Federal Register / Vol. 75, No. 245 / Wednesday, December 22, 2010 / Rules and Regulations 80315 

DEPARTMENT OF LABOR 

Occupational Safety and Health 

Administration 

29 CFR Part 1926 

Compliance Directive for Fall 

Protection in Residential Construction 

AGENCY: Occupational Safety and Health 

Administration (OSHA), Labor. 

ACTION: Notice of Significant 

Enforcement Policy Change; Rescission 

of Interim Fall Protection Compliance 

Directive for Residential Construction. 

SUMMARY: The Occupational Safety and 

Health Administration (OSHA) is 

issuing compliance directive STD 03– 

11–002 Fall Protection in Residential 

Construction. This directive rescinds 

compliance directive STD 03–00–001, 

Plain Language Revision of OSHA 

Instruction STD 3.1, Interim Fall 

Protection Compliance Guidelines for 

Residential Construction, effective on 

June 18, 1999. There continue to be high 

numbers of fall-related fatalities in 

residential construction. The Advisory 

Committee on Construction Safety and 

Health, the National Association of 

Home Builders, and the Occupational 

Safety and Health State Plan 

Association have recommended the 

withdrawal of directive STD 03–00–001. 

DATES: Effective date: June 16, 2011. 

FOR FURTHER INFORMATION CONTACT: 

General information and press inquiries: 

Ms. Mary Ann Garrahan, Acting 

Director of the Office of 

Communications, Room N–3647, OSHA, 

U.S. Department of Labor, 200 

Constitution Avenue, NW., Washington, 

DC 20210; telephone (202) 693–1999. 

Technical inquiries: Contact Mr. 

Garvin Branch, Directorate of 

Construction, Room N–3468, OSHA, 

U.S. Department of Labor, 200 

Constitution Avenue, NW., Washington, 

DC 20210; telephone (202) 693–2020 or 

fax (202) 693–1689. 

Electronic copies of this Federal 

Register notice: Go to OSHA’s Web site 

(http://www.osha.gov), and select 

‘‘Federal Register,’’ ‘‘Date of Publication,’’ 

and then ‘‘2010.’’ 

SUPPLEMENTARY INFORMATION: 

Background. Under 29 CFR 

1926.501(b)(13), workers engaged in 

residential construction six (6) feet or 

more above lower levels generally must 

be protected by conventional fall 

protection (i.e., guardrail systems, safety 

net systems, or personal fall arrest 

systems). However, if an employer can 

demonstrate that such fall protection is 

infeasible or presents a greater hazard, 

it may implement a written fall 

protection plan meeting the 

requirements of § 1926.502(k). 

After OSHA promulgated 

§ 1926.501(b)(13) in 1994, 

representatives of the residential 

construction industry argued that they 

needed more compliance flexibility than 

the standard allowed. As a result, OSHA 

issued Instruction STD 3.1 on December 

8, 1995. STD 3.1 set out an interim 

compliance policy that permitted 

employers engaged in certain residential 

construction activities to use specified 

alternative procedures instead of 

conventional fall protection. These 

alternative procedures could be used 

without a prior showing of infeasibility 

or greater hazard and without a written, 

site-specific fall protection plan. 

On June 18, 1999, the Agency issued 

STD 3–0.1A (subsequently re-designated 

STD 03–00–001), which was a plain 

language replacement for STD 3.1. And 

shortly after issuing STD 03–00–001, 

OSHA published an Advanced Notice of 

Proposed Rulemaking (ANPR). (64 FR 

38077, July 14, 1999). The Agency noted 

that publication of that notice marked 

the ‘‘begin[ning] [of its] * * * 

evaluation * * * of’’ STD 03–00–001. In 

the ANPR, the Agency noted that there 

had been ‘‘advances in the types and 

capability of commercially available fall 

protection equipment’’ since the 

promulgation of § 1926.501(b)(13) (64 

FR at 38080), and stated that it 

‘‘intend[ed] to rescind * * * [STD 03– 

00–001] unless persuasive evidence 

* * * [was] submitted * * * 

demonstrating that for most residential 

construction employers complying with 

* * * [§ 1926.501(b)(13)] is infeasible or 

presents significant safety hazards.’’ (64 

FR at 38078). 

Summary of Action. In Directive STD 

03–11–002 OSHA rescinds STD 03–00– 

001. In the new directive, OSHA 

describes the comments it received in 

response to the ANPR and concludes 

that it did not receive ‘‘persuasive 

evidence’’ showing a continued need for 

STD 03–00–001. OSHA notes that there 

continue to be high numbers of fallrelated fatalities in residential 

construction. Directive STD 03–11–002, 

also describes more recent 

developments, including 

recommendations from the Advisory 

Committee on Construction Safety and 

Health, the National Association of 

Home Builders, and the Occupational 

Safety and Health State Plan 

Association, that provide independent 

support for the Agency’s decision to 

rescind STD 03–00–001. 

Directive STD 03–11–002 sets forth 

OSHA’s interpretation of ‘‘residential 

construction’’ for purposes of 29 CFR 

1926.501(b)(13) and explains that 

existing compliance guidance 

referencing STD 03–00–001 will be 

withdrawn or revised as appropriate. 

Authority and Signature 

This document was prepared under 

the authority of David Michaels, PhD, 

MPH, Assistant Secretary of Labor for 

Occupational Safety and Health, U.S. 

Department of Labor, 200 Constitution 

Avenue, NW., Washington, DC 20210, 

pursuant to Sections 4, 6, and 8 of the 

Occupational Safety and Health Act of 

1970 (29 U.S.C. 653, 655, and 657), and 

Secretary of Labor’s Order 4–2010 (75 

FR 55355). 

David Michaels, 

Assistant Secretary of Labor for Occupational 

Safety and Health. 

[FR Doc. 2010–32154 Filed 12–21–10; 8:45 am] 

BILLING CODE 4510–26–P 

DEPARTMENT OF THE TREASURY 

Fiscal Service 

31 CFR Part 208 

RIN 1510–AB26 

Management of Federal Agency 

Disbursements 

AGENCY: Financial Management Service, 

Fiscal Service, Treasury. 

ACTION: Final rule. 

SUMMARY: The Department of the 

Treasury (Treasury), Financial 

Management Service (FMS), is 

amending its regulation to require 

recipients of Federal nontax payments 

to receive payment by electronic funds 

transfer (EFT), effective May 1, 2011. 

The effective date is delayed until 

March 1, 2013, for individuals receiving 

Federal payments by check on May 1, 

2011; and for individuals who file 

claims for Federal benefits before May 1, 

2011, and request check payments when 

they file. Individuals who do not choose 

direct deposit of their payments to an 

account at a financial institution would 

be enrolled in the Direct Express® Debit 

MasterCard® card program, a prepaid 

card program established pursuant to 

terms and conditions approved by FMS. 

Treasury waives the EFT requirement 

for recipients born prior to May 1, 1921, 

who are receiving payments by paper 

check on March 1, 2013; for payments 

not eligible for deposit to a Direct 

Express® prepaid card account; and for 

recipients whose Direct Express® card 

has been suspended or cancelled. In 

addition, this rule establishes the 

criteria under which a payment 

recipient may request a waiver if the 


emcdonald on DSK2BSOYB1PROD with RULES
80316 Federal Register / Vol. 75, No. 245 / Wednesday, December 22, 2010 / Rules and Regulations 

1 Direct Express® is a registered service mark of 

the Financial Management Service, U.S. 

Department of the Treasury. The Direct Express®

Debit MasterCard® card is issued by Comerica 

Bank, pursuant to a license by MasterCard 

International Incorporated. MasterCard® and the 

MasterCard® Brand Mark are registered trademarks 

of MasterCard International Incorporated. 

EFT requirement creates a hardship due 

to his or her mental impairment or 

remote geographic location. 

DATES: This rule is effective February 

22, 2011. 

ADDRESSES: You can download this rule 

at the following Web site: http:// 

www.fms.treas.gov/eft. You may also 

inspect and copy this rule at: Treasury 

Department Library, Room 1428, Main 

Treasury Building, 1500 Pennsylvania 

Avenue, NW., Washington, DC 20220. 

Before visiting, you must call (202) 622– 

0990 for an appointment. In accordance 

with the U.S. government’s 

eRulemaking Initiative, FMS publishes 

rulemaking information on http:// 

www.regulations.gov. Regulations.gov 

offers the public the ability to comment 

on, search, and view publicly available 

rulemaking materials, including 

comments received on rules. 

FOR FURTHER INFORMATION CONTACT: Walt 

Henderson, Director, EFT Strategy 

Division; Natalie H. Diana, Senior 

Counsel; or Ronda Kent, Senior 

Counsel, at eft.comments@fms.treas.gov 

or (202) 874–6619. 

SUPPLEMENTARY INFORMATION: On June 

17, 2010, the Department of the 

Treasury (Treasury), Financial 

Management Service (FMS), published a 

notice of proposed rulemaking (NPRM) 

at 75 FR 34394, requesting comment on 

a proposed amendment to 31 CFR part 

208 (Part 208), which implements the 

requirements of 31 U.S.C. 3332. Section 

3332, title 31, United States Code, as 

amended by subsection 31001(x)(1) of 

the Debt Collection Improvement Act of 

1996 (Pub. L. 104–134) (Section 3332), 

generally requires that all Federal 

nontax payments be made by electronic 

funds transfer (EFT), unless waived by 

the Secretary. The Secretary must 

ensure that individuals required to 

receive Federal payments by EFT have 

access to an account at a financial 

institution ‘‘at a reasonable cost’’ and 

with ‘‘the same consumer protections 

with respect to the account as other 

account holders at the same financial 

institution.’’ See 31 U.S.C. 3332(f), (i)(2). 

Direct deposit is the primary method 

used to make EFT Federal payments. 

The NPRM proposed to amend Part 

208 to require all recipients of Federal 

nontax payments to receive payments 

by EFT, effective March 1, 2011, with a 

delayed effective date of March 1, 2013 

for individuals receiving Federal 

payments by check on March 1, 2011, 

and for individuals who file claims for 

Federal benefits before March 1, 2011 

and request check payments when they 

file. Recipients receiving payments by 

direct deposit prior to March 1, 2011, 

would continue to do so under the 

proposed rule. 

Treasury’s proposed rule stated that a 

Federal payment recipient could choose 

to have payments directly deposited to 

his or her own account at the recipient’s 

financial institution. The NPRM stated 

that individuals who did not choose 

direct deposit of their payments to an 

account at a financial institution would 

be enrolled in the Direct Express® 1

Debit MasterCard® card program, a 

prepaid card program established 

pursuant to terms and conditions 

approved by FMS. The proposed rule 

contemplated that, beginning on March 

1, 2013, all recipients of Federal benefit 

and other non-tax payments would 

receive their payments by direct 

deposit, either to a bank account or to 

a Direct Express® card account. 

Treasury sought comment on all 

aspects of the proposed rule, and 

specifically requested comments 

regarding (1) exceptional circumstances 

where specific types of individual EFT 

waivers could be needed, (2) the costs 

to recipients for accessing their benefit 

payments received by paper check 

compared to those received by EFT, and 

(3) alternative phase-in approaches. 

Treasury is finalizing the proposal in 

the NPRM to require, in general, that all 

Federal nontax payment recipients 

receive payments by EFT. The March 1, 

2011 effective date has been changed to 

May 1, 2011. There remains a delayed 

effective date of March 1, 2013, for: (1) 

individuals receiving Federal payments 

by check on May 1, 2011; and (2) 

individuals who file claims for Federal 

benefits before May 1, 2011 and request 

check payments when they file. In 

addition, after consideration of the 

comments received, Treasury is 

modifying its proposed elimination of 

all individual waivers from the EFT 

requirement. Instead, Treasury will 

automatically waive the EFT 

requirement for: (1) A recipient born 

prior to May 1, 1921, who is receiving 

Federal payments by check on March 1, 

2013; (2) a payment that is not eligible 

for deposit to a Direct Express® prepaid 

card account; and (3) a recipient whose 

Direct Express® card has been 

suspended or cancelled. Also, the final 

rule establishes the criteria under which 

a payment recipient may request a 

waiver if the EFT requirement creates a 

hardship due to his or her mental 

impairment or remote geographic 

location. 

I. Background 

Part 208 sets forth the general rule 

requiring Federal payments to be made 

by EFT and the requirements for 

accounts to which Federal payments 

may be sent by EFT. ‘‘Federal payment’’ 

means any nontax payment made by an 

agency, including, but not limited to, 

Federal wage, salary, and retirement 

payments; vendor and expense 

reimbursement payments; benefit 

payments; and miscellaneous payments. 

See 31 CFR 208.2(g). Federal payments 

include payments made to 

representative payees and other 

authorized payment agents. See 31 CFR 

210.5(b)(1). For Part 208 purposes, 

‘‘agency’’ means any department, 

agency, or instrumentality of the United 

States Government, or a corporation 

owned or controlled by the Government 

of the United States. See 31 CFR 

208.2(a). 

As explained in the NPRM, Part 208 

provides that any individual who 

receives a Federal benefit, wage, salary, 

or retirement payment is eligible to 

open an Electronic Transfer Account 

(ETA) at a financial institution that 

offers such accounts, and establishes the 

responsibilities of Federal agencies and 

recipients under the regulation. Part 208 

also sets forth a number of waivers to 

the general requirement that Federal 

payments be delivered by EFT. See 31 

CFR 208.4. Among the waivers 

previously included in the regulation 

were waivers for situations in which an 

individual determined that payment by 

EFT would impose a hardship due to a 

physical or mental disability or a 

geographic, language or literacy barrier, 

or would impose a financial hardship. 

See 31 CFR 208.4(a). 

Treasury has reviewed the comments 

received in response to the NPRM, and, 

as described in more detail below, 

modified its proposal to eliminate all 

individual waivers from the EFT 

requirements. The Secretary’s waiver 

authority remains unchanged, and 

Federal agencies continue to have the 

ability to waive payment by direct 

deposit or other EFT method in the 

circumstances described in paragraphs 

(b) through (g) of § 208.4, namely, for 

situations where the infrastructure in a 

foreign country does not support EFT, 

for certain disaster or military 

situations, for situations in which there 

may be a security threat or for valid law 

enforcement reasons, for non-recurring 

payments, and for unusual and/or 

urgent situations where the Government 

would be seriously injured unless 

payment is made by a method other 


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Federal Register / Vol. 75, No. 245 / Wednesday, December 22, 2010 / Rules and Regulations 80317 

than EFT. The final rule revises the 

criteria for the agency waiver related to 

non-recurring payments, as described 

below. 

II. Summary of NPRM Comments 

Treasury received 33 comment letters 

and 1,087 comments solicited by and 

sent to a consumer advocate 

organization via its Web site. Of the 33 

comment letters, three were from 

consumer advocate groups. One of the 

groups submitted its comments on 

behalf of its low-income clients, another 

consumer advocate organization, and 23 

national, state, and local advocates for 

low and moderate income recipients of 

Federal benefits. While the consumer 

advocate groups generally 

acknowledged the benefits of EFT, all 

three groups opposed the complete 

elimination of waivers for individuals 

for whom EFT might impose a hardship 

and suggested improvements to the 

Direct Express® card and changes to the 

Direct Express® card terms and 

conditions. In addition, the three groups 

recommended that Treasury issue 

consumer protection rules for 

individuals whose benefit payments are 

delivered electronically to prohibit 

predatory loans, the unlawful freezing 

or garnishing of benefit payments 

legally exempt from garnishment, and 

the offsetting of overdraft and other 

bank fees against benefit payments. 

Three comment letters were from 

associations that represent financial 

institutions. One commenter supported 

Treasury’s proposal, provided that 

payments would be delivered, by 

default, to a recipient’s existing bank 

account and that recipients would be 

allowed to elect direct deposit to 

reloadable prepaid cards issued by 

insured depositary institutions. Another 

commenter supported Treasury’s 

proposal, including the alternative debit 

card option, because of the potential 

cost savings to credit unions. The third 

association commenter also supported 

Treasury’s proposal and urged Treasury 

not to include individual waivers in the 

final rule. 

A national electronic payments 

association and one financial institution 

submitted comment letters supporting 

Treasury’s proposal. The electronic 

payments association supported the 

Direct Express® card as a safe, 

convenient, and reasonably priced 

alternative for unbanked Federal benefit 

recipients. The financial institution 

urged Treasury to consider expanding 

its regulations to allow direct deposit of 

Federal payments to general purpose 

reloadable prepaid debit cards. 

