The Government Spends 10 Times More on Foster Care and Adoption Than Reuniting Families

It sounds like a conspiracy theory: The United States government incentivizes foster care placements and forced adoption over social support and reunification with birth families. It seems unreal, possibly even illegal, and not at all like something a responsible government would do.

Unfortunately, it’s very real, and the root cause of many  of the problems in child welfare cases.

“Some people do phrase it as a conspiracy theory,” acknowledged Richard Wexler, executive director of the National Coalition for Child Protection Reform. “When they say the government makes money on foster care, that’s not true … on foster care they still lose money, but they lose less money [than on reunification]. And private agencies do make money on foster care in many cases.”

In the United States, child welfare agencies are tasked with ensuring the health and safety of the nation’s children. Each agency receives a complex web of funding from federal, state, and local sources, leaving it accountable to a hodgepodge of authorities. Although these agencies are often referred to as “child protective services” and considered by many as a cohesive national program, state and local agencies are only linked by a loose set of federal guidelines that provide broad definitions for child maltreatment, along with the Adoption and Safe Families Act (ASFA).

First enacted in 1997 under the Clinton administration, ASFA has undergone several rewrites, but its overarching purpose has remained steady: to ensure “timely permanency planning for children.” Part of the emphasis on “permanency” includes financial reimbursements for foster care programs, as well as adoption bounties, which are lump sums in the thousands paid to states for each child they successfully adopt out after a certain threshold.

This starts with the Federal Foster Care Program (Title IV-E of the Social Security Act), which functions as an open-ended entitlement grant. There is no upper limit to the amount of funding that can be provided for eligible foster children each year. States receive reimbursements ranging from 50 cents to approximately 76 cents for each dollar spent on daily child care and supervision, administrative costs, training, recruitment, and data collection.

But when it comes to programs that support family reunification, the budget slims. Title IV-B of the Social Security Act, which governs federal reunification funding, includes a capped entitlement component and a discretionary component. So, unlike foster care funding, these dollars come with a set limit.

And that limited money isn’t all for reunification services. Title IV-B also includes provisions that allow for some of this funding to go toward foster care programs. A portion is also required to go toward adoption promotion.

The result of this imbalanced funding structure? The federal government spends almost 10 times more on foster care and adoption than on programs geared toward reunification.

One of the less-known sources of federal funding for child welfare programs is the Temporary Assistance for Needy Families (TANF) program. TANF is supposed to be a cash-assistance program servicing low-income families with children, In reality, TANF funds can be used to support many services designed to help “needy” children, including child protection agencies. The result is that many states use TANF funds to finance foster care, child welfare investigations, and adoption or guardianship payments.

Because child welfare program data are self reported, it can be difficult to track exactly how each dollar is spent, but Wexler was able to identify eight states using TANF to pay for adoption subsidies, 23 states funding CPS investigations, 27 states funding foster care, and three states diverting TANF money to fund residential treatment facilities for child welfare involved children.

Considering that three-quarters of substantiated child maltreatment cases are related to neglect, which is often the result of poverty, it seems exceedingly unjust that funds supposedly intended to offset the worst effects of poverty are instead being used to finance the separation of mostly poor families.

The harder the system deems the child to place, the higher the bounty.
– Richard Wexler

Under ASFA, states are — with few exceptions — required to file for the termination of parental rights when a child has been in foster care for 15 of the past 22 months. In an attempt to curtail the infamous foster care hopscotch, which leaves children whose parents have lost their rights bouncing from foster home to foster home, the government created adoption payment incentives.

Adoption bounties range from $4,000 to $12,000 per child. As Wexler explained, “the harder the system deems the child to place, the higher the bounty.”

But in order to begin collecting that money, a state must exceed the last year’s number of adopted children, thus incentivizing states to permanently re-home an ever-increasing number of children each year. As can be expected, the number of adoptions increased in the five years after the implementation of ASFA, while reunifications declined. The Bush administration’s Adoption and Promotion Act of 2003 further codified this adoption bounty system by allocating $43 million yearly to states that succeed in increasing the number of adoptions from foster care.

Many states contract with private agencies that oversee out-of-home placements and service referrals for child welfare involved children. Said Wexler, “that agency will probably be paid for each day that child remains in foster care … So the private agency has an incentive to convince itself that the child really, really can’t go home and has to stay with them for a long, long time.”

