The Association for Neighborhood & Housing Development (ANHD) is a nonprofit coalition comprised of over 80 neighborhood-based affordable housing and equitable economic development organizations and CDCs with over 40 years of experience in policy and organizing work related to bank reinvestment, affordable housing, and equitable economic development.
The mission of ANHD is to build community power to win affordable housing and thriving, equitable neighborhoods for all New Yorkers. As a coalition of community groups across New York City, we use research, advocacy, and grassroots organizing to support our members in their work to build equity and justice in their neighborhoods and citywide.
ANHD has been a strong supporter of the IDNYC since its inception, actively encouraging banks to accept it as primary identification and urging the regulators to support this as well. We have serious concerns about adding a so-called smart chip to the card. The risks far outweigh any benefits it might add.
Security / Privacy Concerns
First of all, we echo our colleagues’ strong security and privacy concerns. The IDNYC is used far and wide throughout New York City, including by many undocumented immigrants who are particularly vulnerable right now, at risk of detention, deportation, and harassment. We have already seen the misuse of technology by big tech companies, such as Amazon, whose cloud computing and facial recognition are being used by ICE to fuel the deportation machine that is tearing families apart. While collusion with ICE is clearly not the intent of New York City, there are not enough safeguards to prevent their information from getting into the wrong hands. And not enough reasons to put them at such risk.
According to the City’s own research, IDNYC cardholders want access to actual banks and credit unions. Other studies have similar findings. However, the city’s same research found that the top reason New Yorkers hesitated to get an IDNYC card was the concern that it was being used to monitor people.
Access to Banking
Access to banking is a major concern in New York City. Fifteen percent of Black households and 18% of Hispanic households in the NY metro region are completely unbanked, versus just 2.8% for white households. Prior studies show higher rates of unbanked residents in many NYC neighborhoods of color. The IDNYC was designed in part to increase access to banking. In fact, more than 9,000 people used IDNYC successfully to open bank and credit union accounts in the program’s first year. However, more needs to be done to accomplish IDNYC’s goal of increasing access to banking; only seven CRA-regulated banks accept the IDNYC as primary identification. And two of those require a social security number (SSN), thus defeating the purpose.
This chip will in no way increase access to banking nor will it eliminate banking deserts. The banks have given numerous excuses over the years for why they will not take the IDNYC, but the federal regulators stated quite clearly that the ID is an acceptable form of identification and the few CRA-regulated institutions that accept it operate under the same regulations, meaning more certainly could and should accept it as it is now. There is nothing we can see in this chip proposal that would ensure more banks would accept the IDNYC as primary identification.
The recent passage of the NYS Green Light legislation allows undocumented New Yorkers to obtain driver licenses. This immigrant-led campaign will go far to expand equitable and safe banking access for hundreds of thousands of New Yorkers who will now have that form of identification, but the IDNYC should remain an acceptable alternative for those do not want a state ID or cannot afford one.
We also note that over time, banks have felt more comfortable accepting other alternative forms of identification such as the Mexican Consular ID and foreign passports without visas. This came about both through advocacy and seeing the IDs used successfully by other financial institutions. We believe the same can happen with the IDNYC over time.
The Wrong Banking Solution
FinTechs are not banks and pre-paid debit cards are not the same as bank accounts. Products like the prepaid debit cards the city is proposing incorporating as part of IDNYC are symbolic of a two-tier banking system that pushes underserved populations – low-income, minority, immigrants - to prepaid debit cards while higher income customers have access to full-service bank accounts that promote savings and can lay the groundwork to achieving larger financial goals, such as purchasing a home or financing a business. Some banks are rightly moving away from this system. Chase, for example, stopped offering its prepaid card and now offers instead a low-cost no-overdraft bank account. Other banks are introducing low-cost accounts and similar products to help people open an account or re-enter the banking system. Clearly, more needs to be done to improve access to banks and banking, and especially low and no-fee bank accounts, but a FinTech company providing more prepaid debit cards is not the solution.
Much more can be done to increase access to banks and banking for low-income communities of color and immigrant populations while protecting their privacy and security. We would be happy to sit down with all stakeholders – advocates, consumers, City officials, regulators, and banks – to explore ways to do so. This chip is not that solution and we support this bill that will prevent the city from adding it.
