last page for
vote
SUBJECT : Public assistance payments and unemployment
compensation
benefits: electronic fund transfer: qualifying
accounts
SOURCE : National Consumer Law Center
Western Center on Law and Poverty
DIGEST : This bill (1) authorizes a recipient of public
assistance payments to authorize payment to be directly
deposited by electronic fund transfer to a qualifying account,
as defined, at a financial institution of his/her choice; (2)
requires qualifying accounts to meet specified requirements and
provides that each county treasurer has no obligation to
determine whether the account is a qualifying account; (3)
requires, if unemployment compensation benefit payments are
directly deposited to a recipient's account, that the payments
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only be deposited to a qualifying account, as defined; (4)
provides that the Employment Development Department (EDD) has no
obligation to determine whether an account is a qualifying
account; and (5) prohibits a person or entity that issues a
prepaid card or maintains or manages a prepaid card account, as
defined, from accepting or facilitating the direct deposit of
public assistance payments or unemployment compensation benefits
to a prepaid card account that does not meet the requirements of
a qualified account.
Senate Floor Amendments of 8/20/13 clarify the types of funds
included in this legislation.
ANALYSIS :
Existing law:
1. Establishes legislative intent that it is considered to the
public good and the general welfare of the citizens of
California to set aside funds to be used for a system of
unemployment insurance to provide benefits for persons who
are unemployed through no fault of their own, as specified.
2. Defines the circumstances under which a California resident
may be eligible for unemployment insurance benefits.
3. Requires the EDD to pay unemployment compensation benefits
through public employment offices or such other agency as may
be prescribed by authorized regulations of the director.
4. Establishes in federal statute the Electronic Fund Transfer
(EFT) Act, which declares that the use of electronic systems
to transfer funds provides the potential for substantial
benefits to consumers and provides a basic framework
establishing the rights, liabilities and responsibilities of
participants in an EFT transfer.
5. Establishes in California statute the EFT Act to disburse
public assistance benefits through electronically issued
means, such as automated teller machines, point-of-sale
devices or other devices that accept electronic benefits
transfer transactions.
6. States legislative intent that the goals of electronic
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benefits transfer are to reduce the cost of delivering
benefits to recipients, to ensure that all systems within
California are compatible, and to afford public social
services recipients the opportunity to better and more
securely manage their financial affairs.
7. Defines "benefits" to mean financial and food assistance
provided to, or on behalf of, those Californians who, because
of their economic circumstances or social condition, are in
need, as specified.
8. Establishes the responsibility of the state Department of
Social Services (DSS) to maintain uniform public social
service programs, administered by the counties, and to
administer the payment of grants for all aid programs.
9. Requires DSS to cooperate with county treasurers and private
financial service providers, including depository
institutions, licensed check sellers, data processing service
vendors and retail merchants in developing and implementing
an electronically based system for delivering public
assistance payments to those recipients who do not have
individual deposit accounts with financial institutions.
10.Permits a recipient of public assistance payments to
authorize direct deposit by EFT into the recipient's account
at the financial institution of his/her choice under a
program for direct deposit by electronic transfer established
by the county treasurer. The direct deposit shall satisfy
DSS's obligation for the payment.
11.Requires each county treasurer to make an agreement by
December 1, 2001, with one or more financial institutions, as
specified, and to establish a program for the direct deposit
by EFT to any person entitled to the receipt of public
assistance benefits who authorizes direct deposit.
This bill:
1. Requires that if unemployment compensation benefit payments
are directly deposited to an account of the recipient's
choice, as defined, the payments may only be deposited to an
account that meets the requirements of a qualifying account
for deposit of public assistance payments, including
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unemployment compensation benefits.
2. Defines a "qualifying account" as one of the following:
A. A demand deposit or savings account at an insured
financial institution in the name of the person
entitled to receipt of public assistance payments.
B. A prepaid card account that meets all of the
following:
(1) The account is held at an insured financial
institution.
