EXCLUSIVE: BofA says it wants out of unemployment benefits contract as EDD renews
Bank of America tells 7 On Your Side exclusively it wants to get out of the contract as soon as possible. It just shows no one wants any more of the torture of the past year, but the EDD had the sole option to renew this contract and it did, to the chagrin of lawmakers and the bank itself.
It means Bank of America will continue delivering unemployment benefits on EDD debit cards for up to two more years despite rampant fraud, frozen accounts and a class action lawsuit.
Plenty of state lawmakers and EDD cardholders are none too happy about it. They wanted changes in the contract or a different bank, but the EDD decided to renew the contract, without any changes, for up to two years. The EDD says it was the right move for now, but promises change in the future.
Steve Daly was shocked to find a thief had drained all $16,000 from his EDD debit card. Instead of reimbursing him, Bank of America froze his account.
"I found out about the hack when there was no money in my account," he said. "It was a nightmare. Nobody knew what was going on."
RELATED: Judge says Bank of America may have illegally denied EDD fraud claims
Annmarie Garvey realized someone ran up $14,000 on her EDD account even before she got her debit card in the mail. The bank restored her money only to take it all back out, then froze her account too.
"I'm the victim and I'm being treated like the criminal," she said.
They are among thousands of fraud victims who say Bank of America made it impossible to get their benefits restored.
State lawmakers blasted EDD for renewing the exclusive contract with Bank of America to provide EDD debit cards, despite the widespread turmoil and fraud.
But as it turns out, Bank of America is equally dismayed. Just today, the bank told 7 On Your Side it wants out of the contract, saying: "We have advised the state that we would like to exit this business as soon as possible."
VIDEO: Retired Chicago woman can't figure out why California's EDD approved her for benefits
The deal with EDD has brought plenty of grief to the bank as well. BofA claims it lost $200 million to criminals making phony claims of fraud on EDD debit cards, which they falsely obtained.
"Bank of America and EDD, unfortunately, left our constituents hanging at the worst possible time," said State Assemblymember David Chiu, D-San Francisco.
"What they have done is renewed a contract that has made Californians' life so miserable," said State Senator Jim Patterson, R-Fresno.
Now the bank is facing a class action lawsuit, which claims Bank of America failed to prevent fraud or even put security chips on debit cards, then automatically denied claims without investigation.
A judge ruled the bank likely broke federal law by rejecting claims and freezing accounts using only an automated fraud filter.
"This is a bureaucracy that has to face the music sooner or later," said Patterson.
RELATED: Easier to get Real ID or EDD benefits? CA woman defies the odds
Bank of America says it received 230,000 claims of debit card fraud from last October to March. It denied more than half the claims, but says anyone can ask for a new review.
The EDD says the contract renewal gives Bank of America the time it needs to manage millions of ongoing accounts. It's also working with the bank to add security chips to the cards for the first time.
The bank said today it will meet its obligations, even as it wants out of the business.
The contract still includes a major financial perk for both the bank and the EDD.
Under the agreement, they share transaction fees generated every time someone swipes an EDD debit card. Those revenues skyrocketed during the pandemic. The EDD raked in more than $47 million from last March until this April, nearly five times more than in 2019.
VIDEO: CA man can't get unemployment benefits because EDD claims he's in prison
The bank did not disclose its share of the earnings.
"We were all surprised to learn that it's Californians who have to pay Bank of America to access their money," said Chiu.
"A split of state money fees collected with your contractor, that just smells," Patterson said.
We've found many cardholders so frustrated they are now having the EDD mail paper checks instead.
The EDD says it's also planning to offer an option for direct deposit of benefits into personal bank accounts, avoiding debit cards entirely.
Take a look at more stories and videos by Michael Finney and 7 On Your Side.
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EDD extends contract with Bank of America, but bank wants out
SACRAMENTO, Calif. — Despite calls for change from cardholders, lawmakers, and even the bank itself, California’s Employment Development Department (EDD) is extending its relationship with Bank of America.
“To help ensure continued service to claimants, EDD intends to exercise its right under the existing contract with Bank of America to continue providing debit card service,” the EDD wrote in an email to our Dollars and Sense team.
The agreement means that Bank of America will continue to provide debit cards for unemployment benefits in the state for the next two years. The decision was made by the EDD despite the bank making it clear it wants out.
“Under the contract, the state had the sole option to extend and chose to do so," Bank of America said in a written statement. "We have advised the state that we would like to exit this business as soon as possible.”
Since the start of the coronavirus pandemic, the EDD debit cards have been targets of fraud and frozen accounts. Cardholders filed a class-action lawsuit earlier this year alleging Bank of America "breached its exclusive contract with the California Employment Development Department (EDD) and violated the rights of thousands of California benefits recipients." A judge issued a preliminary injunction in the case in June.