What does this look like on the ground? Painfully delayed referrals to support services such as parenting classes and addiction treatment, judges hesitant to find fault with the way agencies and providers handle cases, and private agencies eager to deem parents unfit for reunification.

There have been some recent moves at the federal level aimed toward shifting some of these financial imbalances. The Family First Act, signed into law in 2018, now allows federal reimbursements for mental health services, evidence-based substance use treatment, and in-home parenting support. Its purpose is to create similar incentives for helping families stay together.

Unfortunately, the act does not support many of the common needs that lead to family separation, such as housing or child care support. And because the programs it does support must meet stringent requirements in order to be eligible for reimbursement, foster care and adoption subsidies continue to exceed reunification programs by the hundreds of millions.



The Next Recession Will Be Harder Than It Needs to Be. Here’s Why.

Recessions are hardest on those who can least afford it.

Take the Great Recession, the economic plunge that followed the 2008 financial crisis. It cost those in the poorest 10 percent of Americans more than 20 percent of their incomes, which was more than twice the drop experienced by the richest 10 percent. It was black and Hispanic workers, as well as workers who didn’t have a college degree, who saw higher rates of unemployment and longer durations without a job than other workers.

Overall, the recession exacerbated already existing inequalities in wealth and income, with black and Hispanic families, as well as women, falling further behind their white, male counterparts in terms of asset building.

And the next recession could be even harder.

It’s not because that next recession, whenever it arrives, will reach the depth and breadth of the Great Recession. Rather, it’s because federal and state governments have been undermining the programs that protect people when an economic downturn arrives, such as unemployment benefits or nutrition assistance, essentially since the Great Recession ended. This means those programs will be even less effective when they’re next called into action, making the next recession more painful than it would be otherwise.

These concerns are even more important now that there are some flashing red signs that a recession may come sooner than anyone would hope.

To start, nine states have cut the duration of their unemployment benefits systems to below the previously standard 26 weeks, with Florida cutting all the way down to 12. During the recession, when the average length of unemployment approached 40 weeks, more conscientious states extended benefits up to 99 weeks.

While five of the states that have cut unemployment benefits have rules in place to automatically expand benefits if the unemployment rate rises, the other four don’t. And since the conservatives who now control the Senate were against those Great Recession benefits expansions, there’s no guarantee of federal help if states do not act to fix their stingy systems.

Also, having a workable benefits system in place doesn’t necessarily ensure people get the help they need. In 2007, 35 percent of unemployed workers received benefits. Today, barely more than a quarter do due to the imposition of more stringent eligibility requirements. In some states it’s substantially worse: In 2017, for instance, just 10 percent of unemployed workers in North Carolina qualified.

So the main bulwark against poverty when mass unemployment occurs has been whittled down from a standard that even before the recent cuts left America among the least generous countries in the world.

Then there’s nutrition assistance. During the recession, the Supplemental Nutrition Assistance Program (SNAP) provided help to nearly 50 million people per month at its peak in December 2012. But the Trump administration — after trying and failing to convince Congress to cut the program — has unilaterally imposed new limits that are going to make it so the program reaches fewer people in the future.

One change, in particular, makes it harder for states to waive certain requirements during periods of high unemployment, which is exactly the time at which eligibility should be expanding.

The Trump administration is also providing waivers to states so that they can add work requirements to Medicaid – to date, six states have had their waivers approved. So when workers lose their jobs, and thus their employer-based health insurance, Medicaid will be that much harder to turn to.

An economic problem is going to collide with a political one

Other steps state governments have taken will also make recession response harder. One of the fundamental problems during an economic downturn is that most states have balanced budget requirements, meaning they have to cut their budgets and suck money out of the economy at the precise moment households are doing the same thing, creating a vicious cycle of economic contraction. Education is a particular favorite for reductions; 12 states still aren’t spending as much on their education system today as they were before the Great Recession.

To deal with that reality, states have rainy day funds they are meant to deploy during rough times to counteract some of that budget slashing. However, about a third of states don’t have the money available in their funds to get through even a moderate downturn. Some of those states, such as Kentucky and Missouri, decided to lower tax rates for their wealthiest earners this year, which didn’t really help bolster those reserves.