(2) The account is set up to meet the
requirements for pass-through deposit or share
insurance so that the funds accessible through the
account are eligible for insurance for the benefit
of the person entitled to the receipt of public
assistance payments by the Federal Deposit
Insurance Corporation in accordance with Federal
Regulations.
(3) The account is not attached to any credit or
overdraft feature that is automatically repaid
from the account after delivery of the payment.
(4) The issuer of the card complies with all of
the requirements, and provides the holder of the
card with all of the consumer protections, that
apply to a payroll card account under the rules
implementing the EFT Act or other rules
subsequently adopted under the EFT Act that apply
to prepaid card accounts.
3. Prohibits a person or entity that issues a prepaid card or
maintains or manages a prepaid card account that does not
meet the requirements of a qualifying account from accepting
or facilitating the direct deposit of unemployment
compensation benefit payments, to the prepaid card account.
4. Prohibits each county treasurer and county welfare department
from being held liable for authorizing a direct deposit of
public assistance payments into a prepaid card account,
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designated by the person entitled to receipt of public
assistance benefits, that does not meet the requirements of a
qualifying account.
5. Clarifies that EDD has no obligation to determine whether an
account at the financial institution of the recipient's
choice is a qualifying account, as defined. For purposes of
bill, prohibits EDD from being held liable for authorizing a
direct deposit of unemployment compensation benefit payments
into a prepaid card account designated by the recipient that
does not meet the requirements of a qualifying account.
6. For the purposes of this bill, establishes the following
definitions:
A. "Financial institution" means a state or national bank,
a state or federal savings and loan association, a mutual
savings bank, or a state or federal credit union.
B. "Issuer" means a person or entity that issues a prepaid
card.
C. "Payroll card account" shall have the same meaning as
that term is defined in the regulations implementing the
EFT Act.
D. "Prepaid card" or "prepaid card account" means either
of the following:
(1) A card, code, or other means of access to funds
of a recipient that is usable at multiple,
unaffiliated merchants for goods or services, or
usable at automated teller machines.
(2) The same as those terms or related terms are
defined in the regulations adopted under the EFT Act
regarding general use reloadable cards.
7. Repeals the provision requiring DSS to cooperate with county
treasurers and private financial service providers, including
depository institutions, licensed check sellers, data
processing service vendors, and retail merchants, in
developing and implementing an electronically based system
for delivering public assistance payments to those recipients
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who do not have individual deposit accounts with financial
institutions.
8. Clarifies that any person entitled to the receipt of public
assistance payments is authorized to have the payment
directly deposited by EFT into the person's qualifying
account at the financial institution of his/her choice under
a program for direct deposit by electronic transfer, as
defined. States the direct deposit to a qualifying account
discharges DSS's obligation with respect to the payment.
9. Clarifies that each county treasurer has no obligation to
determine whether the account at the financial institution of
the person's choice is a qualifying account, as defined.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/21/13)
National Consumer Law Center (co-source)
Western Center on Law and Poverty (co-source)
AFSCME
Asian Law Alliance
Coalition of California Welfare Rights Organizations, Inc.
ARGUMENTS IN SUPPORT : The author's office states that this
bill requires the consumer protection standards used by the
federal government for their public benefit programs to be
applied to the state's cash assistance benefits that are
delivered on electronic payment prepaid cards. This bill
creates these consumer protection standards by requiring deposit
insurance, providing protection from theft and unauthorized
charges and prohibiting overdraft fees and other credit-related
features to be applied to the benefits delivered on electronic
payment prepaid cards.
ASSEMBLY FLOOR : 74-0, 5/23/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway,
Cooley, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell,
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Gray, Hagman, Hall, Harkey, Roger Hernández, Jones-Sawyer,
Levine, Linder, Logue, Lowenthal, Maienschein, Mansoor,
Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi,
Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel
Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone,
Ting, Wagner, Weber, Wieckowski, Wilk, Williams, Yamada, John
A. Pérez
NO VOTE RECORDED: Grove, Holden, Jones, Waldron, Vacancy,
Vacancy
JL:d 8/21/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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