But the biggest reason for Bank of America to look and exit the contract might be due to the costs associated with it. In January, Faiz Ahmad, managing director of transaction services for Bank of America, told lawmakers that the bank has “lost hundreds of millions of dollars on the contract.” The bank also said it has hired thousands of people to help answer questions and manage the unemployment debit cards.
And California isn’t the only state where Bank of America wants to end its unemployment contracts. Earlier this month, the bank’s contract with Nevada ended with plans to end all debit card services by Oct. 1, 2021.
Here in California, the bank said, “we will continue to administer unemployment payments and meet the requirements of the contract.”
EDD card changes, direct deposit
Even as the EDD continues its contract with Bank of America, the department said it is moving forward with some changes by working with the bank to implement chip-enabled debit cards. The EDD said the addition of the chip technology will “improve card security.”
The EDD also confirmed plans for a direct deposit option for unemployment benefits, saying it will “seek proposals from vendors.”
EDD got some help from lawmakers, who recently included $5.5 million in the state budget for EDD to develop a direct deposit option. By utilizing direct deposit, people who get unemployment benefits could have the money directly deposited into their personal bank account instead of using a debit card.
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SANTA BARBARA, Calif. - Santa Barbara police say ATM skimmers have struck again - and again - along the coast.
Dozens of Bank of America customers using Employment Development Department debit cards have reported unauthorized withdrawals.
Investigators are trying to find the people behind more than $50,000 dollars in fraudulent withdrawals.
They advise people with EDD or unemployment benefit cards to go inside the bank for transactions.
Felipe Sandoval banks at Bank of America and has an EDD debit card.
"I have my personal savings account with Bank of America, plus my EDD benefits that I get. They are all through Bank of America, so I just wanted to come and take a look to speak to somebody, but I get here, and it is 5 o'clock and they are actually closed, so that is a bummer."
The bank had a note taped to the door that sad it is closing at 4 p.m. rather than at 6 p.m.
In July, detectives released photos of a four-person crew suspected of stealing debit card information from ATM machines at Bank of America on upper State Street in Santa Barbara.
Now they are saying it is happening at branches up and down the coast.
Irene Hernandez said she knows some of the victims who had trouble contacting the EDD.
She said one mother of a little boy had $10,000 taken from her account.
Santa Barbara Police Sergeant Ethan Ragsdale said, "Ultimately, what we always recommend with skimming devices installed in ATMS, nearly impossible to detect with your own eye, we always recommend going into the bank and talking with an actual teller."
Detectives said skimming crews conceal the devices used to steal information and then use the information to withdraw thousands of dollars from the victims' accounts.
EDD debit card do not have security chips or magnetic strips making them easier to target.
Police said that would cost about $25 dollars per card, so it was probably a money-saving measure to issue cards without the extra security.
Bank of America is contracted to handle the cards. The bank did not comment on the recent crimes but some victims said they worked with EDD to get reimbursed.
Detectives believe the suspects may be operating alongside legitimate customers.
Anyone with information regarding these crimes is urged to contact Santa Barbara police detective Kyle Rapp by email or at 805-897-2331.
Crime & CourtsSours: https://keyt.com/news/crime/2021/09/29/skimming-scam-continues-to-target-edd-debit-card-holders/
This Google™ translation feature, provided on the Employment Development Department (EDD) website, is for informational purposes only.
The web pages currently in English on the EDD website are the official and accurate source for the program information and services the EDD provides. Any discrepancies or differences created in the translation are not binding and have no legal effect for compliance or enforcement purposes. If any questions arise related to the information contained in the translated website, please refer to the English version.
The EDD is unable to guarantee the accuracy of this translation and is therefore not liable for any inaccurate information or changes in the formatting of the pages resulting from the translation application tool.
Forms and publications provided on the EDD website cannot be translated using Google™ Translate. Some forms and publications are translated by the department in other languages. For those forms, visit the Online Forms and Publications section.
Bank of America must provide more proof of fraud before freezing EDD accounts, court orders
A federal judge on Tuesday prohibited Bank of America from freezing accounts for California unemployment benefits based solely on an automated fraud filter and required it to do a better job of responding when jobless people say their benefits were stolen.
U.S. District Judge Vince Chhabria issued a preliminary injunction that was sought in a lawsuit by 15 jobless Californians who are among thousands whose benefit debit cards were frozen. Bank of America negotiated the terms of the order to prevent the unfreezing of debit cards on thousands of claims it or law enforcement has determined to be fraudulent.
“The court’s order provides substantial and immediate relief to hundreds of thousands of unemployed Californians,” Brian Danitz, an attorney for unemployed people who sued the bank, said in a statement. “The order prohibits the bank from freezing accounts based on a flawed fraud filter, requires the Bank to reopen unauthorized transaction claims it summarily denied, and requires the Bank to comply with the law by investigating those claims and providing provisional credit.”