Come an economic downturn, the federal government could step in to fill the void states create, just as it did during the Great Recession, providing aid so that states don’t have to, for instance, lay off as many teachers as they would otherwise. But there’s not much reason to believe conservatives in the U.S. Senate would be for that, either. So, an economic problem is going to collide with a political one, creating more pain for more people. (It doesn’t help that Republicans in Congress used $1.5 trillion on a tax cut for the rich and big corporations that had little economic effect, and will embolden those who think additional spending is impossible due to federal deficits and debt.)

Of course, there’s no divining whether a recession is imminent. It may be that the warning signs this time are just a false alarm. But another recession is going to come eventually. And when it does, it’s going to be more painful than necessary, not due to any innate economic condition, but because of choices policymakers made.



Waiting For A Check To Clear Sucks. The Fed Wants to Fix That.

Many people have shared the experience of depositing a check and then waiting while it takes days to clear; the money is there, but not there.

For low-income people, that experience isn’t just annoying. It can also be a real financial hardship. Mismatches between available funds and expenses can create a spiral of bank overdraft fees and denied transactions, and the deeper in someone gets, the more insurmountable it can feel.

“It’s very embarrassing,” a commenter told TalkPoverty, describing a day of being hit with three separate overdraft fees while waiting on  processing for a paycheck.

That’s something that could change as early as 2024 with a proposed real-time payments system recently announced by the Federal Reserve, America’s central bank. With FedNow, as it’s being called, funds could be moved any day, any time, nearly instantly.

The move is long overdue and has big implications for people who cannot afford to wait for a transaction to clear, such as the 1.8 million people earning minimum wage or less. A waiter making a tipped minimum wage, for example, can ill afford to deposit a paycheck and wait for it to clear with their rent deadline looming, and the technology already exists to fix the problem.

Real-time payments are used all over the world to move funds rapidly; they are a type of “faster payments,” which speed the payment process relative to the current standard, but they aren’t just faster. They are, as the name implies, virtually instant.

The United States, though, has remained stuck in the past with an outdated payments system created decades ago that doesn’t operate every day or at all times throughout the day.

In places such as Mexico, the U.K., Japan, Australia, and Turkey, both private firms and central banks own and operate faster payment systems — and in the U.S., a consortium of banks known as the Clearing House operates its own, called, creatively, RTP (for Real-Time Payments). RTP has been rolling out since 2017, and is open to all federally-insured financial institutions. The Clearing House claims RTP is active on 50 percent of direct deposit accounts in America, but the service’s initial customers were the same larger banks that make up the Clearing House.

These account for a large volume of American bank accounts, but a smaller segment of American banks; good for Chase, but perhaps not good for clients, especially since RTP controls pricing and access, potentially to the detriment of some users.

The Fed, building on the work of a task force formed to explore faster payments, wants to leverage its already extensive network of connections with banks, credit unions, and other financial institutions large and small. The goal is not to replace RTP, but to offer another option, and specifically a public one, which offers a net good and adheres to the government’s critical role in promoting fair access, pricing, and opportunity for all.

This is important because while the Clearing House has promised to hold rates steady, there’s no guarantee it will. Smaller banks are concerned about being cut out by what former Independent Community Bankers of America president and CEO Cam Fine described as a “monopoly.” Clearing House’s target date of 2020 for covering all direct deposit accounts in the U.S. is also likely unrealistic, while the Fed’s existing network and reach could make near-universal access much more logistically possible.

Fine notes that the Federal Reserve has been involved in payment processing for over 100 years; this is just another iteration of the central bank’s duties, a sentiment echoed by Chairman Jerome Powell.

Real-time payments can’t wipe out the payday loan industry, but they can take a chunk out of it.

Real-time settlement has big implications for businesses, especially small ones. But for low-income people, it could be transformative. Americans spend $24 billion in overdraft fees annually, some of which are driven by issues resolvable via faster payments; if there’s no lag between deposit and funds availability, there’s less likelihood of engaging in a transaction that will overdraw an account. If someone expects to get paid on Friday, the funds are instantly available, and they can pay their rent without worrying about a financial penalty.

