Paper to plastic

California employees laid off by Bank of America last week could soon receive unemployment from a familiar source: Bank of America.

California’s largest bank is now providing the debit cards used by the state to distribute unemployment aid. The debit cards, branded with Visa logos, are replacing unemployment checks for more than 1.2 million out-of-work residents.

The Employment Development Department has been phasing in the debit cards since July and says the switch from paper checks to plastic will help it save roughly $4 million a year.

“Debit cards are the currency of our time,” explained Pam Harris, EDD’s chief deputy director, in an official statement.

User fees are also a currency of our time, and the EDD stresses, repeatedly, that “careful” use of the cards can cut down on such charges. As part of the arrangement, card users who are not Bank of America customers receive two free withdrawals per deposit. Participants do not have to have Bank of America accounts or a bank account, but those withdrawals may incur charges from merchants, or hidden fees.

“While I can see … how it can help customers avoid check-cashing fees,” said Emily Rusch, state director of the California Public Interest Research Group, “there is a concern about people being nickeled-and-dimed.”

CalPIRG recently published a report on bank fees, and Rusch added that customers need to be educated on how to avoid fees. She noted that the EDD’s instructional video on how to use the cards includes a person using one at a gas station, which often charge use fees for debit cards.

Rusch also said targeted marketing could be a problem. “We have done surveys [of banks] and found customers are heavily marketed to,” she said.

The EDD promised that it is on top of the situation.

“The fee structure for this debit-card program is probably better than most people have for their own personal bank accounts,” said Dan Stephens, an EDD spokesman.

He also said that Bank of America, which did not pay federal taxes in 2010, is paying for the program from fees paid by participating banks and merchants and cannot sell or exchange the information gathered.

And interestingly, Gov. Jerry Brown’s new adviser on jobs creation, Michael Rossi, a former Bank of America executive.