Fourteen attorneys and an association 

that represents Social Security 

claimants’ representatives 

recommended that Treasury waive the 

EFT requirements for attorneys and 

other representatives who receive fee 

payments for representing Social 

Security claimants. The association and 

the attorneys stated that, when fee 

monies are electronically deposited into 

an attorney’s account, the attorney does 

not receive adequate information to 

determine which client the fee payment 

is for. In addition, the association and 

the attorneys stated that many attorneys 

and other representatives, as associates 

or employees of a firm, are precluded 

from accepting direct deposit of 

representative fees into their own 

personal bank account. These fee 

payments must be deposited directly to 

accounts owned by their firms. This is 

problematic because the Social Security 

Administration will only make 

representative fee payments to 

individual attorneys or representatives, 

most of whom are not the owners of 

their firm’s bank account, and therefore 

cannot accept or direct payments to 

them. 

A national trade association 

representing neighborhood financial 

service providers, such as check 

cashers, remittance servicers, short-term 

lenders and bill payment providers, did 

not support Treasury’s proposal. It 

viewed the proposal as depriving 

Americans of the right of choice with 

respect to the delivery of Federal nontax 

payments, disproportionately affecting 

low- and moderate-income individuals. 

Treasury received six comment letters 

from individual or unidentified 

commenters with various concerns. One 

of these commenters, a coordinator of a 

local Volunteer Income Tax Assistance 

program, supported the proposed rule, 

encouraged Treasury to discontinue the 

ETA program, and suggested modifying 

the Direct Express® card program to 

provide at least one surcharge-free 

automated teller machine (ATM) 

withdrawal at any ATM. Another 

commenter, a certified public 

accountant, raised concerns about 

whether the proposed rule would create 

problems if nursing homes are unable to 

clearly identify the resident for whom a 

benefit payment has been directly 

deposited to the nursing home’s trust 

account. Another individual suggested 

that Treasury clarify that it continues to 

support the ETA as an option for 

receiving Federal benefit payments by 

direct deposit. Another individual 

suggested that Treasury require 

financial institutions to allow recipients 

of Federal funds to obtain the full 

amount of their payment in one 

transaction with minimal charge. An 

individual attorney raised a concern 

that direct deposit of Social Security 

disability or SSI benefits could 

inadvertently lead to disqualification 

from Medicaid whereas an individual 

receiving a paper check payment can 

control when the payment is deposited 

into his or her account. An unidentified 

individual opposed the proposed rule 

primarily because the commenter 

believed that benefit recipients are 

entitled to choose to receive their 

payments by paper check, and did not 

agree with Treasury’s underlying 

rationale for the proposed rule. 

In addition to its own comment, one 

consumer advocate organization sent 

Treasury 1,087 comments it solicited 

and received through its Web site. Sixtythree of the Web site commenters 

expressed support for Treasury’s 

proposed rule, but most of the 

commenters opposed the proposal for 

one or more of the following reasons: 

(1) 845 of the commenters cited a 

preference for allowing those who wish 

to continue to receive a paper check to 

do so (more than 140 of the commenters 

already receive their payments 

electronically, but were concerned for 

others who may choose not to do so); 

(2) 615 of the commenters cited an 

objection to bank fees, including Direct 

Express® card fees, with approximately 

482 commenters objecting to requiring a 

benefit recipient to pay fees to receive 

a monthly paper statement; (3) 558 

commenters cited concerns about 

requiring benefit recipients to bank 

online and/or discomfort with adapting 

to new payment technologies, especially 

for older benefit recipients; (4) 475 

commenters cited concerns about 

whether electronic banking would lead 

to increased identity theft; (5) 410 

commenters cited concerns about 

providing bank account information to 

the Social Security Administration or 

other Federal agencies; and (6) 134 

commenters were concerned about the 

ability of elderly benefit recipients to 

change the way they receive their 

benefit payments. Approximately 125 of 

the commenters simply expressed 

general opposition to Treasury’s 

proposal. Other miscellaneous reasons 

for opposing Treasury’s proposal 

included preference for checks (65 

commenters), concerns about EFT 

processing (13 commenters) and 

improper garnishment (6 commenters), 

opposition to prepaid cards (21 

commenters), concerns about access to 

the banking system (35 commenters), 

need for access to a free account (18 

commenters), and hardship (10 

commenters). 

Finally, three Federal government 

agencies submitted comments for 

Treasury’s consideration. One agency 


emcdonald on DSK2BSOYB1PROD with RULES
80318 Federal Register / Vol. 75, No. 245 / Wednesday, December 22, 2010 / Rules and Regulations 

expressed uncertainty about whether 

recipients of payments from that agency 

would qualify for the Direct Express®

card. Two agencies raised concerns 

about making payments to recipients 

who reside in geographically remote 

areas with no access to electronic 

financial services. 

III. Treasury’s Responses to NPRM 

Comments 

In developing the final rule, Treasury 

has attempted to implement the 

requirements of Section 3332 on balance 

with concerns expressed by different 

commenters. The final rule essentially 

adopts the core provisions of the 

proposed rule, and also makes available 

several important waivers for 

individuals in circumstances in which 

Treasury finds that requiring EFT could 

create a significant hardship for those 

individuals. The final rule reflects the 

view of the commenters who generally 

agree that receiving payments by EFT is 

beneficial to recipients and taxpayers 

for the reasons described in the NPRM 

and this final rule. Treasury has 

addressed the concerns raised by those 

opposed to the EFT requirement, and 

will continue to monitor carefully 

whether recipients are subject to 

additional hardships in the future 

because of the requirements of this final 

rule. Treasury’s responses to the NPRM 

comments are as follows. 

1. Retain Paper Check as a Payment 

Option 

Many commenters voiced a 

preference for Treasury to allow 

recipients the choice of a paper check as 

a way to receive their Federal payments. 

Treasury recognizes that the paper 

check has been an important Federal 

payment instrument for at least 150 

years. Treasury also recognizes that 

choice, as expressed by many of the 

commenters, is an important American 

value. While Congress mandated that all 

non-tax payments be made 

electronically, Part 208 continues to 

offer payment recipients the choice of 

how to receive their payments in an 

electronic format. Payment recipients 

have many financial account options 

available to them, and in fiscal year 

2010, more than 80% of all non-tax 

payment recipients selected their own 

accounts for the purpose of receiving 

payments by EFT. Further, Congress 

conditioned its mandate on Treasury 

making available to payment recipients 

an account at a financial institution ‘‘at 

a reasonable cost’’ and with ‘‘the same 

consumer protections with respect to 

the account as other account holders at 

the same financial institution.’’ See 31 

U.S.C. 3332(f), (i)(2). 

The Direct Express® card, which is 

now a nationwide option for most 

Federal benefit recipients, meets these 

statutory account requirements. There 

are no monthly fees and most services 

are free, so it is possible for an 

individual to use the Direct Express®

card for free. There are no fees for 

cardholders to sign up for or activate the 

card; receive deposits; make purchases 

at retail locations, online or by 

telephone; get cash at retail locations 

and financial institutions; or check the 

card’s balance at an ATM, by telephone 

or online. Transaction history and other 

account information are available at no 

cost online or by telephone, but if 

desired, a cardholder may receive a 

monthly paper statement for $ .75 per 

month. There are no fees for declined 

transactions and, in rare instances when 

overdrafts occur, there are no overdraft 

fees. 

Cardholders can choose to receive free 

automated text, email or telephone ‘‘low 

balance’’ alerts or ‘‘deposit notifications’’ 

when money is deposited to their card 

account. Cardholders may close their 

Direct Express® card account at any 

time without a fee. There are no 

inactivity fees and there is no charge for 

bank teller cash withdrawals at 

MasterCard® member banks. The free 

services and minimal fees are fully 

disclosed on the Direct Express® Web 

site (www.USDirectExpress.com), in 

materials available to interested 

applicants, and in materials that are sent 

to new cardholders along with the card. 

Fee and features information are also 

available by calling the Direct Express®

toll-free call center. 

Cardholders may make purchases 

anywhere Debit MasterCard® is 

accepted, including millions of retail 

locations worldwide, online, or by 

telephone. The Direct Express® card 

provider does not impose any limits on 

the number of transactions a cardholder 

may conduct with a card. Similarly, 

cardholders may make cash 

withdrawals and check their account 

balances at ATMs. A cardholder is 

allowed one free ATM cash withdrawal 

for every Federal payment the 

cardholder receives, valid until the end 

of the month following the month of 

receipt. For subsequent ATM cash 

withdrawals, a cardholder pays a fee to 

the card issuer of $.90 per ATM 

withdrawal in the United States. ATM 

owners often charge ATM users 

additional fees, known as ‘‘surcharge 

fees;’’ however, a Direct Express®

cardholder may make cash withdrawals 

at more than 53,000 Direct Express®

card surcharge-free network ATMs 

without paying any surcharge fees. The 

Direct Express® card surcharge-free 

ATM network consists of ATMs owned 

by a variety of entities who have agreed 

to offer surcharge-free ATM access to 

Direct Express® cardholders. 

Cardholders are provided with 

information on how to recognize the 

various logos that identify a surchargefree ATM, the Direct Express® card Web 

site has an ATM locator feature to assist 

cardholders in finding a surcharge-free 

ATM, and cardholders may call the 

customer service department with any 

questions on how to locate a surchargefree ATM. The Direct Express® card 

provider does not impose a daily limit 

for ATM withdrawals, although many 

ATM owners do set limits on the 

maximum amount of cash that may be 

withdrawn by any debit cardholder. 

ATM owners’ daily ATM withdrawal 

limits typically range from $200 to 

$1,000. 

Direct Express® cardholders are 

protected by the Federal Reserve 

Board’s Regulation E (12 CFR part 205, 

which implements the Electronic Funds 

Transfer Act (Regulation E)), which 

generally provides certain protections to 

a cardholder whose card is lost or 

stolen, subject to reporting 

requirements. In fact, Direct Express®

cardholders have 90 days to report 

unauthorized transactions rather than 

the typical 60 days offered by most 

financial institutions. Card balances are 

covered by deposit insurance by the 

Federal Deposit Insurance Corporation 

(FDIC) to the extent allowed by law and 

Direct Express® cardholders are not at 

risk for an improper garnishment or the 

related freezing of funds in the card 

account. More information about the 

Direct Express® card, including a list of 

all fees and the terms and conditions of 

card use, can be found at 

www.USDirectExpress.com. 

In light of the choices available to 

payment recipients, as well as the 

benefits of electronic payments to 

recipients and the Government, 

Treasury believes it is appropriate to 

make all Federal nontax payments 

electronically. 

2. Provide Limited Waivers From EFT 

Requirement 

a. Limited Waivers for Hardship Based 

on Mental Impairment and Geographic 

Barriers 

In its NPRM, Treasury requested 

comments about ‘‘examples of 

exceptional circumstances where 

specific types of individual EFT waivers 

could be needed, even with the 

availability of the Direct Express® card 

for Federal benefit recipients.’’ See 75 

FR 34394, at 34395. After review and 

consideration of all of the comments, 


emcdonald on DSK2BSOYB1PROD with RULES
Federal Register / Vol. 75, No. 245 / Wednesday, December 22, 2010 / Rules and Regulations 80319 

Treasury agrees with those commenters 

who urged Treasury to reconsider its 

proposed elimination of individual 

waivers from the EFT requirement for 

claims of hardships due to mental 

disability or geographic barriers. 

Treasury does not agree, however, that 

such reconsideration should be 

extended to the elimination of waivers 

related to physical disability, language 

or literacy barriers, or where payment 

by EFT would impose a financial 

hardship. None of the commenters 

provided specific examples of how 

physical disability or language or 

literacy barriers would make receiving 

payments by EFT more difficult than 

receiving payments by paper check and 

Treasury does not find any basis for 

maintaining a waiver for such 

conditions. In addition, although several 

commenters urged Treasury to consider 

that any fees charged for use of the 

Direct Express® card could create a 

financial hardship, the Direct Express®

card is structured in such a way that it 

may be used at no cost to the payment 

recipient, thus minimizing a 

beneficiary’s risk of incurring a financial 

hardship to receive and use his or her 

benefits. Treasury recognizes that more 

education regarding how to use the card 

for free is needed and is expanding its 

program to provide such information to 

Direct Express® cardholders in various 

ways, including direct mail, 

informational pictorial brochures, 

online videos, and more. 

One consumer advocate organization 

urged Treasury to retain a paper check 

option for those who articulate a 

‘‘legitimate’’ reason for receiving 

payments by paper check, including 

physical or mental disability that makes 

it difficult to use a debit card; difficulty 

accessing funds without incurring fees, 

costs, or inconvenience; availability of a 

less expensive and more beneficial 

alternative using a paper check; dispute 

with the participating financial provider 

of the debit card; concerns over privacy 

or financial security; literacy and 

technology barriers; and need to 

accommodate assistance provided by a 

representative payee or family member. 

This commenter proposed that Treasury 

accept individuals’ statements about the 

need for a paper check without inquiry 

or review. Another consumer advocate 

organization similarly urged Treasury to 

reconsider its proposal to eliminate 

individual waivers with respect to 

people with mental disabilities, 

emotional disorders, or other disabilities 

making the use of the Direct Express®

card difficult; people who live in rural 

areas, or even inner city areas, where 

there is not ready access to banks and 

automated teller machines (ATMs); and 

other hardships that make both a bank 

account and the Direct Express® card 

unusable for the payment recipient. 

This organization also suggested that 

Treasury not review waiver requests 

because the costs of policing a waiver 

process would far outweigh the costs 

associated with letting recipients who 

would not qualify for a waiver receive 

a paper check. Another consumer 

advocate organization also objected to 

the elimination of the provision 

allowing recipients to determine on 

their own whether they qualify for a 

waiver to obtain their Federal payments 

by paper check. Unlike the other two 

consumer advocate organizations, this 

organization urged Treasury to offer the 

broadest waiver possible to allow any 

individual who wants his or her 

payments by paper check to receive 

them that way. 

After reviewing the comments, 

Treasury has reconsidered its proposed 

elimination of the waivers related to 

mental disability and geographic 

barriers. A consumer advocate 

organization commented on the need to 

provide a waiver for individuals who 

have mental or emotional disabilities, 

for example, someone with an anxiety 

disorder that makes it difficult to 

receive benefits electronically, but not 

by paper check. Another commenter 

cited his parents with poor memories 

stating that having their payments 

deposited electronically would simply 

add to their confusion and problems in 

taking care of their own finances. In 

recognition of individuals within the 

payment recipient population who may 

have mental impairments that do not 

hinder their ability to manage their 

financial transactions using checks or 

cash, but for whom EFT would present 

a significant hardship, Treasury is 

retaining a waiver from the EFT 

requirement for an individual payment 

recipient for whom EFT would impose 

a hardship because of his or her 

inability to manage a bank account or 

prepaid debit card due to a mental 

impairment. Treasury notes that, in 

those cases where a beneficiary suffers 

from a mental disability necessitating 

the appointment of a representative 

payee, the representative payee is the 

‘‘recipient’’ of a Federal payment under 

this rule. In those cases, it is the 

condition of the representative payee 

and not the beneficiary that is the 

determining factor as to whether a 

waiver is appropriate. 

Two Federal agencies cited the need 

to consider the inability of payment 

recipients who live in remote and less 

developed areas of the country to access 

their payments electronically. For 

example, according to one agency, many 

recipients of Individual Indian Money 

payments live in remote and less 

developed areas such as Alaska and on 

reservations throughout Indian Country 

in an environment lacking many 

amenities including public 

infrastructure such as roads and 

convenient access to providers of goods 

and services. The other agency noted 

that Regional Advisory Council 

members appointed under the Alaska 

National Interest Lands Conservation 

Act (ANILCA) travel to council meetings 

held in off-roadway bush villages where 

it is highly unusual for most village 

merchants to have the infrastructure to 

accept charge cards. These villages are 

cash economies with check cashing 

capabilities, but no ability to process 

electronic financial transactions. In its 

comment, one consumer advocate 

organization cited the lack of access to 

banks and ATMs in the majority of 

Montana, rural parts of Alaska, and 

some rural parts of Missouri. The fact 

that an area is rural or remote does not 

necessarily preclude the use of 

electronic financial services. As these 

examples demonstrate, it is the 

combination of being in an area that is 

rural or remote plus being in an area 

lacking the transportation or other 

infrastructure (for example, access to the 

Internet and online banking) necessary 

to access electronic financial services. 

Therefore, Treasury is including in the 

final rule a waiver from the EFT 

requirement for an individual recipient 

who lives in a remote area lacking the 

infrastructure to support electronic 

financial transactions. 

Under this final rule, to assert one of 

these two waivers based on mental 

impairment or geographic barrier, a 

Federal payment recipient is required to 

provide to Treasury a written 

certification supporting his or her 

request, in such form as Treasury may 

prescribe. The individual is required to 

sign the certification before a notary 

public, or otherwise file the certification 

in such form that Treasury may 

prescribe. Treasury will publish 

guidance describing the waiver process. 

b. Automatic Waivers for Recipients 

Born Prior to May 1, 1921 Who Are 

Receiving Federal Payments by Check 

on March 1, 2013; for Payments Not 

Eligible for the Direct Express® Card; 

and for Recipients Whose Direct 

Express® Card Has Been Suspended or 

Cancelled 

In addition to the limited waivers 

from the EFT requirement for hardship 

claims due to mental impairment and 

geographic barriers, Treasury has added 

automatic waivers for: (1) A recipient 


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born prior to May 1, 1921, who is 

receiving Federal payments by check on 

March 1, 2013; (2) a payment that is not 

eligible for deposit to a Direct Express®

prepaid card account; and (3) a recipient 

whose Direct Express® card has been 

suspended or cancelled. 