People also spend about $7 billion on payday loans, which one in ten Americans have used. Real-time payments can’t wipe out the payday loan industry, but they can take a chunk out of it, since some of those loans are taken out in desperation by people who need money immediately, not after the time it takes for a bank to settle. Similarly, Americans spend approximately $2 billion cashing checks every year. That’s not just people who don’t have bank accounts; it includes people who can’t afford to wait for their accounts to clear.

That’s billions of dollars low-income people can ill-afford going into the pockets of companies with entire families of products built upon exploiting financial vulnerabilities.

Thomas Hoenig, former president of the Federal Reserve in Kansas City, former vice-Chair of the Federal Deposit Insurance Corporation, and currently a senior fellow at the Mercatus Center, notes that FedNow has another potential benefit as the system is built out: It could extend to other financial institutions such as remittance services. Immigrants sending money home through Western Union could therefore benefit from modernization to U.S. payments system, as a faster payments service in the United States can communicate with similar systems overseas, instantly transferring funds from senders to recipients.

Real-time payments will not fix issues like a federal minimum wage that hasn’t increased since 2009, repeated attacks on nutrition programs, and attempts at undermining unions. But they will help low-income people get, and move, their money faster, reducing the strain that comes from living paycheck to paycheck but not actually knowing when the funds in your paycheck will be accessible.



State Laws Punish Pregnant People Just For Seeking Drug Treatment

Mandy, a server living in the Boston area, became pregnant with her first child two weeks after enrolling in buprenorphine treatment, which consists of a medication that mitigates the cravings and withdrawal that result from opioid addiction. It was her fourth serious attempt at sobriety after 18 years of drug use that evolved from occasional lines of cocaine into an addiction to heroin, and eventually fentanyl.

Mandy had tried methadone, another medication similar to buprenorphine, three times unsuccessfully, but was determined to maintain sobriety this time. When she learned that she was pregnant, using again became a “hard no.” She enrolled in a comprehensive, high-risk pregnancy program geared toward people in recovery from substance use disorders.

There, she learned that due to a Massachusetts state statute requiring hospitals to report any prenatal substance use, she would be subject to a child services case once she had given birth. But she was assured that as long as she remained compliant with treatment and continued to prioritize her health and pregnancy, the investigation would be brief and relatively unintrusive.

That’s not how it went, though. Instead, she was charged with neglect and a placed on a statewide child maltreatment registry that would limit her job options and even her ability to attend field trips with her child.

Mandy was relatively lucky because she had the knowledge and resources to successfully appeal this decision, but many mothers who face similar circumstances are stuck living with the consequences of child welfare involvement simply for seeking treatment.

Media outlets have labeled the uptick in overdose deaths since 2015 the “opioid crisis,” and a rash of sensationalized stories — cops overdosing from contact with crime scenes, babies born “addicted” to drugs, drug dealers compared with serial killers — are fueling a public perception of drug users as a macabre and dangerous population.

The result? A crackdown on parents — especially mothers — who use drugs, with a hard target centered on those with a past or present addiction to opioids. State laws vary, but at least 23 states and the District of Columbia articulate that substance use during pregnancy is child abuse, and virtually every state in the U.S. will open an investigation (at the very least) into a person who tests positive for substances during or shortly after pregnancy.

According to research compiled by the Vanderbilt Center for Child Health Policy, the number of infants entering the foster care system rose by nearly 10,000 between 2011 and 2017, and at least half of those infant removals were due to parental substance use, often during pregnancy.

Not only can these types of punitive measures make pregnant people who use substances wary about seeking medical care, but applying personhood rights to the unborn is a dangerous precedent that criminalizes people for events outside of their control; for example, earlier this year in Alabama, Marshae Jones faced criminal charges for having a miscarriage after she was shot.

Women’s rights advocates continue to fight laws that pursue the rights of fetuses before those of the people who carry them, and have seen some wins — for example, the charges against Jones were ultimately dropped, and last year the Pennsylvania Supreme Court reversed a ruling against a mother who use opioids and marijuana while pregnant, stating that fetuses were not covered in their child maltreatment laws — but it remains an uphill battle around the nation.

