Now that President Joe Biden has signed the third economic-stimulus bill — the American Rescue Plan Act — into law, those administering the distribution of the one-time direct payment of $1,400 at the Treasury Department and IRS and their vendors need to ensure the last relief payment does get delivered — even for the “hard-to-reach.”
This was a significant problem with the $1,200 and $600 payments, mostly to recipients in the lower quartile of the 99 percent (33 million households) who need money the most. They are the demographic instantly buying goods and services, paying rent and mortgages, or paying down debts. The “multiplier effect” means their purchases fed expenditures of their landlords, utility companies, gas and diesel service-station corporations, banks, supermarkets and suppliers — thus, boosting the economy.
Unfortunately, vendors hired by the Treasury and IRS to dispense the first two payments to those without bank or credit union accounts failed to deliver. Eight million eligible recipients reportedly didn’t get their $1,200 payment last May, indicating many of the same people probably didn’t get their $600 in late January.
Treasury funds certainly were available for those first two payments ($290 billion for the $1,200, $166 billion for the $600). The $456 billion payout was “real money,” as Sen. Everett Dirksen (R-Illinois) was wont to say about federal allocations.
Small wonder then that the first distribution of $1,200 starting in March 2020 was followed by the Treasury’s stunning admission that “hundreds of thousands” of the checks or pre-paid VISA debit cards were unused. This raises the question of whether the Treasury and IRS and their vendors for this crash project tried hard enough to reach the lower third of the U.S.’s 99 percent. At least one Treasury spokesperson told CNBC that they and the IRS planned to build on “lessons learned over the past year.” One successful contact method for thousands of the “hard-to-reach” they seemed to have bypassed was well-advertised street signups. The Sanders committee should ensure they do them for the $1,400 payment.
The program’s second priority was to speed money to the eligible recipient base. That meant individuals with a gross annual income under $75,000 or couples under $150,000. Couples also were set to receive $500 per child under 17.
Millions of eligible recipients were in several federal databases that Treasury/IRS staffs could have used: tax filings and refund payments, Social Security, Supplemental Security Income, the Railroad Retirement Board, and departments such as Veterans Affairs, Health and Human Services, Labor, Agriculture and the Census Bureau. But too many recipients seem to have fallen between the cracks of what should have been a rigorous search despite the short deadline.
According to MarketWatch, many of those 8 million people probably fell into six categories:
- The IRS claimed it didn’t have bank account information on these eligible even though monthly federal checks were directly deposited;
- they may have earned more than payment ceilings (individuals: $75,000; married couples: $150,000);
- they were claimed as dependents by others;
- creditors directly garnished the bank deposit;
- a complex immigration situation was involved;
- IRS “glitches” of sometimes failing to use people’s “final destination bank.”
The IRS Sets Up Service Websites to Help Recipients
Decades of experience with the public taught the Treasury and IRS that mistakes and misunderstandings would arise, especially for this vast project. So the IRS set up a “FAQ” website and two other service sites: “Get My Payment” for questions on delivery status and payment mode; and the free “Non-Filers” for those with low or no income. However, the first two payment deliveries needed far more than websites because deliveries were fraught with far more than “glitches.”
Treasury and IRS officials had to have begun planning for these distributions as the CARES Act with the stimulus provision was moving through Congress. They knew that this immense project entailed far more than delivering millions of tax-refund checks. But they apparently were not about to spend time, energy, payroll expense, printing supplies, and their own U.S. debit cards on those lacking bank or credit union accounts or who don’t contribute a penny to tax revenues.
Their assignment to distribute those $1,200 payments within a week meant they could go only to the nearly 90 million with direct-deposit or regular checking accounts at banks or credit unions. Not the 150 million who lacked those financial credentials or were among the seemingly “hard-to-finds” with unknown addresses, or non-tax filers (10 percent of the population), or the homeless (1.5 million). They would be relegated to deliveries by vendors of financial institutions, which all but guaranteed trouble.
If found, recipients with known addresses would get snail-mailed pre-paid “Economic Impact Payment” commercial debit cards instead of Treasury checks. The Denver Post reported the Treasury chose debit cards because the department “lacked the capacity to print millions of EIP checks required quickly. Plastic cards offered a quicker option[.]”
Postage costs would be higher. And deliveries might take a little longer — like late summer/early fall — because of chaos at the U.S. Postal Service caused by its postmaster general.
So much for putting money into the hands of the near-destitute quickly.
Treasury and IRS Explain Need for Vendors for Payment Deliveries
To warm up public acceptance of this decision, an IRS spokesperson in late April 2020 told Reuters that, “Hobbled by budget cuts and obsolete technology, the IRS would otherwise struggle with the enormous workload involved in printing and distributing millions of checks and could take months to complete the job.”
Action began on April 13 when Treasury officials got the go-ahead to sign contracts with three vendors: VISA; Fiserv, a Fortune 500 company providing electronic transaction services for financial institutions and which would process and produce VISA cards; and MetaBank, a Fintel Technologies subsidiary. MetaBank was to be the overall and sole financial agent working with the Treasury’s Bureau of the Fiscal Service through which taxpayer billions would pour into those pre-paid VISA debit cards.
