Bamboozled: Checks and low balances

When Karen Muller divorced almost three years ago, the court awarded her alimony payments of $1,600 a month.BB branding

Muller (no relation to the writer) originally wanted her alimony to be direct deposited into her checking account, but because of a paperwork mix-up, she was instead given what’s called the EPPICard: a debit card that can be used to access monthly payments.

EPPICard is supposed to make life easier. It helps recipients avoid costly check cashing joints, bank lines, waiting for checks to clear and so on. But there are fees. (More on that later, with a spanking for the state.) Muller, 49, works in a nursing home by day and goes to nursing school at night, so it was hard to make an in-person appearance to make the change to direct deposit.

She didn’t love the EPPICard, but she was willing to live with it.

Until nearly $10,000 went missing from her account.

The fraud

It happened in April, when Muller checked her balance before withdrawing money to give to her son, who is getting married.

90909“When I heard the balance, I almost choked,” Muller said. “They charged K-Mart five times in one day, Macy’s, there were nine charges to Duane Reade, McDonald’s, gas stations, you name it. Oh yeah, and a beer distributor for more than $900.”

She immediately called EPPICard, spending hours on the phone reviewing all the fraudulent transactions with a customer service representative.

“When she realized how many, she said, ‘We should have caught that. You’ve never used the card this way and we should have caught it,'” Muller said.

But the money wasn’t restored right away. Muller was sent to the fraud department, which said she had to fill out a form detailing the more than 300 crooked charges.

Finally, in the middle of May, Muller received a letter saying the money had been restored. The compromised account was canceled and Muller was assigned a new account number.

All was well.

For about 10 days.

Muller checked her balance on the new card and found many of the same original fraudulent charges — totaling more than $5,000 — were once again debited from the account.

“I was shocked. Ten days after they redeposited my money, they let these charges go through,” Mueller said. “I was like, you’ve got to be kidding me!”

She called to report the fraud, spending hours on the phone. More hours on hold. She was told she had to open a new fraud claim, even though this was directly related to the original claim, and that meant more hours on the phone.

Then she was told by an EPPICard rep that it was her responsibility to contact each of the merchants, and that it wasn’t EPPICard’s responsibility to withhold funds from the merchants even though the charges were made with a stolen card number.

That’s when she contacted Bamboozled.

Restoring the funds

EPPICard is issued by Comerica Bank, which directed Bamboozled to Dallas-based Affiliated Computer Services, or ACS, which processes EPPICard accounts for the bank. Bamboozled asked for proper attention to be given to Muller’s plight.

Within two days, her account was made whole again.

“Ms. Muller’s account has been adjusted correctly so she is not impacted by the fraudulent charges,” said Ken Ericson, spokesman for ACS Services.

OK, mistakes happen. We’re glad it was fixed. But what about the rep who told Muller she’d have to check with each merchant individually, and that EPPICard wasn’t responsible? Ericson never directly answered the question, which we asked multiple times, nor did he explain why no warning bells went off when these 300-plus fraudulent charges were made.

“The EPPICard comes with the same federal consumer protections that govern traditional debit cards,” said Ericson.

That means, Bamboozled presumes, that Muller should have never been told to contact the merchants directly.

Muller is pleased that the funds are back in her account, but she said she’s done with EPPICard.

“I absolutely never want to deal with them again,” she said. “I want to have direct deposit and just keep the money in my own account.”

EppiCard is no bargain

EPPICard users get a PIN number and they can withdraw cash from automatic teller machine (ATMs) or at bank tellers that have a MasterCard logo in the window. They get one free ATM withdrawal per month at either a Wachovia or PNC ATM, and every subsequent withdrawal costs $1.25. Non-Wachovia ATM withdrawals cost $1.25. Subsequent bank teller withdrawals cost $2. Unless you sign up for online account access, there’s a charge for balance checks: the first two are free, and after that there’s a $0.40 charge. We won’t even go into the over-the-limit fees.

These cards are also accepted anywhere MasterCard is accepted. If a purchase or a “cash back” transaction requires the user to input their PIN, there’s another $0.20 fee.

The state of New Jersey is one of 16 states that use EPPICard to distribute benefits. Today, some 72,000 residents use it to collect alimony and child support payments — or roughly 20 to 25 percent of all state beneficiaries. Add up all those little fees, and EPPICard earns a nice profit in New Jersey.

Many bank accounts have fees like these, and sure, companies should be paid for providing a service. But this is pure nickel and diming. If my bank charged fees like this, I’d find a new bank.

Can’t the state of New Jersey, which offers healthy business to EPPICard, get a better deal?

“The Division of Family Development negotiated the best deal available,” said Suzanne Esterman, spokesperson for the Department of Human Services Division of Family Development, the agency that contracts for the EPPICard. “We understand that for some people the fees make an impact in what they receive in their child support funds but we do offer the choice of the debit card or direct deposit.”

Esterman said the current contract with EPPICard expires February 2010.

So come on, New Jersey, negotiate a better deal. You’re giving EPPICard more than 72,000 customers who I’m sure the company would like to keep, so you have the upper hand. Insist on lower fees. Tell EPPICard that even with cheaper costs, it would benefit from economies of scale as more of New Jersey’s 300,000-plus child support and alimony recipients will be attracted to the card.

You’ve got the power in this deal, New Jersey. Use it for the good of your citizens.