The 10% Bleed: How Plasma Donors Got Stuck With Prepaid Card Fees and Why It Matters
The American plasma industry has thrived since the Great Recession, keeping financial vampires well fed.
An hour after they stuck me, I ran out of ways to ignore the needle in my arm. There were no TVs, my phone was dead, and my left hand, at the end of an arm battered by technicians who’d given up trying to find a vein there, was too numb to hold a magazine upright. I didn’t want to risk eye contact with whomever was on the next couch, but had been told not to shut my eyes — sleep wasn’t allowed. I looked up at the ceiling. There were no distractions.
I was four months removed from my last job, writing for an alt-weekly. I’d eaten my severance, which was a little over a grand, and was attempting to live on $345 a week from Missouri’s unemployment office. Even if you prune all your expenses, you still have to spend something: on utilities, food, rent or a mortgage, gas or a bus pass depending on geography, and probably a payment on student loans or a credit card if you’re like most younger Americans. You’re left to scrabble by on $1,380 a month — about $44.50 a day. I’d been out of work four months, and no longer could. So, I sold plasma.
Something else had changed besides the crowd, something I didn’t find out until they gauzed my wound and sent me out to get paid. In the aftermath of the housing crash, plasma companies had shifted to a payment model that allowed big banks to profit off donors as well, via fees as high as 15 or 20 percent. The same financial institutions who drove the economy off the cliff were hurting too, you see, and like the rest of us they were looking to make up the difference by cutting deals with an industry swelled with the ranks of the desperate. They chose a new, unregulated way to drain more than just my blood.
Like oil companies, the plasma industry keeps finding new wells to tap. A hundred centers opened during the Great Recession, doubling the donor pool from 12.5 million transactions in 2006 to 23 million in 2011, the year I went back to donating. BioLife’s website boasts that the industry has gone from $4 billion a year to $11 billion per year, with no signs of ebbing to pre-2008 levels. Its collections are used for medical research, and to provide a key ingredient in medical products used primarily to treat clotting problems or to aid antibody production.
The Kansas City operation I “donated” at, ZLB Plasma, has since adopted the name of its parent company and now goes by CSL Plasma Services. There are roughly 60 collection centers in that chain in the United States and another eight in Germany. And they’ve got competition: Biotest, Yale Plasma, OctaPharma, BioLife — the names changing state to state like regional fast-food drive-thrus. CSL alone estimates an annual plasma pool of 800,000 gallons bought and paid for. That’s about the same amount as the 2010 Kalamazoo River oil spill, a quantity that could flood a football field knee-high. The United States is one of the few countries that allows medical companies to pay plasma donors, though companies insist on the technicality that they’re paying people for only their time, not for fluids. “The U.S. is the OPEC of plasma,” Jim MacPherson, then the chief executive of America’s Blood Centers, a blood bank network, told The New York Times in 2009.
The screening process doesn’t ask you about your financial status — walking through the door is a strong indicator on its own — but many donors are among the estimated 58 million Americans who lack access to traditional banking services. Often they don’t have enough money to open an account or to meet the minimum balances, or the income they do have isn’t regular. The unbanked are disproportionately people of color and undocumented workers.
According to the Federal Deposit Insurance Corporation, one in three unbanked Americans says part of the reason they aren’t using checking accounts is because of high or unpredictable fees, something that, prior to the crash in 2008, made a cash-in-hand payout from the plasma centers an attractive proposition. But with the surplus of willing donors, companies like CSL Plasma, BioLife, and Talecris didn’t need to offer such incentives to convince people to donate twice a week. CSL, for one, clearly knew this when it lowered payments by $20.
The Credit Card Act of 2009 limited retroactive interest rate hikes and what banks could charge you for paying late or for surpassing your credit limit. That same year the Federal Reserve banned banks from automatically enrolling customers in debit card and ATM accounts that charged exorbitant overdraft fees at about the same time Dodd-Frank called for a limit on the amount of interchange fees banks could charge businesses that accepted debit cards. As the government moved to protect consumers, by 2011 banks were adjusting. It was getting harder for people to open a “free” checking account. Banks were requiring higher minimum balances or a certain number of debit-card payments or direct deposits per month. Making money on traditional fees was getting harder and harder.
