What your California middle class tax refund will cost you

When James Clerf received his Middle Class Tax Refund via a debit card, he was alarmed. 

“When I read the terms on the back of the form about all the different charges the bank was going to make, I thought it didn’t sound right,” he said

Fees you’ll pay

But it is right. The cards can cost you, depending on how you use them. And the program, overall, has cost the state a chunk of change. 

California paid $25 million to a debit card vendor to produce and manage the cards; that vendor subcontracted a New York bank to issue them. And the vendors are also collecting money directly from you. 

For example, if you withdraw cash at your bank’s ATM, you’ll likely pay $1.25 per transaction. Your bank may penalize you and charge you a fee, too.

To avoid ATM fees, you have to use an in-network ATM, and those are generally located in some drug stores, gas stations and grocery stores. Other transactions will cost you, too.

Clerf is frustrated that a debit card was his only option. 

“Why do I have to pay an out of state bank anything when they could issue me a check?” he said.

The answer, in short, is because it’s faster. The Franchise Tax Board told the I-Team it can get payment to residents six months quicker using debit cards. 

Reports of hacking

But while debit cards might be fast, they also attract fraudsters who hack the cards. This has been an ongoing problem with other state debit card programs, like EDD and EBT. 

One resident emailed the I-Team: “Our card was drained by two purchases on the day I activated the card.” He said the purchases took place 100 miles from his home. 

The Franchise Tax Board told the I-Team that there’s “no indication that this is a widespread issue” and that it’s “keeping a close eye on the situation.” It also said: “No form of payment, including a check, is completely fraud-proof.”

Some residents still waiting for payment

The state says most residents have received their refunds, but some say they’re still waiting. Most of these complaints come from people who should have received their refund through direct deposit to their bank account, because they filed their taxes electronically.

The Franchise Tax Board said it needs to validate eligibility for some of those residents, and that could extend the timing.  

Clerf wonders if all of this was worth it. 

“My question would be – is that really a good use of taxpayer money?” he said. 

If you have a problem with your refund:

1. Check your eligibility and when you will receive your middle class tax refund.
2. Chat is available for your debit card at mctrpayment.com, weekdays 8AM to 5PM
3. Call customer support about your debit card at 800-542-9332, weekdays 8AM to 5PM
4. Activate your card by calling 800-240-0223, available 24/7
5. Most debit card questions are answered here.