At the same time, abortion rights are under fire. Fueled by the Supreme Court’s conservative majority, many conservative states are implementing laws that make abortions virtually impossible to access legally and safely. For example, Alabama’s governor recently signed into law a bill that holds doctors criminally liable, with a penalty of up to 99 years in prison, for performing abortions that are not medically necessary and also bans abortions at all points of pregnancy, even in cases of rape and incest. Georgia, Louisiana, Mississippi, Missouri, and Ohio also passed recent legislation banning abortions after six to eight weeks respectively, which is before many people even realize they are pregnant. Because habitual drug use can interrupt or alter menstruation, it can be even more difficult for those experiencing addiction to catch a pregnancy early enough to terminate it in one these states.

The concurrent rise of anti-abortion laws and punitive prenatal substance-use laws leaves people who become pregnant while having a substance use disorder — whether active or in remission — trapped in a dangerous situation that is often overlooked due to the stigma attached to substance use during pregnancy.

Any time we take a swing at so-called ‘bad mothers,’ it falls to the children.
– Richard Wexler

“Among people with substance use disorders, there’s no one more stigmatized than pregnant women,” said Stephen Patrick, a neonatologist and an associate professor of pediatrics and health policy at Vanderbilt University. He added that this pervasive stigma leads some people with substance use disorders to fear and distrust the medical community, even to the point of avoiding treatment.

Unfortunately, that distrust is often warranted. “Pediatricians often don’t know what they are required to do, and often states have a hard time interpreting what the federal government wants them to do,” Patrick explained. At the federal level, child welfare guidelines are vague and general, leaving states with broad discretion when it comes to defining child maltreatment and the subsequent responses. This means that when state or county authorities are misinformed about the reality of substance use and parenthood, that bad information can easily become codified into the system. Worse, it allows those policymakers determined to give the unborn personhood rights a means for policing the behaviors of pregnant people. “The end result is a system that in many cases over intervenes in some families that may be in recovery, and in other cases may not intervene when it needs to,” Patrick said.

Mandy’s story is just one example of the real-world impact of this stigma. My own life is yet another: I gave birth in 2014 while prescribed methadone. My daughter was hospitalized for neonatal abstinence syndrome, which is a common side-effect of appropriate methadone usage. She had no other health problems and, five years later, remains a healthy and developmentally normal child.

Nonetheless, a child welfare case was opened against me in the state of Florida. At the time, the case was deemed unsubstantiated — but four years later, a call by my mother-in-law to the Florida state child abuse hotline triggered another investigation. This time, the investigator made no attempt to speak with me before making her decision. She simply looked at my previous records of having been prescribed methadone while pregnant and filed to have my two daughters removed from my care. More than a year later, I am still fighting to get them back.

I love my daughters, and I have no regrets when it comes to birthing them — but I remember learning I was pregnant with my youngest less than a year after her elder sister was born. I was on a low dose of buprenorphine after having tapered from the methadone I began taking during my previous pregnancy. I had just finished grad school, and before entering treatment had been using heroin intravenously for nearly five years. My husband and I, both in recovery, were broke and sharing a mobile home with his parents in South Florida.

I became pregnant after being unable to access a timely refill on my birth control. Abortions in Florida are not covered by Medicaid. I didn’t feel ready for another child, but I had no way to finance an abortion. I don’t know that I would have decided to get one if I could have; that’s something I will never know, because it was a choice I simply did not have. Now, the same state that gave me no other options is withholding my children from me for having sought treatment for a medical condition.

No woman should feel compelled to terminate a pregnancy because she has a substance use disorder—but when jurisdictions withhold that choice, they force people who use drugs to suffer harsh punishments simply for becoming pregnant. Sometimes, that even includes jail time.

“In 2006, the Alabama legislature passed the chemical endangerment of a child law, and even though the legislation said this has nothing to do with pregnancy and drug use — it has to do with punishing adults who take children to dangerous places like meth labs — it was used as a basis for arresting pregnant women using any controlled substance, even if prescribed,” explained Lynn Paltrow, the executive director of National Advocates for Pregnant Women. This has led to the arrest or child welfare prosecution of thousands of women since it was implemented; in 2015, ProPublica identified 1,800 affected mothers. The law is still being used.