MetaBank (doing business as “Meta Financial Group”) would direct traffic, starting with getting a VISA use license, as noted on the Meta card. Fiserv’s subsidiary, Money Network Financial, would design and mail the cards attached to a two-page information sheet for recipients about card use — and MetaBank fees. It also would handle complaints (“go to “EPICard.com or call 1-800.240.8100”).
Major problems began with two vendors almost as soon as the ink was dry on the contracts.
The first was the presumption that every American had access to computers, the internet and cellphones. Decision-makers at the Treasury and IRS and the vendors obviously could not conceive targets might not be able to afford them. But in this low- or no-income population, 26 percent don’t own a computer, not counting those who’ve never used them. Of those who do have computers, 77 million still lack adequate broadband services for the internet. So how could they possibly find information from Treasury/IRS websites or these vendors?
Homeless people might not have access to computers or electrical outlets to recharge their cellphones for those long waits on robotic responders. How would they contact assistance sources for the whereabouts of their stimulus payments to even activate the VISA debit card?
Moreover, most cards have cumbersome and often unfair restrictions — and can be lost, stolen or scammed. Aside from use at banks and credit unions, they are limited to buying goods and services at VISA retail outlets, online or by phone. Money Network withdrawals were free only at its “in-network” ATMs such as All Point®, though my card also listed PLUS, INTERLINK, STAR and MetaBank.
Some ATMs had daily withdrawal limits of $200 to $400. “Out-of-network” ATMs were charging $2 per transaction. Every EIP debit card balance-check inquiry by an in-network card-issuing bank’s ATM inquiry costs 25¢. A non-network ATM can cost from $2.50-$2.75.
Money Network did provide a “Locater” site for finding an in-network machine within three miles of a recipient’s home. Retailers providing space for ATMs do so to sell goods and service. Among mine were Walgreens, Safeway, Ed’s Deli and Pietro’s Pizza. But, once again, what do thousands of recipients do if they don’t have access to a computer to find an in-network ATM?
Of course, the $1,200 and $600 payments could be transferred to bank or credit union accounts, a path probably used by millions of card recipients like me. However, my credit union’s nearest branch was 30 miles away.
Envelope Design Becomes Worst Blunder for Payment Deliveries
The third problem was the mailer’s design and Money Network’s two-page informational sheet containing the attached VISA card. Now, the Treasury stores billions of those familiar envelopes containing federal checks. Seemingly they could quickly resupply if needed. The return address always arrests instant attention: “Department of the Treasury/Internal Revenue Service” over the ominous line “Official Business/Penalty for Private Use, $300.” Few would ever consider it junk mail.
Additionally, the U.S. Government Publishing Office (GPO) is the “official, digital and secure source for producing, protecting, preserving and distributing the official publications and information products of the Federal Government.” On a rush need for this kind of project, it’s difficult to believe the GPO would redesign print envelopes and literature resembling junk mail or permit Money Network to find an envelope company to do the same.
The plain white envelope containing the card did have a large Treasury seal on the left side and a red-ink command that the mailer was “not a bill or an advertisement.”
Inside were Money Network’s two pieces of information. A slip informed me my stimulus payment was in the VISA pre-paid debit card affixed to the two-sided information sheet with vital referral URLs. The card provided a phone number for authorization. But neither piece mentioned the number “$600,” which would have saved many from misunderstandings.
The text about withdrawal methods, MetaBank rules and fees — and scam warnings — were set in a 9-point sans-serif font using justified lines with a 7-inch eye-swing. All were typography’s classic no-no’s for readability, and indicated recipients were not considered worth the expense of an additional page with larger type in serif fonts.
So it was easy to see why millions accidentally tossed the mailer without opening it. Or bothered to read the information sheet. Or cut up the card. The rude awakening meant perhaps thousands calling MetaBank’s customer service for a replacement which, as in the case of loss or theft, required a garbage search to report the card’s number.
Complaints from eligible recipients failing even to get the mailer seemed to have been so numerous that on February 1, 2021, the IRS dispatched a follow-up letter (Notice No. 1444-B) to us recommending that if it hadn’t arrived within seven days of receiving that letter, to go to “IRS.gov/eip” and click on “Get My Payment.” Or call 800-191-9835.
Added to such aggravation was the assumption once again that all complainers had computers or electrical outlets for recharging cellphones for those lengthy waits between robotic responses directing keypad runarounds.
Robotic answering services ever since have become the target of recipients’ rage and complaints about payment deliveries. Thousands have demanded help from such sources as the Consumer Protection Service Bureau, the Better Business Bureau, their congressional delegations, and their banks or credit unions. Terrible public images have fallen on VISA, ATM networks, the vendors, and, of course, both the Treasury and the IRS.
It’s true that the current bill (H.R. 1319) was first introduced February 24 and has been fast-tracked through Congress for the President’s signature. But ever since the complaints began coming in almost a year ago about the first stimulus payment of $1,200, knowing others surely would follow, they’ve had time to address them.
So let’s hope the Treasury, the IRS and their vendors get distribution right on the upcoming $1,400 stimulus payments. The third time might well be the charm.
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