BILL ANALYSIS �
AB 1614
Page 1
Date of Hearing: May 7, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 1614 (Stone) - As Amended: April 22, 2014
Policy Committee: Human
ServicesVote:5 - 0
Urgency: No State Mandated Local Program:
Yes Reimbursable: Yes
SUMMARY
This bill ensures access to information about benefits usage and
protection for electronic benefits transfer (EBT) consumers.
Specifically, this bill:
1)Requires the CalWORKs/CalFresh 24-hour toll-free telephone
hotline to provide recipients, at no additional cost, access
to transaction history detail (at least 10 transactions on the
phone), and to request at least two months of transactions by
phone.
2)Requires the EBT system to have a website to provide
recipients, at no additional cost, information on how to
replace a lost or stolen EBT card and pin number.
3)Requires the EBT system be designed to inform recipients that
access to electronic benefits is temporarily unavailable if
the system does not function or is expected to function for
more than a one-hour period between 6 a.m. and midnight during
any 24-hour period.
4)Creates the Electronic Benefits Transfer System Consumer
Protection, Financial Empowerment, and Cash Access Fund in the
State Treasury for the purpose of ensuring CalWORKs recipients
are educated about their consumer rights and financial
management tools and services available to them. The fund may
contain federal, state, and private funds.
FISCAL EFFECT
Many of the proposals in the bill are already implemented and
AB 1614
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part of the current EBT system. All other costs to DSS are minor
and absorbable.
COMMENTS
1)Purpose of the bill . This bill seeks to improve EBT consumers'
access to information about their EBT transactions and promote
financial education to ensure recipients can maximize the
benefits they are provided to meet basic needs and maintain
the safety and wellbeing of their families. The bill codifies
several existing practices regarding the telephone hotline,
access to transaction history and information supplied to
consumers regarding minimizing bank fees.
2)Background . AB 1542 (Ducheny), Chapter 270, Statutes of 1997,
implemented federal welfare reform and established the
CalWORKs program, and conformed to federal law in establishing
the Electronic Benefits Transfer (EBT) Act. California moved
from a paper-based system to an electronic system for the
distribution and use of public assistance benefits in 2002.
Today, recipients of CalWORKs cash aid often receive their
benefits on an EBT card and use the card as they would any
other debit card for ATM withdrawals and purchases to meet
basic needs. Because EBT cards are not credit cards, use is
limited and CalWORKs recipients often withdraw cash to pay
utility bills, for example. Unlike CalWORKs benefits,
CalFresh benefits are only accessible through use of an EBT
card and can only be used to purchase food items and cannot be
used for cash withdrawals.
3)Bank surcharges for EBT cash withdrawals . CalWORKs recipients
pay four types of surcharges on EBT card usage. These include
ATM and POS machine surcharge fees for cash withdrawal, ATM
balance inquiry fees, and an $0.85 transaction fee paid to the
state's EBT vendor when cash is withdrawn from ATM or POS
machines more than four times within a single month.
Recipients' grant amounts do not account for potential fees or
surcharges, thus every bank fee charge directly reduces a
recipient's grant amount.
The Los Angeles Times reported that $18.9 million in EBT
dollars went to banks through ATM fees in 2013, and $19.4
million came from EBT transactions at ATMs in 2012. In the
absence of policies to eliminate fees and surcharges on EBT
cards, this bill seeks to provide EBT consumers with
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information about how to improve the efficiency and
effectiveness of their EBT usage to minimize their loss of
grant money to bank fees.
4)System Outages . In October 2013, Xerox, the state's EBT system
vendor, reported that all EBT systems in states with Xerox
contracts were down. While many stores put up signs notifying
customers of the EBT outage as they were notified, CalWORKs
and CalFresh recipients were left without any ability to pay
for basic necessities. The system was back up after a number
of hours, but some recipients had no forewarning of the
outage, and were left holding unpurchased groceries and
questioning why their EBT cards weren't functioning. To
mitigate the effects of future outages on consumers, this bill
explicitly requires the EBT system to be designed to notify
recipients of prolonged system outages.
5)Prior Legislation .
a) AB 1280 (John A. P�rez), Chapter 557, Statutes of 2013,
made state law consistent with federal protections for
direct deposit of public assistance benefits and
unemployment compensation benefits.
b) AB 2035 (Bradford), Chapter 319, Statutes of 2012,
protects against electronic theft of benefits delivered
electronically.
Analysis Prepared by : Jennifer Swenson / APPR. / (916)
319-2081