Both anti-choice activists and those who push for criminal or civil prosecution of pregnant people who use substances claim to be protecting children. But the reality is one of oppression and harm. “It is an anti-woman policy and an anti-child policy,” says Richard Wexler, the executive director of the National Coalition for Child Welfare Reform, of child welfare policies aimed toward substance use. “Any time we take a swing at so-called ‘bad mothers,’ it falls to the children.”

You see this in cases like mine; my judge doesn’t see my daughters crying every time I leave our once weekly supervised visit, nor does she have to answer their questions about why they can’t come home, but that doesn’t mean it’s not happening. You see this also in cases like that of Keri, a mother who I interviewed for a story I wrote for Filter Mag, who bought buprenorphine on the street and self-detoxed before giving birth to avoid child welfare intervention. A 2017 paper by Amnesty International reports that doctors across the nation are seeing substance-addicted people avoid timely prenatal care out of fear of prosecution, harming the very infants these laws claim to protect.

Across the country, harm reduction efforts are gaining traction, and the government is slowly increasing access to evidence-based medical care. But even while the general perceptions and treatment of people with addictions are advancing, pregnant people who use drugs continue to be stigmatized and punished.

Said Paltrow, “There’s no question that prosecutors and others have used the stigma and horrific medical info about the impact of controlled substances on pregnancy to establish in the law separate rights for fetuses, and anti-abortion principles that treat pregnant women like criminals.”



I Worked at Capital One. Hacks Like This Are Most Dangerous for Low-Income People.

The Capital One breach announced recently compromised the data of 100 million Americans, which is nearly 40 percent of all U.S. adults. After the Equifax, Target, Home Depot, and Marriott hacks, it can be easy to shrug off the news of another leak, but one group of consumers is at particular risk in the Capital One breach: 80,000 Americans who applied for secured credit cards with the company.

The hacker, Paige Thompson, gained access to personal information such as income, address, and credit scores for seemingly all recent applicants to Capital One credit cards. For secured card applicants, who tend to be low-income, bank account information was compromised as well.

A secured card normally resembles other subprime credit cards — they still report to the credit bureaus, they still charge interest and late fees, and you can still default on the card if you don’t make your payments. But borrowers need to put down a security deposit in order to obtain one, which requires access to the borrower’s bank account information.

The fact that bank account credentials were compromised raises the stakes for those consumers: even compared to credit card fraud, resolving checking account fraud is no walk in the park, and the costs here will be borne by people who can’t afford to take a hit.

For consumers who don’t think they can get approved for a normal credit card, secured cards can be appealing. And who are those consumers? They don’t have a lot of money: Federal Reserve Bank of Philadelphia researcher Larry Santucci has found that the median income of secured card customers is $35,000, compared to $50,000 for Americans with unsecured credit cards.

Of course, given that these incomes are self-reported, and that credit card companies aren’t required to validate the income of all credit card applicants, this income data is almost certainly overstated: Plenty of people know they can get declined for a credit card for being too poor.

I worked at Capital One for five years, from 2013 to 2018. For a short stint during that time, I was in charge of the secured card product. I know most secured card customers are in no position to absorb a financial shock — and, unfortunately, having your checking account data leaked puts you in a much more dangerous position than a simple breach of your credit card number, or even your Social Security number.

If you apply for a Capital One secured card and get approved, you’ll initially be assigned a $200 credit limit, contingent on you sending in a security deposit of either $49, $99, or $200. The minimum security deposit you have to make depends on your risk as an applicant.

Think about that for a second: People are putting down a $200 deposit, to get a $200 credit limit, and the product makes money because people then borrow against their own deposit at a 26.99 percent interest rate — one of the highest in the industry — and get hit with late fees up to $39 when they fail to make payments on time. Santucci has found that only one in four secured card customers pays their credit card bill in full every month.

Some secured card customers are “new-to-credit,” but major banks such as Bank of America, Wells Fargo, and Discover have all been known to give out credit cards, at least with small credit limits, to people without credit history. If you’re new-to-credit but you have a checking account, and you also realize that your odds of being approved for an unsecured credit card are pretty high if you walk into a branch of your bank (of course, not everyone realizes this), you’re not likely to find a secured card attractive.

Your checking account could be emptied.