Many commenters were concerned 

about the ability of elderly check 

payment recipients to adapt to 

electronic money technologies. For 

example, one consumer advocate 

organization explained that ‘‘[p]eople 

who are older are more likely to be 

unaccustomed to or uncomfortable 

using the technology involved in 

electronic disbursements.’’ An 

individual commenter noted: ‘‘Many of 

us older people do not understand and 

get confused by this paperless society 

* * * ’’ On the other hand, another 

commenter believed that paper checks 

cause problems for older people noting 

that through her work as a coordinator 

of a Volunteer Income Tax Assistance 

program in Missouri, she has ‘‘witnessed 

firsthand the hardships that * * * 

elderly * * * individuals face when a 

Treasury Check is lost or misdirected 

through the mail.’’ Many senior citizens 

receive their benefit payments 

electronically, and are very capable of 

managing their finances electronically. 

In recognition of the concerns raised 

by the commenters about the elderly, 

Treasury has established an automatic 

waiver from the EFT requirement for 

recipients born prior to May 1, 1921, 

who are receiving Federal payments by 

check on March 1, 2013. According to 

the Social Security Administration, 

almost 80% of Social Security recipients 

who will turn 80 years old in 2011 

receive their payments electronically. 

By comparison, fewer than 72% of 

Social Security recipients who will turn 

90 years old in 2011 receive their 

payments electronically. Further, for 

most of the population of elderly benefit 

recipients, the EFT requirement is not 

effective until March 2013, giving 

Treasury, Federal agencies, community 

organizations, and others more than two 

years to educate individuals so they 

may become comfortable with and adapt 

to the requirement. Between the 

publication of the final rule and the 

effective date for current check 

recipients, Treasury will work with 

Federal agencies and various 

organizations to educate all affected 

individuals, including the elderly and 

long-time check recipients, about how 

to use direct deposit or the Direct 

Express® debit card. 

Treasury has also waived the EFT 

requirement for any payment that is not 

eligible for a Direct Express® card 

account and for those payment 

recipients whose Direct Express® card 

has been suspended or cancelled by the 

card issuer due to improper, fraudulent, 

or unauthorized use. The Direct 

Express® card program currently 

accepts Social Security, SSI, and 

Veterans compensation and pension 

benefit payments, as well as Railroad 

Retirement benefit, Black Lung benefit, 

and civil service retirement benefit 

payments. If a recipient receives a 

payment for which the Direct Express®

card is unavailable (for example, an 

Individual Indian Money payment or a 

pension benefit payment), then the 

individual is automatically exempt from 

the EFT requirement for that payment 

type. Once the card becomes available 

for the payment type, then the recipient 

will be required to switch to an EFT 

payment option. If the individual also 

receives other types of Federal 

payments that are accepted by the Direct 

Express® card, those payments remain 

subject to the EFT requirement. 

Further, under the terms and 

conditions of the Direct Express® card 

program, the card issuer reserves the 

right to suspend or cancel the Direct 

Express® card for reasons such as 

cardholder breach of the account terms 

and conditions, multiple cardholder 

claims of unauthorized transactions, a 

card being used for an unlawful 

purpose, or other similar reasons. 

Treasury agrees that the card provider 

needs to retain the right to suspend or 

cancel an individual’s card account in 

these types of cases, and recognizes that 

in the few instances where suspension 

or cancellation occurs, the payment 

recipient may have no other way to 

receive his or her payment except by a 

paper check. 

c. Elimination of Waivers Based on 

Hardship Due to Physical Disability, 

Language or Literacy Barriers, or Where 

Payment by EFT Would Impose a 

Financial Hardship 

Given the availability of the Direct 

Express® card and Treasury’s expansion 

of its public education campaign 

describing how to use the Direct 

Express® card, physical disability, 

language or literacy barriers, and fees no 

longer present hardships requiring 

waivers from the EFT requirement. 

i. Physical Disability. As noted above, 

Treasury requested specific examples of 

the types of hardships that could make 

it difficult to use EFT as compared to a 

paper check, but none were cited by the 

many commenters. While Treasury 

recognizes that not all physical 

disability barriers have been eliminated, 

the Americans With Disabilities Act of 

1990, Public Law101–336 (Jul. 26, 

1990), and the advent of many services 

that benefit the physically disabled, 

such as accessible transportation, public 

accommodations, and online banking, 

have generally rendered receiving 

benefit payments by EFT no more 

difficult than receiving payments by 

paper check. In some cases, EFT 

payments may even be easier for the 

recipient. With the elimination of this 

waiver, Treasury recognizes that for 

those who are physically disabled, the 

ability to travel in remote and rural 

areas may be limited, but considers this 

to be more a hardship due to a 

geographic barrier, described above, 

than solely because of a physical 

disability. In addition, as suggested by 

two commenters, Treasury is working 

with the Direct Express® card provider 

to determine the feasibility of providing 

cardholders with an additional 

convenience card that could be loaded 

via the Internet or by telephone with a 

cardholder-determined amount of funds 

for use by a caregiver or relative to make 

purchases on behalf of the cardholder. 

ii. Language Barriers. None of the 

commenters urged Treasury to continue 

the waiver from the EFT requirements 

based on hardship due to language 

barriers. All of the Direct Express®

cardholder materials are in English and 

Spanish, and the Direct Express® card 

provider offers both English and 

Spanish support through its automated 

telephone service and its customer 

service representatives. Callers may 

choose to speak with a customer service 

representative in either language. In 

addition, the Direct Express® card 

provider offers real-time free interpreter 

services in virtually any language a 

caller requires. For example, in 

September 2010, the Direct Express®

card provider handled customer service 

calls in 19 different languages in 

addition to English, including languages 

such as Mandarin, Urdu, Tagalog, and 

Tigrinya. 

iii. Literacy Barriers. None of the 

commenters specifically urged Treasury 

to continue its waiver based on 

hardship due to literacy barriers, 

although several commenters alluded to 

the difficulties people have due to a lack 

of basic literacy skills. For example, one 

commenter noted that the constituents 

she works with in a poor, rural area of 

Georgia are often barely literate and deal 

with cash because they understand it. 

Treasury recognizes that lack of basic 

literacy skills hinders many in 

managing their financial affairs, and 

understands the challenges associated 

with moving some individuals to 

payment by EFT from payment by paper 

check. The delayed effective date of the 

rule for those currently receiving paper 

checks to March 2013, gives Treasury 


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Federal Register / Vol. 75, No. 245 / Wednesday, December 22, 2010 / Rules and Regulations 80321 

2Summaries of all of the surveys conducted by 

or on behalf of Treasury that are cited in this 

rulemaking may be found at http:// 

www.fms.treas.gov/eft. 

additional time to expand its public 

education efforts related to EFT options. 

Among other things, through its Go 

Direct ® campaign, Treasury will work 

with more than 1,800 partners who 

know their communities best to help 

educate check recipients about the 

benefits of direct deposit, the options for 

receiving payments electronically, and 

how to safely and cost-effectively use 

the Direct Express® card. With the 

assistance of its partners, Treasury is 

able to tailor its education efforts to 

meet the differing needs of local 

communities. 

Treasury especially recognizes the 

need for and importance of expanded 

cardholder education for existing and 

new Direct Express® cardholders. While 

Treasury recognizes that the current 

pool of Direct Express® cardholders may 

not resemble future Direct Express®

cardholders in either demographic 

characteristics or attitudinal variables, 

according to research conducted in 

March 2009 (Direct Express— 

Cardholder Satisfaction and Usage 

Survey, OMB Control No. 1510–0074), 

95 percent of Direct Express®

cardholders are satisfied with the card.2

Eight in ten satisfied cardholders cite 

convenience, safety or immediate access 

to money as reasons for their 

satisfaction. Eighty-six percent of those 

surveyed said they would recommend 

the card to a friend or family member 

who receives Federal benefits. Despite 

this high satisfaction rate, Treasury 

believes that many Direct Express®

cardholders may be unaware of 

important features that promote proper 

card usage and reduce fees, such as the 

availability of free text message alerts on 

their cell phones when a deposit is 

made or when their balance is low, the 

surcharge free ATM network, the ability 

to get cash back at point-of-sale (POS) 

locations for free, or even the ability to 

make purchases at retail locations for 

free. Using its research, including recent 

research conducted with respect to 

cardholder education materials sent to 

approximately 7,000 newly enrolled 

Direct Express® cardholders who 

receive Veterans compensation and 

pension benefit payments, Treasury will 

develop materials, such as informational 

pictorial brochures, and methods for 

further educating benefit recipients as 

necessary, and as suggested by several 

commenters. 

In addition, Treasury continues to 

work with its Go Direct® partners to 

promote financial education. For 

example, through its partnership with 

the Federal Deposit Insurance 

Corporation (FDIC), the Go Direct®

campaign is working to raise awareness 

of the value of financial education 

through the FDIC’s award-winning 

Money Smart financial education 

program. The Money Smart program is 

a comprehensive financial education 

curriculum designed to help individuals 

outside the financial mainstream 

enhance their financial skills and create 

positive banking relationships. Many Go 

Direct® campaign partners have used 

the Money Smart curriculum in their 

financial education efforts, including 

banks, credit unions, law enforcement 

and crime prevention organizations, 

aging and senior organizations, library 

systems, and community and disability 

organizations. 

iv. Financial Hardship. Many 

commenters suggested that the cost of 

receiving payments electronically is 

higher than receiving payments by 

paper check for many benefit recipients, 

and expressed concern that Treasury’s 

EFT requirement will create a financial 

hardship for many of America’s most 

vulnerable population. Treasury’s goal 

is to provide Federal beneficiaries and 

other payment recipients with a lowcost option for receipt of Federal 

payments, which goes beyond the 

requirement in Section 3332 that 

Treasury make available an account at a 

‘‘reasonable cost.’’ See 31 U.S.C. 

3332(i)(2)(a). In addition to low-cost 

accounts available from financial 

institutions and other financial service 

providers around the country, Federal 

payment recipients have at least one 

low-cost option—the Direct Express®

card—and many recipients potentially 

have a second option—the Electronic 

Transfer Account (ETA), an account 

developed by Treasury in 1999. 

Although the ETA is not available on a 

nationwide basis and does not include 

some of the more useful features that 

have become available with prepaid 

debit cards in recent years (thus making 

the Direct Express® card a more costeffective and useful option in most 

cases), the ETA continues to meet the 

needs of some benefit recipients and 

will continue to be available. 

The Direct Express® card offers a 

user-friendly low-cost option for Federal 

benefit payment recipients (see Direct 

Express® card fee tables below). The 

account fees are structured so that even 

those cardholders without access to 

surcharge-free ATMs can use their cards 

for free because they can access their 

funds through free POS purchases either 

in-store or online, can get cash back for 

free at retail locations, and can get cash 

for free at any MasterCard® member 

financial institution. The Direct 

Express® surcharge-free ATM network 

has more than 53,000 surcharge-free 

ATMs, and the Direct Express® card 

program provider continues to identify 

opportunities to expand the network 

further. 

While many commenters expressed 

concern about having to pay fees to the 

Direct Express® card provider, or pay 

fees to receive a paper statement, 

Treasury believes that these fees are 

generally lower than costs that could be 

imposed for cashing a Treasury check 

and managing financial transactions on 

a cash basis. The Direct Express® fee 

tables are as follows: 

STANDARD FREE SERVICES

Service Fee 

Purchases at U.S. merchant locations ......................................................................................................... FREE 

Cashback with purchase .............................................................................................................................. FREE 

Cash from bank tellers ................................................................................................................................. FREE 

Customer service calls ................................................................................................................................. FREE 

Web account access .................................................................................................................................... FREE 

Deposit notification ....................................................................................................................................... FREE 

Low balance notification ............................................................................................................................... FREE 

Card replacement-One free per year ........................................................................................................... FREE 

ATM balance inquiry ..................................................................................................................................... FREE 

ATM denial of service ................................................................................................................................... FREE 


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3The sample consumer scenario in the cited 

report consisted of a cardholder making the 

following transactions in a month: Three ATM 

withdrawals, three bill payments (rent, utilities, 

phone), eight point-of-sale purchases (groceries and 

meals once a week), weekly balance inquiry, and 

two deposits. 

4The consumer scenarios used in the cited report 

assumed that the cardholder did not incur any ATM 

surcharge fees. 

STANDARD FREE SERVICES—Continued 

Service Fee 

ATM cash withdrawal in the U.S. including the District of Columbia, Guam, Puerto Rico, and U.S. Virgin 

Islands. Surcharge by ATM owner may apply.

One free withdrawal with each deposit 

to your Direct Express® Card Account.* 

* For each Federal government deposit to your Card Account, Comerica Bank will waive the fee for one ATM cash withdrawal in the U.S. The 

fee waiver earned for that deposit expires on the last day of the following month in which the deposit was credited to the Card Account. 

THE ONLY FEES YOU CAN BE CHARGED

Optional service Fee 

ATM cash withdrawals after free transactions are used in U.S. including the District of Columbia, Guam, 

Puerto Rico, and U.S. Virgin Islands. Surcharge by ATM owner may apply.

$0.90 each withdrawal (after free 

transactions are used). 

Monthly paper statement mailed to you ....................................................................................................... $0.75 each month. 

Funds transfer to a personal U.S. bank account ......................................................................................... $1.50 each time. 

Card replacement after one free each year ................................................................................................. $4.00 after one (1) free each year. 

Overnight delivery of replacement card ....................................................................................................... $13.50 each time. 

ATM cash withdrawal outside of U.S. Surcharge by ATM owner may apply .............................................. $3.00 plus 3% of amount withdrawn. 

Purchase at Merchant Locations outside of U.S. ......................................................................................... 3% of purchase amount. 

The low fees and nationwide 

availability of the Direct Express® card 

more than satisfy the statutory 

requirement of 31 U.S.C. 3332 for 

Treasury to make available an account 

at a financial institution ‘‘at a reasonable 

cost’’ and with ‘‘the same consumer 

protections with respect to the account 

as other account holders at the same 

financial institution.’’ See 31 U.S.C. 

3332(f), (i)(2). 

A recent report comparing fees for 

general purpose reloadable prepaid 

cards helps illustrate the low cost of 

using a Direct Express® card. A 

consumer advocate organization 

conducted a case study showing the 

wide variations in fee structures for four 

prepaid card products. See, ‘‘Prepaid 

Cards: Second-Tier Bank Account 

Substitutes,’’ Consumers Union 

(September 2010) (http:// 

www.defendyourdollars.org/pdf/ 

2010PrepaidWP.pdf). Using a sample 

consumer scenario,3 the report stated 

that, for the four prepaid card products 

studied, monthly fees ranged from 

$15.45 to $43.75 for the first and second 

months of card use. In contrast, as 

shown in Figure 1, below, a Direct 

Express® cardholder under the same 

scenario would spend no more than $ 

.90 per month if using surcharge-free 

ATMs (one free ATM withdrawal per 

deposit, with a $ .90 per ATM 

withdrawal charge after that), and no 

more than $7.89 per month if no 

surcharge-free ATMs were used, 

assuming the average $2.33 surcharge 

fee per withdrawal cited in the 2010 

checking study by bankrate.com (http:// 

www.bankrate.com/finance/checking/ 

banks-taking-a-bigger-bite-with-atmfees.aspx).4 There is no online bill 

paying service currently offered in the 

Direct Express® card program, so a 

cardholder would pay his or her own 

bills directly to the vendor or retailer, 

with no fee being charged by the 

provider. The Direct Express® card 

provider does not impose charges for 

POS purchases, balance inquiries, or for 

receiving a deposit. 

FIG. 1—DIRECT EXPRESS® CARD

FEES: SAMPLE SCENARIO

Direct Express®

Card transactions 

Fees 

(with no 

ATM 

surcharge) 

Fees 

(with ATM 

surcharge of 

$2.33) 

1st ATM withdrawal (free 

with 1st deposit) ............. FREE $2.33 

2nd ATM withdrawal (free 

with 2nd deposit) ............. FREE 2.33 

3rd ATM withdrawal ............ $ .90 3.23 

Three bill payments ............ FREE FREE 

Eight POS ......... FREE FREE 

Weekly Balance 

Inquiry ........... FREE FREE 

Two Deposits .... FREE FREE 

Total ........... .90 7.89 

In addition, the Direct Express® card 

does not have any monthly fees, fees for 

activating the card, or fees for customer 

service calls, which can drive up costs 

of other prepaid card products. By 

educating Direct Express® cardholders 

to learn how to avoid multiple ATM 

withdrawals, cardholders can quickly 

learn how to incur no monthly fees 

whatsoever. 

