New York’s top prosecutor is investigating some of the state’s largest employers over their use of ATM-style cards to pay their hourly employees, the New York Times DealBook blog reported today. New York Attorney General Eric T. Schneiderman has sent letters seeking information to about 20 employers, including McDonald’s, Walgreen and Wal-Mart. The inquiry by Schneiderman comes as a growing number of companies are abandoning paper paychecks and direct deposit to offer prepaid cards. But consumer lawyers, employees, and state and federal regulators have said that in the vast majority of cases, use of the cards can generate a range of fees—50 cents for a balance inquiry and $2.25 for an out-of-network ATM—and that those fees can quickly devour the pay of part-time and low-wage workers.