More commonly, secured card customers have low credit scores – the typical customer’s FICO is in the 500s — an obvious indication that they’ve struggled in the past to pay bills and to make ends meet. This condition can be temporary —your credit score might still be low even though your finances have recovered, since missed payments lower your credit score for seven years — but many Americans who struggle financially never achieve the stability they’d need to keep a high credit score. In a country where plenty of people live paycheck-to-paycheck, but only a third have subprime credit scores, secured card holders and applicants tend to be under real financial distress.

Because secured card applicants have to put down a security deposit, they’re not approved until they give Capital One checking or savings account information and their deposit is sent, unlike users of unsecured cards. This is what puts Capital One’s secured card holders at greatest risk after the breach.

To see why, it’s helpful to take a second to think about the exact ways in which a data breach comes back to bite consumers — especially given that you’re usually not on the hook for purchases fraudulently made in your name, whether someone has stolen your credit or debit card, or opened up an account using your identity.

Lose your credit card number, as in the Target or Home Depot breach, and you can usually resolve things with quick phone call to your bank if a fraudster makes purchases on your card. Lose your Social Security number and address, like in the Equifax breach, and someone can open up new accounts in your name, or take over your existing accounts by calling the bank, pretending to be you, and changing the contact information. Proving someone else did this can be anywhere from moderately to extremely time-consuming depending on your circumstances: it took reporter Phil McKenna a few days to clear things up, a typical amount of time for garden-variety identity theft, where you’re usually out time but not money.

But let’s consider what it will look like if someone uses the checking account information from a Capital One secured card customer to commit ACH (Automated Clearing House) fraud – using the customer’s checking account routing numbers and account numbers to set up unauthorized withdrawals, write counterfeit checks, or even pay off the fraudster’s own credit card.

If you’re a Capital One secured card customer, your checking account could be emptied. If you don’t notice what happened, you might try to make purchases and get hit with overdraft fees expecting money to be available that’s gone. Odds are very high you’re living paycheck to paycheck. Your Capital One secured card may have a limit as low as $200, and, across the industry, the typical secured card customer has only one credit card. If that happens, how are you supposed to buy groceries, bus fare, or diapers?

What’s known as Regulation E requires the bank credit your account within 10 days of when you notify them about fraud, unless further investigation is needed: a Capital One spokesperson told me they try to resolve most cases well under that limit, and said they refund any overdraft fees they determined occurred because of the fraud, whether it was the fraudulent transaction or a subsequent legitimate transaction took the account to a below $0 balance.

Everything depends on how quickly the customer notices something was wrong, how comfortable she is advocating for herself, and how equipped she is to go up to 10 days with nothing in the bank. Nearly 40 percent of Americans couldn’t cover a $400 emergency expense without borrowing money, even without having their checking account drained unexpectedly by fraud, and the typical secured card customer has no other credit cards.

Now, it’s completely possible that no actual fraud will occur as a result of the Capital One breach: in a statement, Capital One said that, based on the analysis they’ve done so far, they consider it “unlikely that the information was used for fraud or disseminated by this individual.” If they’re wrong, the consequences for secured card customers will be severe.

In this moment of crisis, it’s worth taking a step back to ask a broader question: are secured cards more helpful or more harmful to the low-credit score consumers they’re designed to serve? These products are often touted as a way to help people improve their credit scores, but there is weak evidence that they work for the typical customer. Santucci’s research shows that the median customer with a secured card sees only a 11-point increase in their FICO after two years, a number that’s dragged down by the 20 percent of customers who close or default on their cards within 24 months. 11 points is not a particularly impressive increase, especially given that if you wait and do nothing other than paying any existing bills on time, your low credit score typically goes up on its own as negative information on your credit report ages off.

Banks can tout that secured cards are free for customers who pay their bills in full every month, but the three-quarters of customers who carry a revolving balance are paying a high price for the privilege of borrowing against their own money, and would arguably be better off using their security deposit as an emergency fund. I’m sympathetic to what can feel like a double-bind to the banks: given that you need to charge higher prices to low-income customers to break even, is it better to be accused of ignoring them, or is better to be accused of exploiting them? If companies like Capital One can’t find better ways of serving low-income Americans, it won’t just be a breach of data: it will a breach of trust.