Prepaid cards presumably went under the radar because they’re mostly used by people who go under the radar. Also because, to a financially stable person, the fees sound like small change. But for anyone without steady employment, willing to take a needle for $20, a $2.50 service charge is the ultimate poor tax.
The shift away from a cash-on-hand business had some obvious benefits. “The more benign reason is, it’s easier on them not to have the cash for security reasons,” says Ira Rheingold, the executive director of the National Association of Consumer Advocates. “If you’re looking for less benign reasons, look at relationship with the prepaid card. Most of it is simply convenience, but there could be could be kickbacks to the plasma company. There are so many inherent dangers and you’re dealing with people who have very, very limited cash.”
Without seeing agreements between businesses and banks, it’s uncertain whether plasma companies get a cut. The Plasma Protein Therapeutics Association, a trade group, did not respond to interview requests, nor did Dr. Jay Epstein, director of blood research at the Food and Drug Administration, the office that regulates collection centers and plasma products. Jeffrey Lyttle, a senior vice president at JPMorgan Chase & Co., declined to discuss fee structures with Inverse.
“As a matter of policy, I can’t discuss the details of any client relationship,” Lyttle wrote in an email. “I can’t even confirm that an individual or company is a client of our firm. The customer is free to do that, of course, but we do not.”
Chase offers a prepaid card product, fittingly named Liquid, used by some clinics. The Chase card guide promises users only a monthly service fee of $4.95 along with the standard fee of $2.50 per transaction or balance inquiry at any non-Chase ATM. The monthly fee alone represents a sizable chunk of the payout for plasma donation and can even make it instantly worthless for cash withdrawals if the charge drops the balance below the $20 minimum of most ATMs. As the card was rolled out in 2012 during a boom for targeting low-income consumers (Western Union, MoneyWise, and American Express all offered cards with zero monthly fee around the same time), it’s impossible the card was the exact same model used by those angry donors in the late aughts, even as the fee structure is similar. Though considering JPMorgan Chase’s 2012 complaint that customers with less than $100,000 in their accounts weren’t making the institution any money, it seems reasonable that tapping the unbanked and poor is exactly what the cards are designed to do.
Whatever the benefit is to the industry, the donors can find accessing payment a Kafka-worthy horror-comedy. Take for example this complaint about the debit card partnership between Chase Bank and BioLife Plasma in a June 2009 entry on Ripoff Report by Lola, of Bloomington, Indiana — all (sic):
“Chase bank allows one transaction for free per donation and then it is $2.50 to get your money. Their screen is a touch screen selection style and if you are not really careful the wrong selection detects the touch, then you have to do it over and there you go…now it is $2.50 for that do over. Also if you try to get money you think you know is in there by doing a balance inquiry…that is another ‘transaction’ and you are charged for that. If there is no account activity over a period of months they charge you for that. Another complaint about Chase Bank is that you can only get money at the ATM in multiples of $20. So if you have $50 in the bank you can only get $40. You cannot go into the bank and withdraw it and you cannot add money to that account yourself to bring it up to $20 so you can get your money. Also if you have $20 in there and try to get it and goof up on the sign-in screen, like put in the wrong pin or hit the wrong function touch button, and have to do it over….Chase takes out their $2.50 fee and you get a note saying you do not have that amount in your account. If that note confuses you so you do a balance inquiry then you get charged another transaction fee.”
A second, anonymous BioLife donor from Missouri also felt scammed by the change in this 2008 posting:
“My problem with this is, that you are not given the complete cash upfront for the donation instead you are given a list of ATMs to visit in your area. All tell you that it is, ‘FEE FREE,’ of course that is a lie. What they don’t tell you in the paperwork is that when you go to those ‘FEE FREE’ ATMs they will waive the ‘first’ donation in fees but not the second donation. You will have to pay the bank surcharge to the ATM of $2.50 as said under the Terms & Agreement for cardholders.”