The regulatory impact assessment, 

below, contains additional scenarios 

describing the Direct Express® card fees 

based on card usage. 

Costs incurred to use the Direct 

Express® card can compare favorably to 

the cost of cashing a check and 

conducting necessary cash transactions. 

While some individuals may be able to 

cash government checks at no cost, 

there are often fees of up to $20 or more 

for cashing a check, according to 

Treasury’s research in 2007 (SSA & SSI 

Check Recipient Survey, OMB Control 

No. 1510–0074). Check recipients may 

also incur money order and postage 

costs to pay bills that are not incurred 

with the Direct Express® card. 

3. Suggested Changes to Direct Express®

Card Program. Various Commenters 

Suggested a Number of Ways That the 

Direct Express® Card Should Be 

Changed 

a. ATM Cash Withdrawal Fees. A few 

commenters suggested a range of ways 

to maximize a cardholder’s ability to 

access his or her cash from an ATM for 

free. Suggestions ranged from providing 

cardholders with at least one surchargefree ATM withdrawal to providing free 

unlimited ATM withdrawals and 

expanding the current surcharge-free 

network. Treasury’s current Direct 

Express® card offers sufficient 

opportunities for a cardholder to access 

his or her cash without incurring a fee. 


emcdonald on DSK2BSOYB1PROD with RULES
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The Direct Express® card program offers 

one free ATM withdrawal for each 

deposit received. The free withdrawal is 

valid until the last day of the month 

following the month of receipt of the 

deposit. Thus, if a cardholder receives 

two deposits in January 2011, the 

cardholder is entitled to two free ATM 

cash withdrawals that are good until 

February 28, 2011. In addition, 

cardholders may obtain cash at retail 

locations and bank tellers without 

incurring a fee. The Direct Express®

card provider does not impose limits on 

the number of cash back or teller 

transactions a cardholder may conduct, 

although merchants may impose a limit 

on the amount of cash back a cardholder 

may receive. 

After using available free 

withdrawals, Direct Express®

cardholders who choose to withdraw 

additional cash from an ATM are 

charged a fee by the Direct Express®

card provider of $ .90 per withdrawal. 

The card provider does not impose any 

limits on ATM withdrawals. If the 

cardholder withdraws cash from an 

ATM that is not in the Direct Express®

network, the ATM owner may charge 

the cardholder an additional fee, known 

as a ‘‘surcharge,’’ which can range from 

$1.00 to $3.50 or more. If the cardholder 

uses one of the more than 53,000 Direct 

Express® surcharge-free ATMs, the 

cardholder can avoid a surcharge fee. 

The Direct Express® card provider 

continues to look for ways to expand the 

network, and Treasury will continue to 

educate current and new cardholders 

about alternative ways to get cash 

without paying a fee and how to use 

their card to pay for goods and services. 

b. Free Monthly Paper Statements. 

Several commenters stated a preference 

for paper statements at no cost to the 

cardholder. Currently, Direct Express®

cardholders may obtain transaction and 

balance information for free by calling a 

customer service number or visiting the 

Direct Express® secure Web site. Upon 

request, the Direct Express® card 

provider will send a cardholder a paper 

transaction history at no cost. In 

addition, cardholders may sign up for 

free text message, phone call, or email 

alerts when they receive a deposit or 

reach a low balance amount predetermined by the cardholder. If a 

cardholder prefers a monthly paper 

statement, the provider charges a fee of 

$ .75 per month. Because not every 

cardholder desires or would use a paper 

statement, and because transaction and 

balance information is available via 

different mechanisms, Treasury has 

determined that the cost of paper 

statements should be borne by those 

who want them. While other bank 

accounts may offer free monthly paper 

statements, as one commenter noted, 

these bank accounts generally also 

require credit checks and minimum 

balances, and have other requirements 

that hinder the ability of recipients to 

obtain accounts, none of which are 

required to open a Direct Express® card 

account. Two commenters suggested 

that the Direct Express® card program at 

a minimum offer a free annual paper 

statement for those who do not elect to 

receive electronic or monthly paper 

statements. The Direct Express® card 

provider currently makes available a 

cardholder’s complete transaction 

history, upon request and at no cost. 

Therefore, Treasury believes that it has 

adequately addressed concerns related 

to free monthly statements. 

c. Encourage Opt In Election at 

Enrollment Time of Method for 

Receiving Transaction Information. One 

commenter suggested that cardholders 

who sign up for a Direct Express® card 

be given the opportunity at enrollment 

to elect to receive paper statements, text 

messages, or electronic mail messages 

with transactions and balance 

information. Treasury explored this 

suggestion, but determined that it is not 

feasible at this time given that many of 

the Direct Express® card enrollments are 

handled by the respective Federal 

benefit agency when the beneficiary is 

applying for his or her benefit. Treasury 

is exploring the use of additional 

mailings to cardholders to ensure that 

cardholders are aware of their options 

for receiving transaction and balance 

information. 

d. Provide Additional Convenience 

Card. Two commenters suggested that 

the Direct Express® card program 

provide cardholders with the option of 

allocating a discrete amount of their 

funds to a second convenience card. 

The cardholder could then give this 

card to a caregiver or relative who could 

use it to make purchases for the 

cardholder. In this way, the cardholder 

would not have to turn over his or her 

primary card to the caregiver or relative 

and trust the caregiver or relative not to 

use all of the funds. Treasury supports 

this suggestion as a way to mitigate a 

cardholder’s risks and is working with 

the Direct Express® card provider to 

determine the feasibility and cost of 

providing this option. 

e. Provide Access to Checks. Two 

commenters suggested that the Direct 

Express® card program provide 

cardholders with the ability to write 

checks. Treasury has explored this 

suggestion, but is concerned that adding 

such an option could potentially 

increase fraud opportunities, add 

complexity to the card program, and 

increase costs to the cardholder. Instead, 

Treasury will educate cardholders on 

how to avoid the need to use checks by 

making purchases with the debit card, 

and if checks are necessary, where to 

find low-cost money orders. In addition, 

MasterCard has an initiative aimed at 

increasing acceptance of its card 

products by property managers. As part 

of this initiative, Treasury and 

MasterCard are working together to 

emphasize to property managers the 

importance of accepting the Direct 

Express® card for rent payments. 

f. Ability to Reload Cards With NonFederal Funds. Two commenters 

suggested that the Direct Express® card 

program be expanded to allow 

cardholders to deposit funds other than 

Federal payments to their card account. 

Treasury does not plan to implement 

this suggestion at this time because of 

the increased cost to the Direct Express®

card program, increased opportunity for 

fraud, and added complexity for 

cardholders. Treasury has plans to 

expand the card program to include as 

many Federal payments as possible. 

With respect to the broader need for 

more safe, low-cost financial account 

options, Treasury is exploring the 

feasibility of offering general purpose 

accounts to low- and moderate-income 

tax refund recipients and encouraging 

initiatives for financial products and 

services that are appropriate and 

accessible for millions of Americans 

who are not fully incorporated into the 

financial mainstream, as authorized by 

the ‘‘Improving Access to Mainstream 

Financial Institutions Act of 2010,’’ 

enacted as Title XII of the Dodd-Frank 

Wall Street Reform and Consumer 

Protection Act (Pub. L. 111–203, Jul. 21, 

2010). The FDIC also is encouraging the 

banking industry to offer safe, low-cost 

transaction and basic savings account 

products for low- and moderate-income 

customers with its Model Safe Accounts 

Pilot (http://www.fdic.gov/consumers/ 

template/). 

g. Changes to Terms and Conditions 

of the Direct Express® Card Program. 

Three commenters suggested changing 

some of the terms and conditions of the 

Direct Express® card program. One 

suggestion was to change the title of the 

Direct Express® card program provider’s 

terms and conditions document to 

‘‘Notice of Rights and Obligations.’’ 

Other suggestions were to prohibit terms 

that waive a cardholder’s right to a jury 

trial or to bring a class action lawsuit; 

to allow disputes to be governed by the 

laws of the state in which the 

cardholder resides, rather than the State 

of Michigan, which is where the Direct 

Express® card provider is located; not to 

require that the recipient contact the 


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merchant prior to cancelling a 

preauthorized transfer; to make clearer 

when the time to dispute a charge 

begins; make clearer that garnishments 

are not permitted, except as authorized 

by law (for example, to collect 

delinquent taxes or child support); and 

to improve the protections under 

Regulation E. Treasury will review the 

terms and conditions and, at a 

minimum, will ask the Direct Express®

card provider to clarify the language 

regarding dispute time frames and 

garnishments. At this time, Treasury 

does not plan to implement the 

remaining suggestions, which would 

result in additional costs to the Direct 

Express® card program, and perhaps 

even preclude Treasury from offering a 

valuable low-cost account option for 

those beneficiaries who prefer a prepaid 

debit card over a bank account. For 

example, allowing lawsuits involving 

the Direct Express® card program to be 

based on various choice-of-law 

provisions would increase costs for the 

program to an unacceptable level, 

leaving a large number of Federal 

benefit recipients without any costeffective option for enjoying the safety 

and convenience of direct deposit. 

Requiring the Direct Express® provider 

to cancel a preauthorized debit before 

the cardholder has contacted the 

merchant could leave cardholders 

vulnerable to cancellation of needed 

goods or services because of a lack of 

understanding about the need to make 

alternative payment arrangements for 

necessary services, such as utilities. The 

Direct Express® card provider follows 

standard industry practices, except that 

with respect to the protections afforded 

under Regulation E, the Direct Express®

card provider offers an extended time 

period within which to dispute a 

transaction from the industry standard 

of 60 days to 90 days. Treasury believes 

it has obtained the best possible terms 

and conditions for an account that 

provides the most cost-effective, 

consumer-friendly terms available. 

Treasury will, however, continue to 

work closely with the Direct Express®

card provider to identify and suggest 

improvements to the program. Even 

though satisfaction with the Direct 

Express® card program among current 

cardholders remains very high at 95% 

(Direct Express®—Cardholder 

Satisfaction and Usage Survey, March 

2009, OMB Control No. 1510–0074), 

Treasury is committed to taking all 

feasible and cost-effective steps to 

improve the program because the 

agency recognizes that current users 

may be different than future users in 

their demographic characteristics or 

attitudes towards the use of prepaid 

debit cards. In addition, it should be 

noted that, at any time, benefit 

recipients may choose direct deposit to 

their bank account rather than the Direct 

Express® card. 

h. Cardholder Education. Several 

commenters suggested that Treasury 

should do more to educate beneficiaries 

about their payment options, and 

specifically about the Direct Express®

card features, fees, and terms. One 

commenter suggested that the Direct 

Express® card program customer service 

be improved to make it easier to reach 

an operator. Another commenter 

suggested that cardholders should be 

provided with a wallet size information 

card, noting that ‘‘[t]hough the 

information on the Direct Express® card 

is generally quite good, it could be 

improved.’’ As mentioned previously, 

Treasury will be launching its expanded 

cardholder education campaign 

immediately to ensure that information 

about the Direct Express® card and how 

to use it are easily accessible to the 

beneficiary population for whom the 

card is intended. As part of its 

education effort, Treasury is in the 

process of working with the Direct 

Express® card provider to develop a 

wallet size information card for 

cardholders and pictorial brochure with 

information on how to use the card. In 

addition, Treasury works continuously 

with the Direct Express® card provider 

to maximize and improve customer 

service. For example, when Treasury 

and the provider learned of the 

difficulties cardholders were having in 

reaching a live customer service 

representative, the provider modified its 

telephone system and automated 

messages to make contact with a live 

representative easier from a cardholder’s 

perspective. Among other things, 

Treasury’s plans for cardholder 

education include direct mail and other 

communications explaining how to use 

the card to make purchases, pay bills, 

get cash back, as well as information 

about how to check balances and 

transaction history. As appropriate, 

Treasury will work with its 1,800 Go 

Direct® partners to further enhance its 

cardholder education efforts. 

4. Regulation of the Banking Industry 

and Prepaid Cards. Several commenters 

suggested that Treasury take steps to 

improve consumer protections 

associated with financial services 

products. One commenter suggested 

that Section 3332 requires Treasury to 

take steps to ensure that any account 

established by an individual to comply 

with the EFT requirement is available at 

a ‘‘reasonable cost’’ and stated that 

Treasury is not complying with the 

statutory mandate by providing access 

to one account at a reasonable cost. 

Treasury disagrees. The statute does not 

require Treasury to ensure than any 

account chosen by a Federal payment 

recipient’s must comply with the 

Section 3332(i) requirements. The 

provision requires that Treasury 

regulations ensure that individuals 

‘‘required * * * to have an account’’ 

have ‘‘access to such an account at a 

reasonable cost’’ and with ‘‘the same 

consumer protections with respect to 

the account as other account holders at 

the same financial institution’’ 

(emphasis added). The Direct Express®

card account is an account that meets 

the statutory requirements. 

Nonetheless, Treasury is committed to 

taking steps to resolve several concerns 

raised by commenters. With respect to 

protecting Federal beneficiaries from 

unlawful freezing and garnishment of 

protected benefits, Treasury and the 

four major benefit paying agencies— 

Office of Personnel Management, 

Railroad Retirement Board, Social 

Security Administration, and 

Department of Veterans Affairs—will 

soon publish a joint rule. See, Notice of 

Proposed Rulemaking, Garnishment of 

Accounts Containing Federal Benefit 

Payments, 75 FR 20299, Apr. 19, 2010. 

The rule will help ensure that 

garnishment-exempt benefit payments 

in an account are not improperly seized, 

by requiring financial institutions to 

exempt from freezing or seizure a 

defined amount equivalent to benefit 

payments deposited to an account prior 

to a financial institution’s receipt of a 

garnishment order. This new rule will 

protect benefit recipients where benefit 

payments are directly deposited to an 

account at a financial institution. 

In response to comments related to 

allowing Federal payments to be 

delivered to ‘‘safe’’ prepaid card 

accounts, Treasury is publishing, on this 

date, an interim rule amending 31 CFR 

part 210 (Part 210 Interim Rule), which 

generally requires that a Federal direct 

deposit payment be delivered to a 

deposit account at a financial institution 

in the name of the recipient, subject to 

certain exceptions. The Part 210 Interim 

Rule allows Federal payments to be 

deposited to an account accessed 

through a prepaid card or similar card 

that meets the following requirements, 

as more fully described in the interim 

rule: The account funds are insured by 

the Federal Deposit Insurance 

Corporation or National Credit Union 

Share Insurance Fund to the extent 

permitted by law, the account does not 

have an attached line of credit or loan 

feature that triggers automatic 

repayment from the card account, and 


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the issuer of the card account provides 

the cardholder with the same 

protections under Regulation E required 

to be provided for payroll card accounts 

(12 CFR 205.18). 

Several other concerns raised by 

commenters relating to the regulation of 

bank overdraft fees, account advances 

offered by financial institutions, and 

setoff of fees owed by account holders 

are outside the scope of this rule. 

5. Delay Effective Dates. Two 

commenters urged Treasury to delay the 

proposed effective dates for EFT 

payments under the NPRM. One 

consumer advocate organization 

suggested a delay ‘‘until there is a 

greater confidence that people are 

prepared to switch to electronic 

disbursements,’’ but did not specify a 

date for implementation. This 

commenter urged more time for 

education noting that some people 

shifting to electronic payments will 

need far more education or counseling 

than others. Another commenter 

suggested a delay to 2020. As explained 

in the NPRM, Treasury has accounted 

for the unique issues raised for 

converting current check recipients to 

electronic payments by delaying the 

implementation date for those 

individuals to March 1, 2013. Between 

now and 2013, Treasury plans a robust 

campaign to educate people about the 

EFT requirement, EFT options and 

costs, how to use EFT, and more. 

Treasury agrees with commenters who 

recommend a strong education 

campaign, and as noted above, plans to 

utilize and expand its existing network 

of Go Direct® partners in order to 

provide outreach and sufficient 

information to all affected beneficiaries. 

Therefore, Treasury does not believe 

that there is a need to further extend the 

effective dates proposed in the NPRM, 

except that Treasury is delaying the 

initial effective date from March 1 to 

May 1, 2011. 

6. Provide Waiver for Attorney Fees 

for Social Security Cases. An 

organization that represents Social 

Security claimants’ representatives and 

a number of attorneys who represent 

Social Security claimants recommended 

that Treasury exempt attorneys’ fee 

payments from the EFT requirements for 

two main reasons. First, the individual 

attorneys or representatives receiving 

the fee payment are not the ‘‘owners’’ of 

their firm’s bank account, and in some 

cases, are therefore precluded from 

electronically depositing their fee 

payment to the firm’s account. This is 

problematic in these cases because the 

Social Security Administration does not 

currently make representative fee 

payments directly to the firm’s account, 

nor does it currently recognize firms as 

representatives. Secondly, many 

attorneys state that their banks are 

unwilling or unable to provide all of the 

information needed to identify the 

client on whose account the deposit was 

made. This second point is also raised 

by an individual concerned that nursing 

homes would similarly be unable to 

identify the resident to whom a direct 

deposit payment belongs. 

