TN taxpayers paying thousands for EBT card ATM fees - KCTV5

TN taxpayers paying thousands for EBT card ATM fees

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NASHVILLE, TN (WSMV) -

You know how you hate paying that $3 fee to get money out of another bank's ATM? Well, consider this: your tax dollars have paid more than $80,000 in fees over two years for cash withdrawals for low-income Tennesseans.

One public policy organization says there's a fix to avoid the fees, and Channel 4 has confirmed the state is studying whether or not to make a change.

Many of us don't even make the trip to the bank on payday anymore. Our checks just go right into our bank accounts. And when we need cash we go to our ATMs, no fees. Simple, right?

So, why then is the state paying millions not to banks but to a private company to administer government assistance? That means when an EBT card user goes to get cash out at an ATM, they're charged a fee.

"The fees and the surcharges that we are talking about are a real problem that require a real solution," said Aleta Sprague with the New America Foundation.

The New America Foundation is a nonprofit public policy think tank that studies new strategies to help low-income families.

Channel 4 spoke to Sprague after uncovering that since March 2012, the state has paid nearly $8.2 million to the private company FIS to administer EBT cards for government assistance, such as food stamps as well as TANF benefits, which allows low-income Tennesseans to actually get cash out. But after two ATM withdrawals, the EBT card user is charged, and that's when the fees start adding up, totaling more than $80,000 in two years.

Those charges are deducted from the EBT card user's monthly benefits. That means more money from the taxpayer and less to help the needy family who relies on that government assistance.

The New America Foundation says to use direct deposit with banks and avoid the fees.

"A dollar here, a dollar there, but it adds up quite quickly for struggling families and for the taxpayers that are funding these supports," Sprague said.

Lee Combs, who receives government assistance from the state, shared his thoughts on direct depositing benefits into a bank account instead of using an EBT card.

"There's a lot of people out there it would benefit and it would teach them how to manage their money and make them feel better about their self, if they was to do that, but, there is a lot of people out there who would misuse it," he said.

The Tennessee Department of Human Services, the agency in charge of the TANF program, wouldn't go on camera but did confirm they're considering changing the system.

"The department has and will continue to explore options such as direct deposit for assisting participants with financial management. This option is currently under study," said Tennessee Department of Human Services spokeswoman Devin Stone.

So, as the funding process is being studied, the state will keep paying the private company, and the fees will be paid with your money.

"The fact is it's millions of dollars that are essentially being wasted that should be going to helping the most vulnerable families, and instead, they are just losing this money day by day, so there is a more effective way that these systems could be run," Sprague said.

While Tennessee currently does not offer direct deposit as an option for receiving government assistance, the New America Foundation says at least 22 other states do.

A state spokesperson told the I-Team they have to look into what impact switching to direct deposit would have on government assistance fraud, waste and abuse.

The I-Team also reached out to the private company the state contracts with to administer EBT cards, but FIS did not return Channel 4's request for comment.

Copyright 2014 WSMV (Meredith Corporation). All rights reserved.

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