The takeaway here, consistent with my experience, is that getting paid on a card that bakes in a host of niggling fees and penalties is, disconcertingly, like not getting paid at all.
After you finish donating it goes like this: You have your card and you go to the store, jaundiced chemicals visible around the bandage cutting into your elbow joint. How long can you make your earnings last? The luxury category are foods that are cheap and real — eggs, oatmeal, potatoes — a rung below that, maybe ramen. Toilet paper makes the list. Whatever you choose, the store has a minimum fee of $10 to charge, so you have to keep spending. You could withdraw the cash, but depending on how close to an authorized ATM you are even that could cut you down $2.50. You start adding up items. Do you really need coffee? It’ll get you over the limit, but then you’ve spent $16.75, and what the hell are you going to do with the remaining $3.25 on the card? And what about the point-of-sale fee the store might charge you just for swiping your card? This is the algebra you’re doing just to replace the liquids you lost, the very proteins. How close can you come to using the money you have?
Prepaid cards aren’t unique to plasma donations, though few transactions seem as despairing as trading a piece of yourself for small bills. Correctional facilities have increasingly adopted the cards as a way to give inmates what little money they might have on release. Hip-hop mogul Russell Simmons jumped into the market with RushCard, a prepaid debit card that lets users get their paychecks two days in advance via direct deposit. He and the card have been summarily hit with accusations of predatory services, largely in the form of hidden fees, not unlike brick-and-mortar payday loan businesses.
Banks cottoned to prepaid cards during the stagnant recovery of the Great Recession (a 2014 Census report found the number of Americans in poverty and the median household income both unchanged since 2011) in part for the very feature that had made subprime mortgages so lucrative: indifferent regulation. Unlike traditional checking accounts, cards don’t need to offer such basic protections as limits on fees or on losses due to theft. In BioLife’s case, the debit card it uses for payment is subject to a $3.00 monthly fee if inactive; a fee can be applied if a merchant or ATM declines your card; you can be charged for checking your balance at an ATM; and you can be charged a fee to replace a lost or stolen card. Other cards can charge consumer service fees (about $2 just to talk to a rep about your card) or the even more insidious point-of-sales fees, which charges you just for using your own money, such as the READYdebit Control card that charges 95 cents every time a PIN or signature is entered. The National Retail Federation estimates hidden swipe fees cost an average household about $427 per year — roughly seven weeks of regularly selling your plasma.
That could change in 2016 as the Consumer Financial Protection Bureau rolls out suggestions to finally establish some clear rules on what you can charge people, at least in some cases.
“Mostly these are rules focusing on basic rights like unauthorized charges on cards and more clear fee disclosures,” says Lauren Saunders, associate director at the National Consumer Law Center. “I’m not sure how much of it would even cover these cards.”
After gently staking out the offices of CSL Plasma in Davenport, Iowa, on Saturday, I caught a donor named Tony on his way out, a newly loaded card in pocket. He didn’t want to give his full name, but said he was on the lookout for his next job and had been donating off-and-on since 2004. “Yeah, I liked it a lot better when they just paid me cash. I can’t do anything about that. But I liked it better,” he told me. “I’ve heard people say it’s supposed to cut down on people walking out and buying crack or some shit straight off, but if they’re on crack they shouldn’t be donating. It’s not stopping anybody from buying drugs, [the card’s] just taking their cut before they buy the drugs.”
I sympathized with Tony. It took me almost a year to find steady work after my layoff. I have a better job now, and a real debit card, one tied to a bank account. But I still remember calculating how to use a prepaid card to buy hamburger meat and butter. And, strangely, I still remember the wall art in the ZLB Plasma clinic. The posters in the lobby showed healthy people talking about how they used their plasma money to make a payment on a new car or to buy a ticket to Hawaii. In the room itself, where there was so little else to look at — so few distractions — there was a sign with a simple warning: “INCOMPLETE DONATIONS WILL NOT BE PAID.”
My donations were complete. In the hollow of my left arm, there is the cratered scar to prove it. I’m just not sure precisely who I was donating to.