BILL ANALYSIS �
AB 1614
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1614 (Stone)
As Amended August 22, 2014
Majority vote
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|ASSEMBLY: |77-0 |(May 15, 2014) |SENATE: |35-0 |(August 26, |
| | | | | |2014) |
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Original Committee Reference: HUM. S.
SUMMARY : Ensures access to information about benefits usage and
benefits protection for electronic benefits transfer (EBT)
consumers. Specifically, this bill :
1)Requires the 24-hour, toll-free telephone hotline for the
reporting of lost or stolen EBT cards to provide recipients,
at no additional cost to the recipient, information on how to
replace the card and personal identification number (PIN), and
requires the hotline to allow an authorized representative or
head of household to access the EBT card transaction history
for at least the last 10 transactions and to request that the
transaction history detail for at least the past two months be
sent by mail.
2)Requires the EBT system to have an Internet Web site that will
provide recipients, at no additional cost to the recipient,
information on how to have a lost or stolen EBT card and PIN
replaced, and will allow an authorized representative or head
of household to view transaction history detail, as specified.
3)Requires a county human services agency to provide an EBT
authorized representative or head of household, at no
additional cost, all EBT transaction history details that are
available to the county within 10 business days of receiving a
request for the information.
4)Requires EBT consumers to be informed on how to protect their
cards from misuse and where they can use their EBT cards to
withdraw benefits without incurring a fee, charge, or
surcharge.
5)Requires the EBT system to be designed to inform recipients
when the system does not function or is expected to not
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function, as specified, and requires the information to be
made available in a recipient's preferred language if the EBT
system vendor contract provides for services in that language.
6)Requires the EBT system design to ensure that California Work
Opportunity and Responsibility to Kids (CalWORKs) recipients
have access to using or withdrawing benefits with minimal fees
or charges, including an opportunity to withdraw benefits with
no fee or charges.
7)Requires counties to use information provided by the
Department of Social Services (DSS) to inform CalWORKs
recipients of available methods of electronic delivery of
benefits and associated fees, charges, or surcharges, benefit
protection mechanisms, and potential access to alternative
methods or timelines for the delivery of benefits based on a
recipient's individual needs, as specified.
8)Provides technical clean-up to AB 2252 (John A. P�rez),
Chapter 180, Statutes of 2014.
The Senate amendments :
1)Clarify that counties are required to use information
developed by DSS to inform CalWORKs recipients of options
available with respect to their receipt of benefits and EBT
usage, as specified, and provide that counties are in
compliance with this requirement upon providing recipients a
copy of the information developed by DSS.
2)Delete the establishment of the Electronic Benefits Transfer
System Consumer Protection, Financial Empowerment, and Cash
Access Fund in the State Treasury and related provisions.
3)Require DSS to implement the provisions of this bill by
all-county letters or similar instructions no later than April
1, 2015, and until regulations are adopted on or before
October 1, 2016.
4)Provide technical clean-up to AB 2252, to clarify that the
Department of Child Support Services is not liable for
authorizing a direct deposit of child support dollars into a
prepaid account designated by the recipient that does not meet
the criteria set forth in AB 2252. This clean-up aligns AB
2252 with AB 1280 (John A. P�rez), Chapter 557, Statutes of
2013, with respect to departmental liability for prepaid card
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account transactions.
EXISTING LAW :
1)Establishes under federal law the Temporary Assistance for
Needy Families (TANF) program to provide aid and
welfare-to-work services to eligible families and, in
California, provides that TANF funds for welfare-to-work
services are administered through the CalWORKs program. (42
United States Code (U.S.C.) 601 et seq., Welfare and
Institutions Code (WIC) Section 11200 et seq.)
2)Establishes income, asset, and real property limits used to
determine eligibility for the program, including net income
below the Maximum Aid Payment, based on family size and county
of residence, which is approximately 40% of the Federal
Poverty Level (FPL). (WIC Section 11250 et seq.)
3)Authorizes the establishment of an EBT system for the
distribution and use of public assistance benefits and
requires EBT access to be provided through automated teller
machines (ATMs), point-of-sale (POS) devices, and other
devices that accept electronic benefits transfer transactions.
