Senate Bill S8616

                                
 
BILL NUMBER: S8616

SPONSOR: HOYLMAN
 
TITLE OF BILL:

An act to amend the banking law, in relation to prohibiting fees for
benefit banking services

 
SUMMARY OF PROVISIONS:

Section 1 of the bill adds a new section 9-x to the Banking Law

("Benefit banking services"). The new section 9-x prohibits banks from
imposing any fee for benefit banking services attributable to use of an
electronic benefit transfer card, and prohibits operators or owners of
ATMs from imposing any fee for benefit banking services attributable to
the use of an electronic benefit transfer card.

The new section 9-x defines "electronic benefit transfer card" to
include cards issued to deliver unemployment insurance benefits, occupa-
tional training act program benefits, adoption subsidy electronic
payments, medical assistance benefits, food stamp assistance benefits,
              

and other public benefits under a local, state or federal program admin-
istered by New York State, local governments, or social services
districts.

Section 2 of the bill is the effective date. The law would take effect
immediately upon enactment and would apply to any current or future
contract for benefit banking services entered into between the state, or
any agency, subdivision or department thereof, and any institution
subject to the New York State Banking Law.

 
JUSTIFICATION:

As of May 2020, New York State had paid out $6.8 billion in unemployment
insurance benefits to the more than 1.8 million New Yorkers who had
filed for unemployment benefits since the beginning of the COVID-19
pandemic in March 2020. Even as New York State begins a phased re-open-
ing of its regional economies, the total benefits paid and unemployment
insurance (UI) claimants will continue to grow for the foreseeable
future.

New York UI claimants have the option of receiving their UI benefits on
a debit card issued by KeyBank, which currently holds a contract with
New York State to administer benefit banking services for UI, as well as
the Department of Labor's Occupational Training Act program and the
Office of Children & Family Services' Adoption Subsidy Electronic
Payments program. According to a June 2020 New York Times article{1},
about half a million New Yorkers receive their UI benefits via the
KeyBank debit cards.

KeyBank charges benefit recipients using their debit cards a $1.50 per
withdrawal fee at domestic ATMs outside of the KeyBank ATM network.  For
New Yorkers who have lost their jobs due to COVID-19 related
restrictions on their place of employment, UI benefits are a lifeline.
Banks holding lucrative contracts with New York State to provide banking
services for the administration of public benefits should not be eating
into recipients' benefits with fees for basic transactions like ATM
withdrawals. This bill would prohibit any bank providing benefit banking
services to New York State or its local governments from charging fees
to benefit recipients that reduce

 
1
https://www.nytimes.com/2020/06/05/nyregion/keybank-nyc-coronavirus.h
tml

 
LEGISLATIVE HISTORY:

New bill.

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
This act shall take effect immediately and shall apply to any current
and future contract for benefit banking services as defined in section
9-x of the banking law, as added by section one of this act, entered
into between the state, or any agency, subdivision or department there-
of, and any institution subject to the New York state banking law,
notwithstanding the terms of such current contract.