Individuals have been coming to our bank and asking for cash advances on debit cards issued by the Illinois Department of Employment Security (IDES) for unemployment benefits. Can we charge a fee for providing these cash advances? Mastercard charges us a fee for these transactions.

If your bank is a MasterCard member or participating bank, we believe that MasterCard’s rules would prohibit you from charging a fee when providing a cash advance on an IDES debit card when the cardholder is making the first such request in a calendar month.

IDES issues unemployment insurance benefits on debit Mastercards issued by KeyBank, and the fee schedule for these cards provides that cardholders are entitled to one free over-the-counter withdrawal per month at participating Mastercard member bank branches. Thereafter, cardholders may be subject to a $5.00 fee.

Additionally, you may be prohibited from charging any fees in connection with a cash advance on a debit Mastercard if your bank is a “Customer” licensed by Mastercard to participate in certain activities. The publicly available Mastercard Transaction Processing Rules provide that “with respect to the acceptance of prepaid Cards, the Customer and each of its authorized cash disbursement agents must disburse all cash disbursements at par without any discount and without any service or other charge to the Cardholder, except as may be imposed to comply with applicable law.” As such, we recommend reviewing any agreements you have with Mastercard to determine whether you would be prohibited from charging a fee for subsequent IDES debit card advances requested in a single month.

Additionally, we note that the Illinois Attorney General has warned of rampant unemployment insurance identity theft involving IDES debit cards being sent to individuals who did not apply for unemployment benefits. Such individuals are advised not to activate the cards and to report them to IDES.

For resources related to our guidance, please see:

IDES, Unemployment Insurance (“KeyBank Debit MasterCard Information and FAQ . . . With the Debit Card, you can access your payments 24 hours a day, 7 days a week through retail Point-of-Sale (POS) terminals and Automated Teller Machines (ATMs) where you see the MasterCard logo or the logos on the letter your card was attached to in this package.”)

Key2BenefitsSchedule of Card Fees (“You agree to pay the fees disclosed in this Schedule of Card Fees . . . You also agree that we may deduct these fees and any other charges from the funds on your Card. . . . . Over-the-counter withdrawals at participating MasterCard member bank branches3 — 1 free per month, $5.00 thereafter . . . 3MasterCard member bank branch locations require a withdrawal from the branch teller.”)

Mastercard Transaction Processing Rules, Section 4.15.3 — Discount or Service Charges (December 11, 2020) (“In the U.S. Region, the Rule on this subject is replaced with the following: With respect to the acceptance of prepaid Cards, the Customer and each of its authorized cash disbursement agents must disburse all cash disbursements at par without any discount and without any service or other charge to the Cardholder, except as may be imposed to comply with applicable law. Any charge imposed to comply with applicable law must be charged to and paid by the Cardholder separately and must not be included in the total amount of the cash disbursement.”)

Mastercard Transaction Processing Rules, Appendix H Definitions (December 11, 2020) (“Customer. A financial institution or other entity that has been approved for Participation. A Customer may be a Principal, Association, Affiliate, Digital Activity Customer, Sponsored Digital Activity Entity, or PTA Customer.”)

Mastercard Transaction Processing Rules, Appendix H Definitions (December 11, 2020) (“Participation. The right to participate in Activity, Digital Activity, and/or Payment Transfer Activity granted to a Customer by the Corporation. For a Mastercard Customer, Participation is an alternative term for Membership.”)

Mastercard Transaction Processing Rules, Appendix H Definitions (“Activit(ies). The undertaking of any lawful act that can be undertaken only pursuant to a License granted by the Corporation. Payment Transfer Activity is a type of Activity. Also so Digital Activity(ies).”)

Mastercard Transaction Processing Rules, Appendix H Definitions (“Activit(ies). (“License, Licensed. The contract between the Corporation and a Customer granting the Customer the right to use one or more of the Marks in accordance with the Standards and in the case of Payment Transfer Activity, includes a PTA Agreement. To be ‘licensed’ means to have such a right pursuant to a License.’”)

Consumer Alert, Attorney General Raoul Urges Illinois Residents to be Alert for Unemployment Insurance Identity Theft (July 27, 2020) (“According to Raoul, several individuals contacted the Attorney General’s office after receiving unemployment insurance debit cards in the mail – despite not having applied for benefits. Attorney General Raoul is warning people who receive unsolicited debit cards in the mail that their personal or financial information may have been compromised. Raoul is urging these individuals to contact the Illinois Department of Employment Security at 800-814-0513 to report receiving the unsolicited card and contact the Illinois Attorney General’s office if they need information to take steps to guard against identity theft.”)

IDES, Reporting Unemployment Insurance Fraud (“What steps should I take if I receive a debit card or a UI Finding letter, and did not file for unemployment benefits? If you suspect a claim has been submitted using your information, and you have not applied for unemployment insurance benefits in Illinois, take steps as follows:

Report the fraudulent claim here.

DO NOT activate the debit card that was mailed to you.

DO NOT contact KeyBank.

Request your free credit reports via www.annualcreditreport.com and review them for other fraudulent activities.”)