(WIC Sections 10065 et seq. and 123302)
4)Requires the state's EBT system to provide reasonable access
to benefits for recipients who are unable to use an EBT card
or other aspect of the system due to disability, language,
lack of access, or other barrier, and requires alternative
methods to be in compliance with the Americans with
Disabilities Act and include reasonable accommodations for
people with physical and mental disabilities. (WIC Section
10072 (d))
5)Requires the state's EBT system to have a 24-hour per day
toll-free telephone hotline for the purpose of reporting a
lost or stolen card and receiving information on how to have
the card and PIN replaced. (WIC Section 10072 (f))
6)Provides that a recipient shall not incur any loss of
electronic benefits or cash benefits after reporting a lost or
stolen EBT card, and requires prompt replacement of any
electronic benefits withdrawn without the use of an authorized
PIN or cash benefits taken through an unauthorized withdrawal
or unauthorized use of an EBT card after a card is reported
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lost or stolen, as specified. (WIC Section 10072 (g))
7)Allows cash aid recipients to be charged a fee for withdrawal
transactions that exceed four per month. (WIC Section 10072
(k))
8)Requires CalWORKs benefits provided through EBT transactions
to be staggered over a three-day period unless the county has
exempted an individual from the three-day staggering
requirement due to hardship, as specified. (WIC Sections
10072 (c) and 10072 (l))
9)Requires each county to make an agreement with one or more
financial institutions participating in the Automated Clearing
House, and requires counties to provide direct deposit by
electronic fund transfer of payments to any person entitled to
the receipt of public assistance benefits who authorizes the
direct deposit of benefits into the person's qualifying
account at a financial institution of his or her choice. (WIC
Section 11006.2)
10)Requires all individuals over 16 years of age, unless they
are otherwise exempt, to participate in welfare-to-work
activities as a condition of eligibility for CalWORKs. (WIC
Sections 11320.3 and 11322.6)
FISCAL EFFECT : Unknown
COMMENTS : 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
well-being of their families.
Federal Electronic Fund Transfer Act: The Electronic Fund
Transfer Act (EFTA) (15 U.S.C. 1693 et seq.) was established in
1978 to protect individual consumers engaging in fund transfers
through an electronic terminal, telephone, computer, or magnetic
tape that instruct a financial institution to either credit or
debit a consumer's asset account electronically. Within what is
commonly referred to as "Regulation E" of the Board of Governors
of the Federal Reserve System, the EFTA establishes the rights,
liabilities, and responsibilities of consumers who use
electronic fund transfer services and of financial institutions
that offer such services.
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Electronic Benefits Transfers (EBT) Act: AB 1542 (Ducheny),
Chapter 270, Statutes of 1997, which implemented federal welfare
reform and established the CalWORKs program, also conformed to
federal law in establishing the EBT Act, which makes the
following declarations:
1)The development of incompatible systems for EBT will create
significant hardships on recipients of public social services
and businesses that accept electronic transactions as payment
for goods and services; and
2)The goals of EBT 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.
California's official move from a paper-based system to an
electronic system for the distribution and use of public
assistance benefits occurred in 2002. This shift was essential
in helping the CalWORKs and CalFresh (then Food Stamps) programs
keep pace with technological advances in POS and automated
teller systems.
CalWORKs: The CalWORKs program provides monthly income
assistance and employment-related services aimed at moving
children out of poverty and helping families meet basic needs.
Federal funding for CalWORKs comes from the TANF block grant.
The average monthly cash grant for a family of three on CalWORKs
(one parent and two children) is $463. According to recent data
from DSS, 554,292 families rely on CalWORKs, including over one
million children. Nearly 80% of the children are under age 12.
CalFresh: Nutrition benefits provided through the CalFresh
program are funded entirely by the federal government through
the Supplemental Nutrition Assistance Program (SNAP). The
United States Department of Agriculture sets specific
eligibility requirements for SNAP programs across the United
States, including a gross and net income test, work
requirements, and other documentation requirements. The maximum
allowable gross income is 130% of the FPL, and households with
elderly or disabled members are not subject to gross income
criteria but must have a net monthly income at or below 100% of
the FPL. Other households must meet both gross and net monthly
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income tests. CalFresh is administered locally by county human
services agencies, and the federal, state, and county
governments share in the cost of administration of the program.
The average monthly benefit for a CalFresh recipient is $153.13
per month, or $5.10 per person per day, whereas the maximum
monthly CalFresh benefit for a household of four is $632, or
$5.27 per person per day.
EBT usage restrictions: 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 their families' basic needs. Because EBT cards do not have
any credit insignia, use beyond ATM or POS machines is limited,
resulting in the need for CalWORKs recipients to often withdraw
cash to pay utility bills, for example, which are payments that
could otherwise be made electronically with a standard
commercial debit card.
