Industry Letter

New York State Department of Labor Issuance of Direct Payment Cards for Unemployment Insurance Benefits

September 18, 2006

TO THE BANKING INSTITUTION ADDRESSED:

It has come to the attention of the Banking Department that some confusion has arisen over the new unemployment insurance benefit debit cards. Effective September 10, 2006, the New York State Department of Labor began issuing all unemployment insurance benefits via debit cards, or “Direct Payment Cards.” The Department of Labor no longer issues paper checks.

On August 17, 2006, the Department of Labor began to mail claimants Direct Payment Cards. Your bank may be receiving customer inquiries about these cards. All Direct Payment Cards are linked to a Chase bank account in the cardholder’s name. Unemployment benefits are now disbursed electronically, on a weekly basis, into each claimant’s Chase account. Claimants may access the benefits free of any fees and surcharges by:

• Withdrawing cash from any Chase or Allpoint ATM;
• Withdrawing funds via a teller at any financial institution that honors MasterCard, since the Direct Payment Card operates on the MasterCard debit network; and
• Making point-of-sale debit card transactions at any merchant that accepts MasterCard.

Claimants do not receive checks for, and cannot write checks on, their Chase account. Accounts are subject to fees as detailed in the account agreement, which is mailed to each claimant and can also be found on the Department of Labor’s Web site at: http://www.labor.state.ny.us/directpaymentcard/fees.shtm. Cardholders may be charged a fee for withdrawing funds at a non-Chase or non-Allpoint ATM.

Although a cardholder may also be an account holder at your institution, the cardholder must receive his or her unemployment benefits through electronic transfer into the Chase account. Funds may not be directly transferred between the Chase account and any other account held by the claimant. Any claimants interested in transferring funds from the Chase account fee free, to any other bank account, may do so in two ways. Claimants can visit a Chase or Allpoint ATM and withdraw the balance of the account in cash at no charge. If a claimant does not have access to a Chase or Allpoint ATM, the claimant can visit any financial institution that displays the MasterCard logo and obtain the balance of the benefits from their account in cash at no charge. The funds may also be given to the claimant in check form, although some banks may charge a fee for this service. In any case, the claimant may then deposit the cash or check into the non-Direct Payment Card bank account.

The Department of Labor is asking any banking institution that currently requires a minimum withdrawal amount for teller advances on MasterCard transactions to waive that requirement for Direct Payment Card holders. Later this fall, the Department of Labor plans to offer not just the Direct Payment Card, but also the option of direct deposit into other bank accounts.

If your customers have any further questions about their Direct Payment Cards, please instruct them to call Chase Customer Service at (877) 221-1634, or to visit the Department of Labor’s Web site at www.labor.state.ny.us.

Very truly yours,

Diana L. Taylor
Superintendent of Banks