The Social Security Administration 

recently announced that it will include 

an ‘‘addenda record’’ to display 

identifying information with all direct 

deposit fee payments sent to 

representatives. See, Social Security 

Administration letter at http:// 

fms.treas.gov/greenbook/ssarep.pdf. The 

Social Security Administration 

encourages receiving financial 

institutions to pass through to their 

account holders, as quickly as possible, 

pertinent information. In this way, 

attorneys and other representatives of 

Social Security claimants will be able to 

identify the purpose of the payments. In 

addition, the Social Security 

Administration may, in the future, 

recognize firms which might help 

address the difficulties in using EFT for 

representative fee payments. 

In order to mitigate these difficulties, 

and until these issues are more fully 

addressed, Treasury recognizes the need 

to modify one of the waivers that may 

be exercised by a paying agency, rather 

than Treasury, in § 208.4(f) regarding 

non-recurring payments. As the 

commenters pointed out, some attorneys 

and representatives may receive 

multiple payments in a given year for 

the multiple clients they represent 

before the Social Security 

Administration, and thus do not meet 

the technical definition of a recipient of 

a non-recurring payment in § 208.4(f) 

(‘‘Where the agency does not expect to 

make more than one payment to the 

same recipient within a one-year period, 

i.e., the payment is non-recurring’’). To 

address this, Treasury is modifying 

§ 208.4(f) to allow Federal paying 

agencies to waive the EFT requirement 

for payments made to the same recipient 

in a single year when these payments 

are not made on a regular, recurring 

basis and remittance data explaining the 

purpose of the payments is not readily 

available from the recipient’s financial 

institution receiving the payment by 

EFT. 

Treasury encourages paying agencies 

to contact Treasury, before invoking this 

waiver, to discuss various ways that 

remittance data can be made available to 

payment recipients, which may negate 

the need for a waiver. Treasury 

discourages the use of this waiver by 

agencies, and expects the waiver to be 

employed on an exception basis and 

only until expanded remittance data is 

more widely available to attorneys and 

other representatives. In addition, 

Treasury notes that there are many 

options for receipt of remittance data for 

vendors, and therefore does not expect 

agencies to use this waiver to exempt 

vendor payments from the EFT 

requirements. 

Treasury is removing the requirement 

that agencies determine that the cost of 

making an EFT payment exceeds the 

cost of making a payment by check, as 

it may not be possible for an agency to 

make this determination. 

7. Privacy and Identity Theft 

Concerns. Many commenters raised 

concerns about electronic banking 

leading to an increased risk of identity 

theft. Typically, the comments 

expressed concern about identity theft 

through online banking. This rule does 

not mandate any requirement to bank 

online. Many financial institutions, 

including the Direct Express® card 

provider, offer online banking services 

as a convenience, but account holders 

are not required to use these services. 

None of the comments specifically 

articulated exactly how this rule would 

increase a payment recipient’s risk of 

identity theft. Based on Treasury’s 

experience with paper checks and 

electronic payments, receiving 

payments by direct deposit decreases 

rather than increases the risk of identity 

theft. As noted in the NPRM, in fiscal 

year 2009, more than 670,000 Social 

Security and SSI checks were reported 

lost or stolen. In fiscal year 2010, more 

than 540,000 checks were reported as 

lost or stolen. In fiscal year 2009, 

Treasury investigated more than 70,000 

cases of altered or fraudulently 

endorsed checks, totaling $64 million in 

estimated value, and in fiscal year 2010, 

Treasury investigated almost 50,000 

cases totaling $93 million in estimated 

value. People intent on committing 

fraud can use a stolen Treasury check, 

along with other stolen or fake 

identification documents, to open an 

account in the recipient’s name or 

otherwise impersonate a check payee. A 

Treasury check that has been endorsed, 

but not cashed, offers further 

opportunities for identity theft. 

In addition to identity theft concerns, 

many commenters expressed concern 

about their privacy and were opposed to 

having to disclose their banking 

information to the Federal Government. 

Federal agencies are subject to the 

Privacy Act of 1972, 5 U.S.C. 552a, 

which strictly governs the collection of 

personal information from individuals, 

as well as the maintenance and 


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80326 Federal Register / Vol. 75, No. 245 / Wednesday, December 22, 2010 / Rules and Regulations 

disclosure of the information. Among 

other things, Federal agencies are 

restricted in how they may use personal 

information, such as bank account 

information, and must ensure that the 

information is not disclosed in an 

unauthorized way. Except in limited 

circumstances or with proper consent, 

bank account information provided by 

individuals to agencies for the purpose 

of receiving payment by direct deposit 

may be used and disclosed only for that 

purpose. For an example of agency 

regulations implementing the Privacy 

Act of 1972, see Treasury’s regulations 

at 31 CFR part 1, subpart C. 

With respect to customer account 

information held by a financial 

institution, including Direct Express®

card account information, the 

Government is precluded from receiving 

any customer-specific account 

information from a financial institution, 

and the financial institution is 

precluded from providing any customerspecific account information to the 

Government, without the account 

holder’s consent or without first 

following a process that provides the 

account holder with an opportunity to 

object to any disclosure, generally for 

law enforcement purposes. See, Right to 

Financial Privacy Act, 12 U.S.C. 3401, et 

seq. 

8. Continue to Offer the ETA. A 

couple of commenters urged Treasury to 

continue to offer the ETA option for 

those beneficiaries who opt for this 

account to receive their benefit 

payments by direct deposit. Treasury 

continues to offer the ETA as an 

alternative to the Direct Express® card. 

It is also an option for unbanked Federal 

benefit recipient seeking a safe, 

affordable banking relationship. 

Currently, the ETA is offered by 392 

financial institutions with over 53,000 

branch locations. The ETA program has 

over 121,000 account holders who 

receive Federal benefit payments. 

Although the ETA is not available on a 

nationwide basis and does not include 

some of the more useful features that 

have become available with prepaid 

debit cards in recent years, it continues 

to meet the needs of some benefit 

recipients in certain regions of the 

country. Treasury has no plans to 

eliminate the ETA option and continues 

to support the ETA through its call 

center and Web site. It should be noted, 

however, that Treasury is directing more 

of its resources to educating 

beneficiaries about the Direct Express®

card since the card is available 

nationwide, provides more useful 

features than the ETA, and may be used 

more cost-effectively than an ETA. 

Information about ETAs may be found 

at http://www.eta-find.gov. 

9. Require EFT to Existing Bank 

Accounts. An association that 

represents financial institutions 

suggested that when a recipient has an 

established banking relationship, the 

default election should be to convert the 

benefit payment to a direct deposit to 

that established bank account. Through 

its Go Direct® campaign, Treasury 

encourages financial institutions to 

work with their own customers who 

receive Federal benefit and other 

payments by paper check on converting 

to payment by direct deposit. The Go 

Direct® campaign communicates the 

many benefits to financial institutions 

that encourage their customers to 

convert to direct deposit, which include 

increasing a financial institution’s 

customer base and customer loyalty, 

operational and transaction-based cost 

savings, and reduction of check fraud. 

See www.godirect.org. Absent clear 

instructions from a payment recipient, 

Treasury is unable to ascertain with 

certainty whether a payment recipient 

has a current bank account to which 

payments should be directed. Therefore, 

Treasury allows each recipient to have 

payments electronically delivered to an 

account at a financial institution of his 

or her choice since the recipient is in 

the best position to determine the most 

cost-effective and desirable account 

option for receipt of his or her Federal 

payments. 

IV. Final Rule 

As explained above and in the 

regulatory impact assessment below, 

Treasury is revising its NPRM proposal 

to address the comments we received 

regarding elimination of all individual 

waivers from the EFT requirement. 

Under the final rule, the EFT 

requirement will not apply to (1) 

payment recipients born prior to May 1, 

1921, who are receiving Federal 

payments by check on March 1, 2013; 

(2) payments that are not eligible for 

deposit to a Direct Express® prepaid 

card account established pursuant to 

terms and conditions approved by FMS; 

and (3) payment recipients whose Direct 

Express® card has been suspended or 

cancelled. In addition, an individual 

payment recipient may request a waiver 

from the EFT requirement if the EFT 

requirement would impose a hardship 

because of the inability of a recipient to 

manage an account at a financial 

institution or a Direct Express® card 

account due to a mental impairment or 

because a recipient lives in a remote 

geographic location lacking the 

infrastructure to support electronic 

financial transactions. Payment 

recipients requesting a waiver are 

required to provide to Treasury a 

written certification supporting their 

request, in such form as Treasury may 

prescribe. The certification requires a 

recipient to identify the basis for his or 

her request and provide a brief 

explanation of how the exception 

applies to his or her situation. The 

recipient shall sign the certification 

before a notary public. 

V. Section-by-Section Analysis 

New § 208.2(c) adds a definition for 

‘‘Direct Express® card’’ as meaning the 

debit prepaid card issued to recipients 

of Federal benefits by Treasury’s 

financial agent pursuant to requirements 

established by Treasury. The Direct 

Express® card features are explained in 

the NPRM, in this rulemaking, and on 

the Direct Express® card Web site at 

http://www.USDirectExpress.com. 

Redesignated § 208.2(e) (formerly 

§ 208.2(d)) clarifies that the definition of 

‘‘electronic benefits transfer’’ includes 

disbursement through a Direct Express®

card account. As has been the case, 

‘‘electronic benefits transfer’’ (EBT) 

continues to include, but is not limited 

to, disbursement through an ETASM and 

a Federal/State EBT program. 

Section 208.4(a) is divided into two 

paragraphs (a)(1) and (a)(2). It is noted 

that, in cases where a representative 

payee has been designated by the 

benefit paying agency and is receiving 

payments on behalf of a beneficiary, the 

representative payee is the ‘‘individual’’ 

for purposes of § 208.4(a). Redesignated 

§ 208.4(a)(1) is revised to allow waivers 

where an individual: 

(i) Is receiving a Federal payment by 

check prior to May 1, 2011. In such 

cases, the individual may continue to 

receive those payments by check 

through February 28, 2013; 

(ii) Files a claim for a Federal 

payment prior to May 1, 2011, and 

requests payment by check at the time 

he or she files the claim. In such cases, 

the individual may receive those 

payments by check through February 

28, 2013; 

(iii) Was born prior to May 1, 1921, 

and is receiving Federal payments by 

check on March 1, 2013; 

(iv) Receives payments that are not 

eligible for deposit to a Direct Express®

card account. In such cases, those 

payments are not required to be made 

by electronic funds transfer, unless and 

until such payments become eligible for 

deposit to a Direct Express® card 

account; 

(v) Is ineligible for a Direct Express®

card because of suspension or 

cancellation of the individual’s card by 

the Financial Agent; 


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Federal Register / Vol. 75, No. 245 / Wednesday, December 22, 2010 / Rules and Regulations 80327 

(vi) Has filed a waiver request with 

Treasury certifying that payment by 

electronic funds transfer would impose 

a hardship because of the individual’s 

inability to manage an account at a 

financial institution or a Direct Express®

card account due to a mental 

impairment, and Treasury has not 

rejected the request; 

(vii) Has filed a waiver request with 

Treasury certifying that payment by 

electronic funds transfer would impose 

a hardship because of the individual’s 

inability to manage an account at a 

financial institution or a Direct Express®

card account due to the individual 

living in a remote geographic location 

lacking the infrastructure to support 

electronic financial transactions, and 

Treasury has not rejected the request. 

New § 208.4(b) requires payment 

recipients requesting a waiver from the 

EFT requirement because of a mental 

impairment or remote geographic 

location to provide Treasury with a 

certification, in writing, supporting their 

request in such form that Treasury may 

prescribe. The individual shall attest to 

the certification before a notary public 

or otherwise file the certification in 

such form that Treasury may prescribe. 

A payment recipient requesting these 

types of waivers will be required to 

provide identifying information, such as 

name, address, and Social Security 

number, as well as a short statement 

supporting the reason for the waiver 

request. Unless Treasury rejects the 

request, the recipient will not be 

required to comply with the EFT 

requirement. As noted above, in cases 

where a representative payee receives 

payments on behalf of a beneficiary, the 

representative payee is the individual 

requesting the claim based on the 

representative payee’s circumstances. 

Treasury will be publishing additional 

guidance regarding the waiver process. 

The Secretary’s waiver authority 

remains unchanged, and Federal 

agencies continue to have the flexibility 

to waive payment by direct deposit or 

other EFT method in the circumstances 

described in redesignated paragraphs 

(a)(2) through (a)(7) of § 208.4 (formerly 

paragraphs (b) through (g)), namely, for 

certain payments to payees in a foreign 

country where the infrastructure does 

not support EFT, for certain disaster or 

military situations, for situations in 

which there may be a security threat or 

for valid law enforcement reasons, for 

non-recurring payments, and for 

unusual and/or urgent situations where 

the Government would be seriously 

injured unless payment is made by a 

method other than EFT. 

Treasury is revising redesignated 

paragraph (a)(6) of § 208.4 (formerly 

paragraph (f)) which previously allowed 

Federal paying agencies, rather than 

Treasury, to waive the EFT requirement 

for payments that are non-recurring, i.e., 

no more than one payment to the same 

recipient within a one-year period. 

Under the revised rule, the waiver exists 

for payments made to the same recipient 

in a single year when these payments 

are not made on a regular, recurring 

basis and remittance data explaining the 

purpose of the payments is not readily 

available from the recipient’s financial 

institution receiving the payment by 

electronic funds transfer. As mentioned 

above, agencies should make limited 

use of this waiver and should use this 

waiver only after discussions with 

Treasury to rule out other ways in 

which remittance data can be made 

available. 

Section 208.6 is revised to remove the 

provisions for the general account 

requirements for Federal payments 

made electronically to an account at a 

financial institution. These 

requirements are contained in 31 CFR 

210.5 and do not need to be duplicated 

in Part 208. Revised § 208.6 states that 

any individual who receives a Federal 

benefit, wage, salary, or retirement 

payment will be eligible for a Direct 

Express® card account. 

Section 208.7 is revised to state that 

agencies shall put into place procedures 

that allow recipients to provide the 

information necessary: (i) For the 

delivery of their payments by EFT to an 

account at a financial institution, or (ii) 

to enroll for a Direct Express® card 

account. Agencies no longer need to 

notify individuals about their right to 

invoke a hardship waiver. FMS will 

provide guidance and work with 

agencies to ensure that they have the 

information they need to effectively 

explain the rule, available waivers, 

direct deposit, and features and fees of 

the Direct Express® card. 

Section 208.8 is revised to state that 

payment recipients are required to 

provide a Federal agency with the 

necessary information to receive 

payments electronically. To receive a 

payment by direct deposit to an account 

at a financial institution, a recipient will 

need to provide his or her account 

information. To enroll for a Direct 

Express® card account, a recipient will 

need to provide sufficient demographic 

information to allow for an account to 

be established, including information 

needed for identity verification 

purposes. 

Section 208.11 is revised to conform 

to the technical revision and delete the 

reference to § 208.6. 

Appendices A and B containing 

Model ETASM Disclosure Notices are 

removed because they no longer apply. 

ETASM accounts remain available from 

financial institutions that continue to 

offer them. For more information about 

ETASM accounts, visit http://www.etafind.gov. 

VI. Procedural Analysis 

Regulatory Planning and Review 

It has been determined that this 

regulation is a significant regulatory 

action as defined in Executive Order 

12866 in that this rule would have an 

annual effect on the economy of $100 

million or more, and this rule raises 

novel policy issues arising out of the 

legal mandate in 31 U.S.C. 3332. 

Accordingly, this final rule has been 

reviewed by the Office of Management 

and Budget. The Regulatory Impact 

Assessment prepared by Treasury for 

this regulation is provided below. 

SUMMARY OF ESTIMATED BENEFITS

AND COSTS

Benefit ................................. $117 million. 

Cost ..................................... Not estimated. 

Net Benefits ......................... Not estimated. 

The analysis used nominal dollars in 2010. 

1. Description of Need for the 

Regulatory Action 

a. Statutory and Regulatory History 

As discussed in the Regulatory Impact 

Assessment in the NPRM, this 

rulemaking is necessary to expand 

compliance with the electronic funds 

transfer (EFT) provisions of section 

3332, title 31 United States Code 

(Section 3332). In 1996, Congress 

enacted subsection 31001(x)(1) of the 

Debt Collection Improvement Act of 

1996 (Pub. L. 104–134) (DCIA), which 

amended Section 3332 to generally 

require that all nontax Federal payments 

be made by EFT, unless waived by the 

Secretary of the Treasury (Secretary). 