Unlike CalWORKs benefits, CalFresh benefits are only accessible
through use of an EBT card and cannot be used for cash
withdrawals or for the purchase of basic necessities that don't
qualify as food. CalFresh benefits can only be used to purchase
food items to be prepared and consumed at home, as well as seeds
and plants that can be grown at home and produce food.
While EBT cards provide much of the same access to purchases and
withdrawals as commercial debit cards, there are federal and
state restrictions on EBT transactions in certain locations.
The federal Middle Class Tax Relief and Job Creation Act of
2012, signed into law on February 22, 2012, required all states
receiving a TANF block grant to prevent EBT transactions in
liquor stores that do not also sell food; casinos, gambling and
gaming establishments; and any retail establishment that
provides adult-oriented entertainment. Prior to this federal
policy change, DSS had already responded to Executive Order
S-09-10, issued by Governor Schwarzenegger, and by September
2011, had blocked EBT usage at more than 6,000 ATM machines that
were determined to be in violation of the Executive Order. It
is important to note that DSS moved to remove EBT access for ATM
machines at these establishments although there was no record of
EBT withdrawals at all of these locations.
Additionally, EBT cards are very different from commercial
credit cards in that they do not carry a credit line, and the
withdrawals or purchases a recipient makes cannot exceed the
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amount that is available on the card. Lack of overdraft
potential is an important feature that helps poor families have
access to their minimal benefits as they become available each
month without the threat of a future month's aid payment having
to be used to pay back debts or overdraft fees.
Benefits for poor families going to banks: Although funds
distributed through EBT cards are protected from some of the
fees imposed on commercial credit cards, there are still four
types of surcharges that impact EBT card usage for CalWORKs
recipients. These include ATM surcharge fees that are applied
at some ATMs and POS machines when cash is withdrawn, ATM
balance inquiry fees, POS machine surcharge fees for getting
"cash back" on a purchase, and an $0.85 transaction fee paid to
the state's EBT vendor that is in addition to any surcharge and
is applied when cash is withdrawn from ATM or POS machines more
than four times within a single month.
Need for this bill: On October 12, 2013, Xerox, the state's EBT
system vendor, reported that all EBT systems in states with
Xerox contracts were down. While many stores acted quickly to
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 even their most 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.
Additionally, the issue of bank surcharges and fees being
applied to EBT cash withdrawals was highlighted in a recent Los
Angeles Times article, which stated that $18.9 million in EBT
dollars had gone to banks through ATM fees in 2013, and $19.4
million had been taken from EBT transactions at ATMs in 2012.
Recipients' grant amounts are not padded to account for
potential fees or surcharges, meaning that every dollar that
goes to a bank is a dollar that was intended for a needy family,
but can't be used by that family to pay for their basic needs.
In the absence of widespread policies to eliminate fees and
surcharges altogether, this bill seeks to provide EBT consumers
with information about how to improve the efficiency and
effectiveness of their EBT usage.
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Lastly, with the rapidly evolving landscape of electronic
benefits transfer options, and the challenges this evolution
presents to benefits recipients, it is of utmost importance to
enforce adequate consumer protections and to ensure that
electronic benefits card users know their rights. To this end,
AB 1280 ensured federal consumer protections were in place for
public assistance and unemployment compensation benefits
electronically transferred to prepaid cards. Similarly, AB
2252, instituted the same protections for child support payments
electronically transferred to prepaid cards. AB 1280 included
provisions to limit departmental and local agency liability for
authorizing payments to prepaid card accounts. This bill
contains clean-up provisions to AB 2252 to also ensure that the
Department of Child Support Services isn't held liable for
electronic deposits of child support payments to a prepaid card
account that is designated by a recipient but does not meet the
federal standards of a qualifying account.
According to the author, "This bill requires that a few simple
steps be taken to increase access to information for EBT
customers to facilitate their economic empowerment. While
current state policies are predominantly focused on the
provision of assistance and the myriad requirements recipients
must comply with in order to remain eligible for benefits, this
bill seeks to help recipients know their consumer rights and
facilitates access to the tools they need to be able to manage
their benefits. Recently shortened time limits and other
restrictions on the provision of state assistance-not to mention
the bank fees and surcharges that sweep away state dollars -
make it even more important to equip our needy families with the
tools they will need to maintain and surpass whatever level of
financial stability the state helps them achieve."
Analysis Prepared by : Myesha Jackson / HUM. S. / (916)
319-2089
FN: 0005494