Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Nickel-and-Diming America's Most Needy?

Source: iboy daniel, via Wikimedia Commons. 

Imagine this scenario. You're a single mom, working 35 hours per week at your local McDonald's (NYSE: MCD  ) for $7.44 per hour. You've gone to school to work in different fields, but the economy is tough where you live, and this is the best option you could find.

Your take-home pay is $260 per week. But when it comes time to get paid, instead of a check, cash, or direct deposit, you are told the only way to collect your money is through a JPMorgan Chase (NYSE: JPM  ) prepaid debit card. Along with the card comes a litany of fees: $1.50 for ATM withdrawals, $5 to receive cash over the counter, $1 to check your balance, even $0.75 for online bill pay.

Though these fees might sound tiny to some, they mean a lot to you and your child. When you ask your boss to be paid via other methods, you are turned away, even though the managers at your McDonald's --who are paid significantly more -- have other payment options with far fewer fees.

The owners of the McDonald's franchise get to save lots of money with this option, and JPMorgan Chase gets to collect all of these fees, but you -- the single mother trying to put together a living -- you are the one who puts in the hours and still gets the short end of this deal.

Does this seem fair?

Truth is stranger than fiction
This is -- more or less -- exactly what Natalie Gunshannon says she experienced when she worked for a McDonald's franchise in Luzerne Country, Pa., earlier this year.

It's important to note that it was not the corporate McDonald's entity that was allegedly denying Gunshannon the option to get paid via checks, but rather the franchise owners, Albert and Carol Mueller, who own a total of 16 franchises in Pennsylvania.

When Gunshannon was met with this news, she decided to file a lawsuit against the couple. The suit stated that the Muellers were violating the Pennsylvania Wage Payment and Collection Act, as the fees pushed her effective pay below the minimum wage. 

A growing trend
This is not an isolated case. The use of prepaid debit cards to pay employees has become more and more commonplace over the past few years. In fact, the FDIC estimates that in 2014, over $60 billion in wages will be dispersed via prepaid debit cards.

FedEx (NYSE: FDX  ) , Wal-Mart (NYSE: WMT  ) , and Home Depot (NYSE: HD  ) are just a few of the major U.S. employers that have started instituting the use of prepaid debit cards. 

There is, however, a key difference between what these companies practice and what Gunshannon alleges the Muellers offered at their McDonald's locations: Employees have an option as to how they want to get paid.

That's an important difference. Believe it or not, sometimes, prepaid debit cards can actually be beneficial to employees. Usually, businesses can negotiate with banks to lower the fees associated with these cards -- which lowers the overall cost of using them. And other times, Americans who don't have bank accounts -- which includes roughly 10 million American families -- aren't paying exorbitant fees to have their checks cashed.

Whatever the choice employees make, it's clear that the actual choice is what matters the most.

A McHappy ending?
Last week, the Muellers announced that they would be offering employees the option to receive their payments via direct deposit, paper check, or payroll card. While Gunshannon's legal team is no doubt pleased with the move, they have stated that they will continue to move forward with the lawsuit. 

In addition, New York State Attorney General Eric Schneiderman announced that letters have been sent to more than 20 large companies in the state to ensure that employees are given the ability to opt out of payment via debit cards. Only time will tell how this latest inquiry will unfold.

Making your money last in tough times
When times are tough, as they are for folks like Gunshannon, every dollar counts. Social Security plays a key role in your financial security, especially if you are close to retirement. In our brand-new free report "Make Social Security Work Harder for You," our retirement experts give their insight on making the key decisions that will help ensure a more comfortable retirement for you and your family. Click here to get your copy today.

Read/Post Comments (3) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 09, 2013, at 3:40 AM, prginww wrote:

    Wow,that fees are absolutly outragous. How come that a bank charges for handing out money over the counter or for checking the balance? That is not allowed over here in Germany/Europe. That ist the main business of a bank, and charging for that is like paying money to your utility service for flushing the toilett. No wonder that the banks have a bad reputation. That one lowers the reputation for banks even more. Thank good we don´t have to stick witht these kind of banks over here.

    Sorry for my bad english.

    Best regards Andreas

  • Report this Comment On July 09, 2013, at 12:05 PM, prginww wrote:

    Try to join a credit union, most of the time you can get $1.00 a month fee for a checking account or

    just get direct deposit at no cost.

    If that is not an option you can try a savings and loan, get similar benefits.

    Shame on that McD franchisee for not giving their hard workers a choice.

  • Report this Comment On July 09, 2013, at 12:18 PM, prginww wrote:


    It seems Ms. Gunshannon was pretty savvy with her money, as she already had an account at a credit union where she wanted her money deposited. She also was wise enough not to activate her card after carefully reading about the fees. I would think most people (myself included) would have just signed and spent.

    Brian Stoffel

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2524740, ~/Articles/ArticleHandler.aspx, 9/26/2016 10:13:54 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 57 minutes ago Sponsored by:
DOW 18,094.83 -166.62 -0.91%
S&P 500 2,146.10 -18.59 -0.86%
NASD 5,257.49 -48.26 -0.91%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/26/2016 4:01 PM
FDX $175.34 Up +0.95 +0.54%
FedEx CAPS Rating: ****
HD $125.45 Down -2.34 -1.83%
Home Depot CAPS Rating: ****
JPM $65.78 Down -1.47 -2.19%
JPMorgan Chase CAPS Rating: ****
MCD $116.53 Down -0.64 -0.55%
McDonald's CAPS Rating: ***
WMT $71.62 Down -0.73 -1.01%
Wal-Mart Stores CAPS Rating: ***