The Secretary must ensure that 

individuals required to receive Federal 

payments by EFT have access to an 

account at a financial institution ‘‘at a 

reasonable cost’’ and with ‘‘the same 

consumer protections with respect to 

the account as other account holders at 

the same financial institution.’’ See 31 

U.S.C. 3332(f), (i)(2). 

To implement Section 3332 as 

Congress intended, Treasury 

promulgated 31 CFR part 208 (Part 208). 

Part 208 sets forth requirements for 

accounts to which Federal payments 

may be sent by EFT; provides that any 

individual who receives a Federal 

benefit, wage, salary, or retirement 

payment is eligible to open an 

Electronic Transfer Account (ETA) at a 

financial institution that offers such 


emcdonald on DSK2BSOYB1PROD with RULES
80328 Federal Register / Vol. 75, No. 245 / Wednesday, December 22, 2010 / Rules and Regulations 

accounts; and establishes the 

responsibilities of Federal agencies and 

recipients under the regulation. Part 208 

also sets forth a number of waivers to 

the general requirement that Federal 

payments be delivered by EFT. See 31 

CFR 208.4. 

In conjunction with the initial 

publication of Part 208, Treasury 

developed the ETA, a low-cost account 

offered by participating financial 

institutions for those individuals who 

wish to receive their Federal payments 

by direct deposit. The ETA was 

established with the intention that it 

would eventually become available 

nationwide, and thereby comply with 

the statutory mandate that any person 

required to receive payment by EFT 

have access to an account at a financial 

institution at a reasonable cost and with 

standard consumer protections. 

However, the ETA is not available 

nationwide, and, as a result, does not 

meet the statutory requirement related 

to account access. 

Any financial institution that wishes 

to offer the ETA may do so by entering 

into a financial agency agreement 

agreeing to offer the ETA in accordance 

with the terms and conditions 

established by Treasury. See Notice of 

Electronic Transfer Account Features, 

64 FR 38510 (July 16, 1999). A 

participating financial institution must 

open an ETA for any individual who 

requests one, with some limited 

exceptions, provided that the individual 

authorizes the direct deposit of his or 

her Federal benefit, wage, salary or 

retirement payments. A financial 

institution may charge an account fee of 

up to $3.00 per month, and may charge 

other account-related fees as usually 

and customarily charged to other retail 

customers. ETA cardholders must be 

allowed to withdraw funds at least four 

times per month without incurring fees. 

Checks are not offered with ETAs. 

Account holders access their funds 

through online debit at ATMs, 

commonly referred to as ‘‘PIN debit,’’ 

and through POS networks. Offline 

(signature) debit is not permitted. 

Treasury pays a participating financial 

institution a fee of $12.60 for each ETA 

account established. 

The hardship waivers in Part 208 

prior to this rulemaking were necessary 

because the ETA was not (and is not) 

available to all benefit recipients across 

the country. In addition, because the 

ETA does not permit signature debit and 

does not include bill payment capability 

as a required feature, the ETA 

cardholders have limited options in 

paying for goods and services with an 

ETA. They cannot use the ETA, for 

example, to make online and telephone 

purchases. The limited payment 

capability of the ETA resulted in a need 

for hardship exceptions for geographic, 

financial, and physical disability 

reasons, since individuals might not 

have convenient or feasible access to 

physical POS or ATM locations. 

Moreover, the ETA allows monthly and 

other fees which, although limited, 

could still pose a financial hardship for 

some benefit recipients. This meant that 

a waiver for financial hardship was also 

necessary. 

Since its inception in 1999 through 

September 2010, only 251,941 ETA 

accounts have been opened, and, as of 

September 2010, there are only 121,191 

active ETA accounts. Anecdotal 

evidence suggests that, with some 

exceptions, the ETA is not a costeffective product for financial 

institutions. According to a 2002 report 

by the Government Accountability 

Office (GAO), although many financial 

institutions believed that the ETA was 

a good product for the target market, the 

financial institutions were reluctant to 

offer the account because they did not 

see the product as profitable. See, 

‘‘Electronic Transfers: Use by Federal 

Payment Recipients Has Increased but 

Obstacles to Greater Participation 

Remain,’’ GAO–02–913, page 31 (Sept. 

12, 2002) (www.gao.gov/new.items/ 

d02913.pdf). From the consumer 

perspective, reasons for lack of interest 

include the inability to write checks, 

limited availability of ETAs, lack of 

awareness of ETAs, a difficult 

enrollment process, and a personal 

preference for doing business without a 

bank account. Id., at 35–36. 

GAO has issued at least two reports 

on the Federal Government’s efforts to 

increase the use of electronic payments 

rather than checks. See, for example, 

2002 GAO report cited above, and 

‘‘Electronic Payments: Many Programs 

Electronically Disburse Federal Benefits, 

and More Outreach Could Increase Use,’’ 

GAO–08–645 (June 23, 2008) (http:// 

www.gao.gov/new.items/d08645.pdf). In 

these referenced reports, GAO 

recognizes the advantages of electronic 

payments, but also recognizes the two 

major historical obstacles to removing 

the Part 208 individual waivers. First, 

there are a high number of check 

recipients who do not have a bank 

account or who lack convenient access 

to an account at a reasonable cost with 

appropriate consumer protections. 

GAO–02–913, pages 16–24 (Sept. 12, 

2002); GAO–08–645, pages 19–20, 33 

(June 23, 2008). Second, consumer 

concerns about the improper freezing 

and seizure of Federal benefit funds 

typically exempt from garnishment has 

led to resistance to Treasury’s efforts to 

remove the Part 208 individual waivers 

to EFT requirements. GAO–08–645, 

pages 20–22. 

b. Technology Changes in the Banking 

Industry 

As discussed in the Regulatory Impact 

Assessment in the NPRM, the 

technological developments and 

widespread acceptance of debit and 

prepaid card products during the last 

decade have made it feasible and 

advantageous for Treasury to revise its 

existing implementing regulation to 

expand the scope of individuals subject 

to the EFT requirements. Specifically, 

the development and implementation of 

the Direct Express® card, a MasterCard ®

prepaid debit card developed by 

Treasury exclusively for Federal benefit 

recipients, means that Treasury can now 

comply with the requirement of Section 

3332 to ensure that individuals required 

to receive Federal payments by EFT 

have access to an account at a financial 

institution that is reasonably priced and 

subject to standard consumer 

protections. 

Reloadable prepaid debit cards, which 

were a small specialty product in the 

1990s, are now widely available and can 

be used at a vast number of merchant 

locations across the country, not only to 

purchase goods and services, but also to 

obtain cash through cashback 

transactions at POS locations. With the 

expansion of the Internet and other 

technological advances, consumers have 

the ability to make online purchases 

with a debit card, as well as the ability 

to pay for goods and services over the 

telephone, resulting in the mitigation of 

some past obstacles to electronic 

payment acceptance. Even for those 

without access to the Internet, or who 

buy goods and use services from 

vendors who do not accept debit card 

payments, debit cards can be used to 

purchase money orders, thereby 

eliminating the step of having to cash a 

check or carry large amounts of cash to 

complete necessary financial 

transactions. 

The ‘‘2007 Federal Reserve Payments 

Study, Noncash Payment Trends in the 

United States: 2003–2006,’’ sponsored 

by the Federal Reserve System (released 

December 10, 2007) (http:// 

www.frbservices.org/files/ 

communications/pdf/research/ 

2007_payments_study.pdf), highlights 

the growing acceptance of debit cards in 

the United States. According to the 

study, debit cards now surpass credit 

cards as the most frequently used 

payment type. The Federal Reserve 

noted that the highest rate of growth 

was in automated clearing house (ACH) 

payments, which grew about 19 percent 


emcdonald on DSK2BSOYB1PROD with RULES
Federal Register / Vol. 75, No. 245 / Wednesday, December 22, 2010 / Rules and Regulations 80329 

per year, followed closely by debit card 

payments. The annual use of debit cards 

increased by about 10 billion payments 

over the survey period to 25.3 billion 

payments in 2006, an annual growth 

rate of transactions of 17.5% from 2003 

to 2006. Many financial service 

providers offer general prepaid branded 

reloadable cards intended for recipients 

of wages, incentive or bonus payments, 

state benefits and child support 

payments, and other types of high 

volume or regularly recurring payments. 

Many states offer or require the use of 

electronic payment cards for those who 

receive state benefits, such as temporary 

assistance to needy families. 

Treasury’s experience with offering 

electronic payment card products dates 

back to 1989, and illustrates how 

Treasury’s products have evolved and 

how acceptance of these products has 

grown. In 1989, Treasury offered a debit 

card product, known as the SecureCard, 

on a pilot basis in Baltimore, Maryland, 

at no cost to SSI recipients. The 

undeveloped nature of the POS system 

at that time presented the primary 

challenge in that pilot. To make the card 

useful, Treasury installed POS 

equipment at various local merchants, at 

a substantial cost to the Government. In 

1992, Treasury initiated the Direct 

Payment Card pilot for Social Security 

and SSI recipients in Texas, which had 

a better developed POS infrastructure, 

and subsequently extended the pilot to 

Social Security recipients in Argentina. 

From 1992 through 1997, approximately 

46,000 recipients enrolled, and the 

program was well-received by 

recipients. Building on the success of 

the Direct Payment Card pilot, in 1996, 

Treasury joined a Federal-State 

electronic benefits transfer (EBT) 

program known as the Benefit Security 

Card program. The Benefit Security 

Card was offered to Federal and/or state 

benefit recipients in eight southeastern 

states, known as the Southern Alliance 

of States, which included Alabama, 

Arkansas, Florida, Georgia, Kentucky, 

Missouri, North Carolina, and 

Tennessee. Treasury’s Benefit Security 

Card program allowed benefit recipients 

to access their Federal and/or state 

benefits via a single debit card. When 

Treasury terminated the card program in 

January 2003, approximately 51,000 

Federal benefit recipients were enrolled 

in the program. Although customers 

were pleased with the product, Treasury 

and most states were concerned about 

cardholder costs, which were scheduled 

to increase at the time Treasury 

terminated the program. At the end of 

2006, Treasury initiated a small Direct 

Express® card program to gauge the 

market for a branded debit card, 

reloadable only with Federal benefit 

payments. As part of the pilot, Treasury 

sent letters to 35,000 Social Security 

and SSI check recipients in Chicago and 

southern Illinois, offering them the 

opportunity to sign up for a Direct 

Express® card to receive their Federal 

benefit payments electronically. In 

addition, Treasury included information 

about the program in check envelopes 

mailed to all Illinois Social Security and 

SSI check recipients. The card features 

offered for the pilot program were 

similar to the current Direct Express®

card product, although the fees were 

slightly higher. 

2. Provision 

Treasury is implementing this rule in 

two phases. The first phase would 

require all new benefit recipients to sign 

up for direct deposit to a bank account 

of the recipients’ choice or to a Direct 

Express® card account, beginning May 

1, 2011. The second phase would begin 

on March 1, 2013, at which time all 

recipients of Federal benefit and other 

nontax payments would receive their 

payments by direct deposit, either to a 

bank account or to a Direct Express®

card account. 

Those receiving their benefit 

payments by check before May 1, 2011, 

could continue to do so through 

February 28, 2013, after which those 

recipients would convert to direct 

deposit. For Federal benefit recipients, 

this means that individuals who file 

claims for Federal benefits before May 1, 

2011, and who request check payments 

when they file, would be permitted to 

receive payments by check through 

February 28, 2013. Individuals who file 

claims for benefits on or after May 1, 

2011, would receive their payments by 

direct deposit. Individuals receiving 

their payments by direct deposit prior to 

May 1, 2011, would continue to do so. 

In this final rule, Treasury waives the 

EFT requirement for recipients born 

prior to May 1, 1921 who are receiving 

Federal payments by check on March 1, 

2013, for payments that are not eligible 

for deposit to a Direct Express® card 

account, and for recipients whose Direct 

Express® card has been suspended or 

cancelled. In addition, this rule allows 

a recipient to request a waiver from the 

EFT requirement on the basis that EFT 

would impose a hardship because of the 

recipient’s inability to manage an 

account at a financial institution or a 

Direct Express® card account due to a 

mental impairment, or because the 

recipient lives in a remote geographic 

location lacking the infrastructure to 

support electronic financial 

transactions. The waiver request is 

considered effective unless Treasury 

rejects the request. 

3. Baseline 

a. Amount of Federal Disbursement 

The baseline amount of Federal 

disbursement described in the NPRM is 

updated as follows. In fiscal year 2010, 

Treasury disbursed almost 85% of its 

nontax payments electronically, or more 

than 793 million payments. Despite the 

general requirement that Federal 

payments be made electronically, and 

Treasury’s efforts to persuade check 

recipients to convert to direct deposit, 

Treasury nevertheless continues to print 

and mail many millions of checks each 

year, at a substantially higher cost to the 

Government than if those payments 

were delivered by EFT. For example, of 

the approximately 143 million checks 

disbursed for nontax payments, in fiscal 

year 2010, more than 130 million of 

them were Federal benefit checks 

mailed to almost 11 million benefit 

recipients, causing avoidable paymentrelated problems for many check 

recipients, and resulting in extra costs to 

taxpayers of more than $117 million 

that would not have been incurred had 

those payments been made by EFT. 

Social Security (retirement, disability, 

and survivors benefits) and SSI 

payments represent more than 92 

percent, or approximately 120 million, 

of those benefit check payments. The 

remaining 10 million benefit check 

payments are made to recipients of civil 

service retirement, railroad retirement, 

Black Lung, and Veterans benefits. 

Although the direct deposit payments 

rate has increased since 1996, when it 

was 58%, the rate has climbed only 

slowly since fiscal year 2005 when it 

first reached 80%. 

b. Affected Population 

As noted above, in fiscal year 2010, 

Treasury disbursed 130 million checks 

to almost 11 million benefit recipients. 

Treasury estimates that approximately 4 

million of those recipients do not have 

bank accounts. 

Treasury recognizes the demographic 

differences between payment recipients 

who are more willing to accept direct 

deposit and those who are not. Treasury 

also recognizes that there are a variety 

of reasons why check recipients do not 

switch to direct deposit. Because the 

majority of its check payments are made 

to Social Security and SSI recipients, 

Treasury’s research focuses on this 

population. During implementation of 

its rule, Treasury will continue its 

research efforts to ensure that the needs 

of all check recipients are adequately 

addressed and take appropriate action. 


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80330 Federal Register / Vol. 75, No. 245 / Wednesday, December 22, 2010 / Rules and Regulations 

While recognizing that the results of 

the study is not generalizable to the U.S. 

population, Treasury’s study, 

‘‘Understanding the Dependence on 

Paper Checks—A Study of Federal 

Benefit Check Recipients and the 

Barriers to Boosting Direct Deposit’’ 

(2004), sheds some insight on 

individuals who choose to receive 

Federal benefits through paper checks 

(OMB Control No. 1510–0074). The 

average age of a Social Security check 

recipient was 66 years old. Sixty-one 

percent of the Social Security check 

recipients were female; 39% were male. 

Thirty-five percent of the Social 

Security check recipients had not 

completed high school, while 26% had 

some college education or beyond. Sixty 

percent of Social Security recipients 

were retired; 27% did not have bank 

accounts; 12% received some other form 

of government assistance; and, 27% had 

a disability. 

Comparatively, the average age of a 

SSI check recipient was 50. Seventy 

percent of the SSI check recipients were 

female; 30% were male. Fifty-one 

percent of the SSI recipients had not 

completed high school, while 15% had 

some college education or beyond. Only 

21% of SSI recipients were retired; 68% 

did not have a bank account; 42% 

received some other form of government 

assistance, and 42% had a disability. 

According to Treasury research in 

2007 (SSA & SSI Check Recipient 

Survey, OMB Control No. 1510–0074), 

the check recipient population 

demographics had not changed 

significantly. The 2007 survey found 

that 28% of Social Security check 

recipients did not have a bank account, 

but that 9% more SSI recipients had 

bank accounts than in 2004 (in 2007, 

59% of SSI recipients did not have a 

bank account). 

The above-referenced Treasury 

research shows that younger benefit 

recipients convert to direct deposit at a 

faster rate than older benefit recipients. 

Younger benefit recipients who have 

had their payments for less than a year 

are signing up for direct deposit at rates 

that far exceed their proportions in the 

population. Close to 50% of those Social 

Security and SSI check recipients who 

converted to direct deposit had been 

receiving their benefits for less than one 

year. Conversely, only 16% of Social 

Security check recipients and 15% of 

SSI recipients who had been receiving 

their payments nine (9) years or longer 

signed up for direct deposit. 

Treasury and the Social Security 

Administration found that, in fiscal year 

2010, 79.1% of new Social Security 

enrollees signed up for direct deposit 

either to an existing bank account or to 

a Direct Express® card account. Since 

September 2008, the Social Security 

Administration has been offering new 

Social Security and SSI recipients the 

option of signing up for a Direct 

Express® card, in addition to direct 

deposit at a financial institution, at the 

time they enroll for benefits. Social 

Security is also allowing individuals to 

sign up at local offices and by 

telephone. The Direct Express® card has 

been a major contributor in the decline 

of Social Security and SSI check 

payments over the last two years, but 

has had an especially significant impact 

on the SSI check payment volume. The 

average monthly payment amount for an 

SSI check recipient is $545, whereas the 

average monthly payment amount for a 

Social Security check recipient is $808 

for beneficiaries who receive their 

payment on the third of the month, and 

$915 for all other Social Security check 

recipients. There has been a year-overyear decrease in SSI checks of 6.91% in 

March 2010, compared to March 2009, 

which is significantly greater than the 

3.81% decline in March 2009, compared 

to March 2008. The number of all 

nontax checks decreased from 148 

million in fiscal year 2009 to 143 

million in fiscal year 2010. 

4. Assessment of Potential Costs and 

Benefits 

a. Potential Costs 

There are potential short-term costs 

associated with the rulemaking. First, 

there are intangible emotional costs for 

individuals who are fearful or resistant 

to direct deposit. In its 2004 research, 

Treasury learned that there are some key 

differences among Social Security check 

recipients, SSI check recipients, and 

those that receive their benefit payments 

by direct deposit. Although these 

differences do not necessarily explain 

why certain individuals are more 

resistant than others to receiving 

payments by direct deposit, the data 

helps Treasury properly target its public 

education campaign. For example, 

because the data described below shows 

that Social Security check recipients are 

more likely than SSI check recipients to 

have a bank account, Treasury can 

direct its resources to informing Social 

Security check recipients about the 

benefits of directly depositing payments 

to an existing bank account. For SSI 

recipients who are less likely to have a 

bank account, Treasury can focus its 

Direct Express® card information to that 

population. 

Compared to SSI check recipients, 

Social Security check recipients are 

older (average age 66), more likely to 

have a bank account, more likely to be 

male and retired, less likely to have a 

disability, less likely to receive some 

other form of government assistance, 

less likely to depend on their benefit as 

their sole source of income, and more 

likely to be Caucasian. SSI recipients are 

likely to be younger (average age 50), 

less likely to have a bank account, more 

likely to have a representative payee 

acting on their behalf, more likely to be 

African-American, more likely to be 

female, more likely to live in a city, 

more likely to receive some other form 

of benefit payment, and more likely to 

depend on others for assistance with 

daily chores and errands. Direct deposit 

recipients are more technologically 

savvy than either Social Security or SSI 

check recipients. They are more likely 

to own a cell phone or to use a personal 

computer and the Internet. Compared 

with check recipients, direct deposit 

beneficiaries responding to the survey 

were more likely to have confidence in 

banks, to believe that computers are 

secure, and to feel that ATMs are safe. 

Despite these demographic 

differences, Treasury has found that the 

reasons for resistance to direct deposit 

among check recipients have remained 

fairly constant over the years. Many 

people express a desire to see the 

physical payment in check form. Others 

feel a greater sense of control when 

handling checks, and many, especially 

those receiving SSI, believe that 

receiving checks helps them to better 

manage their money and maintain their 

standard of living. Barriers that need to 

be overcome can be grouped into four 

general categories: informational (those 

who do not understand how direct 

deposit works); emotional (those who 

just prefer to receive checks); inertia 

(those who are receptive to electronic 

payments, but need to be motivated to 

sign up); and mechanical (those who do 

not have bank accounts, and in some 

cases, do not want bank accounts). 

Treasury expects most recipients to 

pay less for EFT payments than for 

check payments. While some 

individuals may be able to cash 

government checks at no cost, there are 

often fees of up to $20 or more for 

cashing a check, according to Treasury’s 

research in 2007 (SSA & SSI Check 

Recipient Survey, OMB Control No. 

1510–0074). The Direct Express® card 

program is structured so that there are 

several ways for cardholders to access 

their funds and use their card without 

paying any fees. The Direct Express®

card account fees compare favorably to 

those charged by financial service 

providers offering general purpose 

reloadable cards, which often charge 

fees for sign-up, monthly maintenance, 

ATM withdrawals, balance inquiries, 


emcdonald on DSK2BSOYB1PROD with RULES
Federal Register / Vol. 75, No. 245 / Wednesday, December 22, 2010 / Rules and Regulations 80331 

5The bankrate.com 2010 checking study cited an 

average $2.33 surcharge fee per withdrawal (http:// 

www.bankrate.com/finance/checking/banks-takinga-bigger-bite-with-atm-fees.aspx). 

and customer service calls. Cardholders 

may use their card to make purchases 

and get cash back at a POS location 

without paying a fee; obtain cash from 

any MasterCard® member bank teller 

window without paying a fee; and make 

one free ATM cash withdrawal for each 

benefit payment deposited to the card 

account (the free ATM cash withdrawal 

is available until the end of the month 

following the month of deposit). If the 

cardholder makes a withdrawal using an 

ATM within the Direct Express®

surcharge-free ATM network, the 

cardholder will not pay a surcharge fee 

to an ATM owner. In addition, there are 

many other features that cardholders 

can access without paying a fee, 

including unlimited customer service 

calls (with or without live operators); 

optional automated low balance alerts 

or deposit notifications; and online or 

telephone transaction history and other 

account information. There is no fee to 

sign up for the card, close the account, 

or to obtain one replacement card per 

year. Importantly, there are no 

overdrafts, minimum balance 

requirements, or credit requirements to 

sign up for the card. The few fees that 

are charged for the card include $.90 for 

ATM transactions after free ATM 

transactions are used, $.75 per month 

for optional paper statements, fees for 

using the card outside the United States, 

and replacement cards beyond the free 

replacement card. By way of 

illustration, sample Direct Express®

cardholder scenarios follow: 

FIG. 2—DIRECT EXPRESS® CARD FEES: SAMPLE SCENARIO 1 

Direct Express® Card 

transactions 

Fees 

(with no ATM 

surcharge) 

Fees 

(with ATM 

surcharge 

of $2.33) 5

1st ATM withdrawal (free with 1st deposit) ........................................................................... FREE .............................................. $2.33 

Three bill payments ................................................................................................................ FREE .............................................. FREE 

Eight POS transactions .......................................................................................................... FREE .............................................. FREE 

Weekly Balance Inquiry ......................................................................................................... FREE .............................................. FREE 

One Deposit ........................................................................................................................... FREE .............................................. FREE 

Total Monthly Fee ........................................................................................................... FREE .............................................. 2.33 

FIG. 3—DIRECT EXPRESS® CARD FEES: SAMPLE SCENARIO 2 

Direct Express® Card 

transactions 

Fees 

(with no ATM 

surcharge) 

Fees 

(with ATM 

surcharge 

of $2.33) 

1st ATM withdrawal (free with 1st deposit) ............................................................................................................. FREE $2.33 

2nd ATM withdrawal ................................................................................................................................................ $.90 3.23 

Eight POS transactions ........................................................................................................................................... FREE FREE 

Weekly Balance Inquiry ........................................................................................................................................... FREE FREE 

One Deposit ............................................................................................................................................................. FREE FREE 

Total Monthly Fee ............................................................................................................................................. .90 5.56 

FIG. 4—DIRECT EXPRESS® CARD FEES: SAMPLE SCENARIO 3 

Direct Express® Card 

transactions 

Fees 

(with no ATM 

surcharge) 

Fees 

(with ATM 

surcharge 

of $2.33) 

1st ATM withdrawal (free with 1st deposit) .......................................................................... FREE ................................................ $2.33 

Bank Teller Cash Withdrawal ............................................................................................... FREE ................................................ FREE 

Eight POS transactions ........................................................................................................ FREE ................................................ FREE 

Weekly Balance Inquiry ........................................................................................................ FREE ................................................ FREE 

One Deposit ......................................................................................................................... FREE ................................................ FREE 

Total Monthly Fee ......................................................................................................... FREE ................................................ 2.33 

FIG. 5—DIRECT EXPRESS® CARD FEES: SAMPLE SCENARIO 4 

Direct Express® Card 

transactions 

Fees 

(with no ATM 

surcharge) 

Fees 

(with ATM 

surcharge 

$2.33) 

1st ATM withdrawal (free with 1st deposit) .................................................................. FREE ..................................................... $2.33. 

Purchase Money Order for $700 at US Post Office (USPS) to pay rent .................... $1.50 (to USPS) .................................... 1.50 (to USPS). 

Eight POS transactions ................................................................................................ FREE ..................................................... FREE. 

Weekly Balance Inquiry ................................................................................................ FREE ..................................................... FREE. 


emcdonald on DSK2BSOYB1PROD with RULES
80332 Federal Register / Vol. 75, No. 245 / Wednesday, December 22, 2010 / Rules and Regulations 

FIG. 5—DIRECT EXPRESS® CARD FEES: SAMPLE SCENARIO 4—Continued 

Direct Express® Card 

transactions 

Fees 

(with no ATM 

surcharge) 

Fees 

(with ATM 

surcharge 

$2.33) 

One Deposit .................................................................................................................. FREE ..................................................... FREE. 

Total Monthly Fee ................................................................................................. $1.50 ...................................................... $3.83. 

FIG. 6—DIRECT EXPRESS® CARD FEES: SAMPLE SCENARIO 5 

Direct Express® Card 

transactions 

Fees 

(with no ATM 

surcharge) 

Fees 

(with ATM 

surcharge 

of $2.33) 

1st ATM withdrawal (free with 1st deposit) ............................................................................................................. FREE $2.33 

5 additional ATM withdrawals .................................................................................................................................. $4.50 16.15 

One POS transaction ............................................................................................................................................... FREE FREE 

Weekly Balance Inquiry ........................................................................................................................................... FREE FREE 

One Deposit ............................................................................................................................................................. FREE FREE 

Total Monthly Fee ............................................................................................................................................. 4.50 18.48 

Even in Scenario 5, which is not the 

recommended way to use the Direct 

Express® card, a cardholder incurs less 

expense than what some beneficiaries 

pay to cash their Treasury checks. 

Treasury expects that, with its expanded 

cardholder education, fees incurred 

under Scenarios 1 through 4 would be 

more typical. 

Treasury expects to continue to incur 

expenditures for the public education 

related to the implementation of the 

new rule and to temporarily expand its 

telephone and online direct deposit 

enrollment center to accommodate those 

converting from check payments to 

direct deposit to comply with the new 

rule, whether the conversion is to an 

account at a financial institution or to a 

Direct Express® card account. However, 

such expenditures will taper off after 

the new rule is fully implemented, since 

direct deposit enrollment in the future 

will occur at the time of benefit 

enrollment. Federal benefit agencies 

may incur costs to temporarily expand 

customer service centers to 

accommodate recipients’ questions and 

enrollments until the new rules are fully 

implemented. 

Treasury expects increased costs for 

its call center and Web site used to 

enroll check recipients into direct 

deposit, although these costs are 

expected to drop off after 2013, when 

the rule would be fully implemented. 

The education costs, estimated at $10 

million over the next three years, are 

costs that Treasury would have incurred 

even without the rule, and for 

potentially longer than the next three to 

five years. Similarly, Treasury expects 

benefit paying agencies to incur some 

initial costs for customer service 

training for customer service 

representatives responsible for 

educating new enrollees and current 

check recipients about the new rules, 

but these costs are expected to be more 

than offset by the cost savings expected 

once customer service centers no longer 

have to respond to individual inquiries 

related to check problems. The one-time 

costs to increase customer service 

capacity at the Treasury enrollment 

center (both telephone and online) 

could total as high as $20 million from 

the effective date of the final rule 

through 2013. These costs include 

Treasury’s costs for processing waiver 

requests. After 2013, Treasury expects 

these costs to drop off significantly. 

The Go Direct® campaign, sponsored 

by Treasury and the Federal Reserve 

Banks, highlights the need for this 

educational program. Despite the 

success of the campaign with more than 

five million direct deposit enrollments 

achieved since 2005 as a result of the 

campaign’s activities, an estimated 11 

million Federal benefit recipients still 

receive checks each month. Treasury 

research shows that the likelihood of 

current check recipients switching to 

direct deposit remained generally 

unchanged from 2004 to 2007, with 

55% of banked Social Security check 

recipients surveyed in 2007 being very 

unlikely to change to direct deposit, 

down from 59% in 2004. The 

percentage of banked Social Security 

check recipients likely to switch to 

direct deposit went from 27% in 2004 

to 28% in 2007. Comparatively, 40% of 

banked SSI check recipients were likely 

to switch to direct deposit in 2007, up 

only one percentage point since 2004. 

While Treasury research shows that 

direct deposit education has a positive 

impact on the likelihood of a check 

recipient to switch to direct deposit, the 

effort is time consuming, 

administratively burdensome, costly, 

and resource-intensive. During the 

period July 2009 through June 2010, 

Treasury spent $4.5 million on its Go 

Direct® campaign, and expects to spend 

another $4 million during the period 

July 2010 through June 2011. Prior 

years’ costs have ranged from $5 million 

to $10 million for Treasury to establish 

and sustain its presence in target 

markets to promote and encourage 

check recipients to convert to direct 

deposit. 

Finally, and less directly, financial 

institutions may experience some costs 

associated with converting their check 

recipient customers to direct deposit, 

but Treasury does not expect this to be 

a significant burden since financial 

institutions already enroll a significant 

number of direct deposit recipients 

through Treasury’s Go Direct®

campaign. 

b. Potential Benefits 

The potential benefits of the rule to 

the Government and taxpayers are 

significant. As noted above, in fiscal 

year 2010, Treasury mailed more than 

130 million Federal benefit checks to 

approximately 11 million benefit 

recipients, resulting in extra costs to 

taxpayers of more than $117 million 

that would not have been incurred had 

those payments been made by EFT. 

Without the rule change and given the 

current trends, the number of checks 


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Federal Register / Vol. 75, No. 245 / Wednesday, December 22, 2010 / Rules and Regulations 80333 

that Treasury prints and mails each year 

is expected to increase significantly over 

the coming years, primarily as a result 

of the aging of the baby boomer 

generation. Beginning in 2008, the first 

wave of 78 million baby boomers 

became eligible for Social Security 

benefits. Even as the more 

technologically-savvy baby boomers 

enter the rolls, while improving, the 

direct deposit rate for fiscal year 2010 

climbed no higher than 79.1% for new 

Social Security enrollees. With the 

increase in retiring baby boomers, 

Treasury expects to issue approximately 

60 million new payments each year to 

approximately 5 million newly enrolled 

recipients (based on Social Security 

Administration actuarial data). Of those 

60 million payments, an estimated 9 

million would be made by check based 

on the current overall direct deposit/ 

check ratio (85 percent/15 percent) for 

Social Security payments. By 2020, the 

Social Security Administration projects 

there will be 18.6 million more Social 

Security beneficiaries than in fiscal year 

2009, which would result in more than 

223 million additional payments each 

year. At the current direct deposit/check 

ratio, this would mean 33.5 million 

additional checks each year beginning 

in 2020, at a cost of $31 million each 

year, leading to a total annual cost of 

more than $156 million more than if 

those payments were made by direct 

deposit. 

These projected cost savings do not 

take into account future increased costs 

in postage, paper, and salaries; the cost 

of issuing benefit checks other than 

Social Security and SSI; or the costs 

agencies incur in handling inquiries and 

authorizing replacement checks. For 

example, the Social Security 

Administration expects administrative 

savings resulting from a drop in nonreceipt and lost check actions. The 

Social Security Administration also 

expects to save money by eliminating 

the ‘‘Payment Delivery Alert System,’’ 

which is a joint effort among the Social 

Security Administration, Treasury, and 

the U.S. Postal Service to locate and 

deliver delayed Social Security and SSI 

checks. 

Those who receive their payments by 

direct deposit do not have to worry 

about a lost or stolen check, or carrying 

around large amounts of cash that can 

be easily lost or stolen. Each year, 

approximately half a million 

individuals call Treasury to request 

claims packages related to problems 

with check payments. For example, in 

fiscal year 2009, more than 670,000 

Social Security and SSI checks were 

reported lost or stolen, and in fiscal year 

2010, more than 540,000 checks were 

reported lost or stolen. In fiscal year 

2009, Treasury investigated more than 

70,000 cases of altered or fraudulently 

endorsed checks, totaling $64 million, 

and in fiscal year 2010, Treasury 

investigated almost 50,000 cases, 

totaling $93 million. When checks are 

misrouted, lost in the mail, stolen, or 

fraudulently signed, Treasury must send 

replacement checks to the recipient. 

This can result in a delay in payment, 

especially if fraud or counterfeiting is 

involved, thereby creating a hardship 

for benefit recipients who rely on these 

payments for basic necessities such as 

food, rent, or medication. In contrast, 

individuals receiving Federal payments 

electronically rarely have any delays or 

problems with their payments. Nine out 

of ten problems with Treasurydisbursed payments are related to paper 

checks even though checks constitute 

only 19 percent of all Treasurydisbursed payments made by the 

Government. 

These projected savings also do not 

account for the costs that would no 

longer be incurred by banks and credit 

unions for cashing checks and 

reimbursing the Government when there 

are alterations, forgeries, or 

unauthorized indorsements of Federal 

benefit checks. In fiscal year 2009, it 

cost the banking industry $69.3 million 

to reimburse the Treasury for checks 

that had been fraudulently altered or 

counterfeited, or contained a forged or 

unauthorized indorsement. In fiscal year 

2010, these costs increased to $88 

million. 

5. Alternative Approaches Considered 

Treasury considered three alternative 

approaches to achieving the benefits of 

direct deposit other than the approach 

described in this rulemaking notice. 

First, Treasury could have eliminated 

the individual EFT waivers sooner for 

everyone, i.e., eliminate the waivers for 

all benefit recipients on the same 

effective date, but Treasury was 

concerned about the impact of such a 

rule on payment recipients if the 

amount of time to educate the public 

about the rule’s requirements and 

benefits was inadequate. It is important 

for Treasury and benefit agencies to be 

prepared to respond to recipients’ 

inquiries about the new rules, which 

requires sufficient time to train agency 

customer service representatives, 

educate those affected by the new rules, 

and to implement any process changes 

that may be required. Treasury will 

work closely with the agencies to ensure 

that implementation requirements are 

understood and can be addressed in the 

time frame in the rule. 

Second, Treasury also considered 

phasing in the elimination of the 

individual EFT waivers over a longer 

period of time. Treasury is concerned 

that such a delay results in additional 

costs to individuals who will be delayed 

in realizing the benefits of direct 

deposit. Treasury intends to begin its 

public education campaign immediately 

upon the promulgation of this final rule. 

Treasury will monitor the progress of its 

campaign, and adjust the campaign as 

necessary to ensure maximum 

effectiveness. In addition, a delayed 

implementation results in additional 

costs to the Government and taxpayers. 

For every year that Treasury delays full 

implementation of the EFT rule, the 

Government spends at least $117 

million more for check payments than it 

would otherwise spend if recipients 

were receiving EFT payments. 

Finally, Treasury considered 

eliminating all EFT waivers, and 

whether to institute a formal application 

process for individuals seeking to 

invoke a waiver to the EFT requirement. 

Treasury is concerned that such an 

approach would require the 

unnecessary development of a new 

bureaucratic infrastructure to process 

the applications, and would impose 

administrative burdens on both 

Government agencies and benefit 

recipients. After reviewing comments 

received in response to the NPRM, 

Treasury retained waivers for recipients 

born prior to May 1, 1921 who are 

receiving Federal payments by check on 

March 1, 2013, for payments that are not 

eligible for deposit to a Direct Express®

card account, and for recipients whose 

Direct Express® card has been 

suspended or cancelled. In addition, 

this rule allows a payment recipient to 

request a waiver from the EFT 

requirement on the basis that EFT 

would impose a hardship because of the 

recipient’s inability to manage an 

account at a financial institution or a 

Direct Express® card account due to a 

mental impairment, or because the 

recipient lives in a remote geographic 

area lacking the infrastructure to 

support electronic financial 

transactions. Recipients requesting 

waivers are required to submit a 

certification with a short statement 

explaining why they need a waiver. The 

certification will be signed by the 

individual requesting the waiver before 

a notary public, or in such form that 

Treasury may prescribe. The waiver 

request is considered effective unless 

Treasury rejects the request. 

The availability of the Direct Express®

card negates the need for other 

individual waivers. Agencies retain the 

ability to waive EFT requirements for 


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80334 Federal Register / Vol. 75, No. 245 / Wednesday, December 22, 2010 / Rules and Regulations 

classes of payments for various reasons. 

Finally, in an unusual or exceptional 

circumstance, the Secretary has the 

authority to waive the EFT requirement, 

but Treasury does not anticipate 

invoking this authority except in rare 

situations. 

6. Other Issues 

a. Financial Agent 

Building on the ‘‘lessons learned’’ in 

previous programs and the Direct 

Express® card program pilot, Treasury 

issued an announcement in 2007 

seeking a financial institution qualified 

to act as a Treasury-designated financial 

agent to provide debit card services for 

Federal benefit recipients nationwide, 

through the Direct Express® card 

program. Treasury has unique legal 

authority to designate a financial 

institution as its financial agent to 

disburse Federal benefit payments 

electronically, which includes the 

establishment of an account meeting 

certain requirements, maintenance of an 

account, the receipt of Federal payments 

electronically, and the provision of 

access to funds in the account on the 

terms specified by Treasury. See 12 

U.S.C. 90; 31 CFR 208.2. Fifteen 

financial institutions responded, and 

after careful review of the applications, 

Treasury selected Comerica Bank as its 

agent based on various criteria, 

including the proposed cardholder fees. 

Treasury considered, but rejected, 

selecting multiple financial agents 

(although it has the option to do so in 

the future) primarily to ensure that the 

selected financial agent would be able to 

maintain a sufficient volume of active 

accounts in order to cost-effectively 

sustain a program with the lowest 

possible cardholder fees. The financial 

agent selection process used by 

Treasury enabled Treasury to obtain 

debit card services with the most value 

for benefit recipients, including, among 

other things, better consumer 

protections than those offered by most 

prepaid card products, a surcharge-free 

ATM network of more than 53,000 

surcharge-free ATMs, free low balance 

alerts and deposit notification, 

unlimited free customer service calls, 

and the ability to use the debit card 

product to access Federal benefit 

payments without incurring a fee. 

Treasury provides oversight to confirm 

that its financial agent operates the 

Direct Express® card program to provide 

maximum value at a reasonable cost to 

cardholders. The card program is now 

available to recipients of Social 

Security, SSI, Veterans compensation 

and pension, civil service retirement, 

and railroad retirement benefit 

payments. This allows Federal payment 

recipients to receive multiple types of 

Federal payments to a single Direct 

Express® card account. 

b. Garnishment 

Treasury has also addressed the 

concerns about the improper freezing 

and seizure of benefit funds exempt 

from garnishment. Treasury and the four 

major benefit paying agencies—Office of 

Personnel Management, Railroad 

Retirement Board, Social Security 

Administration, and Department of 

Veterans Affairs—published a notice of 

proposed rulemaking and will soon 

publish a joint rule. The rule will help 

ensure that garnishment-exempt benefit 

payments in an account are not 

improperly seized, and will protect 

benefit recipients where benefit 

payments are directly deposited to an 

account at a financial institution. 

Regulatory Flexibility Act Analysis 

It is hereby certified that the rule will 

not have a significant economic impact 

on a substantial number of small 

entities. The rule applies to individuals 

who receive Federal payments, and does 

not directly impact small entities. 

Accordingly, a regulatory flexibility 

analysis under the Regulatory 

Flexibility Act (5 U.S.C. 601 et seq.) is 

not required. 

Unfunded Mandates Act of 1995 

Section 202 of the Unfunded 

Mandates Reform Act of 1995, 2 U.S.C. 

1532 (Unfunded Mandates Act), 

requires that the agency prepare a 

budgetary impact statement before 

promulgating any rule likely to result in 

a Federal mandate that may result in the 

expenditure by State, local, and tribal 

governments, in the aggregate, or by the 

private sector, of $100 million or more 

in any one year. If a budgetary impact 

statement is required, section 205 of the 

Unfunded Mandates Act also requires 

the agency to identify and consider a 

reasonable number of regulatory 

alternatives before promulgating the 

rule. We have determined that the rule 

will not result in expenditures by State, 

local, and tribal governments, in the 

aggregate, or by the private sector, of 

$100 million or more in any one year. 

Accordingly, we have not prepared a 

budgetary impact statement or 

specifically addressed any regulatory 

alternatives. 

List of Subjects in 31 CFR Part 208 

Accounting, Automated Clearing 

House, Banks, Banking, Electronic funds 

transfer, Financial institutions, 

Government payments. 

■ For the reasons set out in the 

preamble, 31 CFR part 208 is amended 

to read as follows: 

PART 208—MANAGEMENT OF 

FEDERAL AGENCY DISBURSEMENTS 

■ 1. The authority citation for part 208 

continues to read as follows: 

Authority: 5 U.S.C. 301; 12 U.S.C. 90, 265, 

266, 1767, 1789a; 31 U.S.C. 321, 3122, 3301, 

3302, 3303, 3321, 3325, 3327, 3328, 3332, 

3335, 3336, 6503; Pub. L. 104–208, 110 Stat. 

3009. 

■ 2. In § 208.2, redesignate paragraphs 

(c) through (o) as paragraphs (d) through 

(p), respectively, add new paragraph (c), 

and revise redesignated paragraph (e) to 

read as follows: 

§ 208.2 Definitions. 

* * * * * 

(c) Direct Express® card means the 

prepaid debit card issued to recipients 

of Federal benefits by a Financial Agent 

pursuant to requirements established by 

Treasury. 

* * * * * 

(e) Electronic benefits transfer (EBT) 

means the provision of Federal benefit, 

wage, salary, and retirement payments 

electronically, through disbursement by 

a financial institution acting as a 

Financial Agent. For purposes of this 

part, EBT includes, but is not limited to, 

disbursement through an ETAsm, a 

Federal/State EBT program, or a Direct 

Express® card account. 

* * * * * 

■ 3. Amend § 208.4 as follows: 

■ a. Remove the introductory text; 

■ b. Revise paragraph (a); 

■ c. Add paragraph (a)(1); 

■ d. Redesignate paragraphs (b) through 

(g) as paragraphs (a)(2) through (a)(7). 

■ e. In redesignated paragraph (a)(4), 

further redesignate paragraphs (1) and 

(2) as paragraphs (a)(4)(i) and (ii); 

■ f. Revise redesignated paragraph 

(a)(6); and 

■ g. Add new paragraph (b). 

The revisions and additions read as 

follows: 

§ 208.4 Waivers. 

(a) Payment by electronic funds 

transfer is not required in the following 

cases: 

(1) Where an individual: 

(i) Is receiving a Federal payment by 

check prior to May 1, 2011. In such 

cases, the individual may continue to 

receive those payments by check 

through February 28, 2013; 

(ii) Files a claim for a Federal 

payment prior to May 1, 2011, and 

requests payment by check at the time 

he or she files the claim. In such cases, 

the individual may receive those 


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Federal Register / Vol. 75, No. 245 / Wednesday, December 22, 2010 / Rules and Regulations 80335 

payments by check through February 

28, 2013; 

(iii) Was born prior to May 1, 1921, 

and is receiving payment by check on 

March 1, 2013; 

(iv) Receives a type of payment that 

is not eligible for deposit to a Direct 

Express® card account. In such cases, 

those payments are not required to be 

made by electronic funds transfer, 

unless and until such payments become 

eligible for deposit to a Direct Express®

card account; 

(v) Is ineligible for a Direct Express®

card because of suspension or 

cancellation of the individual’s card by 

the Financial Agent; 

(vi) Has filed a waiver request with 

Treasury certifying that payment by 

electronic funds transfer would impose 

a hardship because of the individual’s 

inability to manage an account at a 

financial institution or a Direct Express®

card account due to a mental 

impairment, and Treasury has not 

rejected the request; or 

(vii) Has filed a waiver request with 

Treasury certifying that payment by 

electronic funds transfer would impose 

a hardship because of the individual’s 

inability to manage an account at a 

financial institution or a Direct Express®

card account due to the individual 

living in a remote geographic location 

lacking the infrastructure to support 

electronic financial transactions, and 

Treasury has not rejected the request. 

* * * * * 

(6) Where the agency does not expect 

to make payments to the same recipient 

within a one-year period on a regular, 

recurring basis and remittance data 

explaining the purpose of the payment 

is not readily available from the 

recipient’s financial institution 

receiving the payment by electronic 

funds transfer; and 

* * * * * 

(b) An individual who requests a 

waiver under paragraphs (a)(1)(vi) and 

(vii) of this section shall provide, in 

writing, to Treasury a certification 

supporting that request, in such form 

that Treasury may prescribe. The 

individual shall attest to the 

certification before a notary public, or 

otherwise file the certification in such 

form that Treasury may prescribe. 

■ 4. Revise § 208.6 to read as follows: 

§ 208.6 Availability of the Direct Express®

Card. 

An individual who receives a Federal 

benefit, wage, salary, or retirement 

payment shall be eligible to open a 

Direct Express® card account. The 

offering of a Direct Express® card 

account shall constitute the provision of 

EBT services within the meaning of 

Public Law 104–208. 

■ 5. Revise § 208.7 to read as follows: 

§ 208.7 Agency responsibilities. 

An agency shall put into place 

procedures that allow recipients to 

provide the information necessary for 

the delivery of payments to the recipient 

by electronic funds transfer to an 

account at the recipient’s financial 

institution or a Direct Express® card 

account. 

■ 6. Revise § 208.8 to read as follows: 

§ 208.8 Recipient responsibilities. 

Each recipient who is required to 

receive payment by electronic funds 

transfer shall provide the information 

necessary to effect payment by 

electronic funds transfer. 

■ 7. Revise the third sentence in 

§ 208.11 to read as follows: 

§ 208.11 Accounts for disaster victims. 

* * * Treasury may deliver payments 

to these accounts notwithstanding any 

other payment instructions from the 

recipient and without regard to the 

requirements of §§ 208.4 and 208.7 of 

this part and § 210.5 of this chapter. 

* * * 

■ 8. Remove Appendix A and Appendix 

B to Part 208. 

Dated: December 16, 2010. 

Richard L. Gregg, 

Fiscal Assistant Secretary. 

[FR Doc. 2010–32117 Filed 12–21–10; 8:45 am] 

BILLING CODE 4810–35–P 

DEPARTMENT OF THE TREASURY 

Fiscal Service 

31 CFR Part 210 

RIN 1510–AB24 

Federal Government Participation in 

the Automated Clearing House 

AGENCY: Financial Management Service, 

Fiscal Service, Treasury. 

ACTION: Interim final rule. 

SUMMARY: The Department of the 

Treasury, Financial Management 

Service (FMS) is amending its 

regulation governing the use of the 

Automated Clearing House (ACH) 

system by Federal agencies to permit the 

delivery of Federal payments to prepaid 

debit cards that meet certain criteria. To 

be eligible to receive Federal payments, 

a card must provide the cardholder with 

pass-through deposit or share insurance 

and the card account must not have an 

attached line of credit or loan feature 

that triggers automatic repayment from 

the card account. In addition, the issuer 

of the card account must provide the 

cardholder with all of the consumer 

protections that apply to a payroll card 

under the Federal Reserve Board’s 

Regulation E. 

DATES: This interim final rule is 

effective January 21, 2011. Comments 

must be received on or before February 

22, 2011. 

ADDRESSES: You can download this 

interim final rule at the following Web 

site: http://www.fms.treas.gov/ach. You 

may also inspect and copy this interim 

final rule at: Treasury Department 

Library, Freedom of Information Act 

(FOIA) Collection, Room 1428, Main 

Treasury Building, 1500 Pennsylvania 

Avenue, NW., Washington, DC 20220. 

Before visiting, you must call (202) 622– 

0990 for an appointment. 

In accordance with the U.S. 

government’s eRulemaking Initiative, 

FMS publishes rulemaking information 

on http://www.regulations.gov. 

Regulations.gov offers the public the 

ability to comment on, search, and view 

publicly available rulemaking materials, 

including comments received on rules. 

Comments on this rule, identified by 

docket FISCAL–FMS–2010–0003, 

should only be submitted using the 

following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions on the Web site for 

submitting comments. 

• Mail: Walt Henderson, Financial 

Management Service, 401 14th Street, 

SW., Room 337, Washington, DC 20227. 

The fax and e-mail methods of 

submitting comments on rules to FMS 

have been decommissioned. 

Instructions: All submissions received 

must include the agency name 

(‘‘Financial Management Service’’) and 

docket number FISCAL–FMS–2010– 

0003 for this rulemaking. In general, 

comments received will be published on 

Regulations.gov without change, 

including any business or personal 

information provided. Comments 

received, including attachments and 

other supporting materials, are part of 

the public record and subject to public 

disclosure. Do not disclose any 

information in your comment or 

supporting materials that you consider 

confidential or inappropriate for public 

disclosure. 

FOR FURTHER INFORMATION CONTACT: Walt 

Henderson, Director of the EFT Strategy 

Division, at (202) 874–6619 or 

walt.henderson@fms.treas.gov; or 

Natalie H. Diana, Senior Counsel, at 

(202) 874–6680 or 

natalie.diana@fms.treas.gov. 


emcdonald on DSK2BSOYB1PROD with RULES