The judge also ordered the creation of new customer service phone lines to help people whose accounts were affected by fraud.
A representative for Bank of America said it will meet the requirements of the preliminary injunction.
“As California’s unemployment program faced billions of dollars in fraud, Bank of America’s No. 1 goal always has been to ensure legitimate recipients could access their benefits,” said Bill Halldin, a spokesman for the bank. “With this agreement, we are committing to additional measures to help unemployment recipients who have been victimized by fraud receive their benefits as quickly as possible.”
The bank issues debit cards containing unemployment benefits under a contract with the state Employment Development Department, which administers the benefits program.
The EDD said in January that at least $11 billion in benefits had been paid on fraudulent claims and that it was investigating an additional $19 billion in claims.
In October, officials announced the bank had frozen 350,000 debit cards because of suspicious activity that included a high number of claims to a single address. However, many jobless Californians with legitimate claims said their benefits were also frozen, in some cases after criminals hacked into their cards and stole money.
The lawsuit was filed in San Francisco by defendants including Jennifer Yick, who lost work in real estate only to see her benefit account emptied by unauthorized transactions on her Bank of America EDD debit card. She complained that when she tried to report the fraud to the bank, she was repeatedly disconnected without getting help.
The lawsuit alleged that the bank unlawfully deprived unemployed people of essential benefits to help them weather the COVID-19 pandemic, did not implement effective security measures and froze people out of their accounts for months.
The injunction prohibits Bank of America from considering the results of the bank’s automated claim fraud filter as the basis for freezing debit card accounts.
In cases in which a debit card holder files a claim saying there were unauthorized transactions on their account, the court order bars the bank from denying or closing the claims, or denying provisional or permanent credit to claimants’ accounts without concluding a full investigation into the alleged unauthorized transaction.
The bank is also blocked from denying or closing claims of unauthorized transactions without providing the claimant a written explanation of the findings of its investigation. Within 10 days, the bank must give written notice to people whose accounts are blocked solely based upon its claims fraud filter that explains the bank will unblock the account if the person authenticates their identity.
“The hardship to the defendant from this injunction is outweighed by its benefits to the class members,” said the order signed by Chhabria. “The injunction is also in the public interest.”
The bank has 20 days to set up a dedicated toll-free number that must operate at least 14 hours on weekdays and 10 hours on Saturdays.
The judge was critical of the bank’s handling of the fraud problem during a recent court hearing.
“What seems clear to me from the record is that Bank of America has been violating people’s rights by not doing a good enough job of responding to this crisis,” he said.
New Chip-Enabled Debit Cards
Starting July 25, you will receive a new chip-enabled debit card if you:
- Are a new claimant receiving EDD benefits for the first time.
- Have a card that is expiring soon.
- Need a replacement card because your card is expired or has been lost, stolen, or damaged. Learn more about replacement and expired cards.
If you have a question about activity on your account related to fraud or suspected fraud, contact a Bank of America fraud specialist directly at 1-800-558-9226.
About the Debit Card
The EDD issues benefit payments for Disability Insurance, Paid Family Leave, and Unemployment Insurance claims using a visa debit card. This prepaid debit card is a fast, convenient, and secure way to get your benefit payments and is not subject to a credit check or monitoring by the EDD. With the debit card you can:
- Get your money sooner.
- Use it everywhere VISA is accepted (in stores, online, and by phone).
- Withdraw cash at ATMs, banks, and stores with cash back options.
- Transfer funds to the financial institution of your choice at no additional cost.
- Be notified when a deposit is made to your card or when you have a low balance.
- Receive fraud protection from a Zero Liability Policy.
Note: Your card is valid for three years from the date it is issued and is used for all EDD benefit programs, so you should keep it until it expires.
If you have never had a debit card from the EDD before, Bank of America will mail you a card after your first benefit payment has been issued by the EDD . It can take 7 to 10 business days to receive your card in the mail.
To activate a new card, use one of the following methods:
- Online - Visit the Bank of America debit card website and select Activate My Card.
- By phone - If you are calling from within the United States, call 1-866-692-9374 or 1-866-656-5913 (TTY). If you are calling from outside of the United States, call collect at 1-423-262-1650.
Your card is valid for three years from the date it is issued and is used for all EDD benefit programs. If you previously participated in an EDD benefit program using a card, and began participating in an EDD benefit program again within three years of the date the card was issued, you will not have to wait for a new card to receive benefits. We will continue to load funds on your existing card and you will have immediate access to them.
Replacement and Expired Cards
If your card is lost or stolen, you must call Bank of America at 1-866-692-9374 (TTY: 1-866-656-5913). When prompted, choose the “lost or stolen” option from the automated menu. You do not need to have your old card number or speak to a representative.
If your card is damaged, you can order a replacement card online by visiting the Bank of America debit card website.
Replacement cards will be delivered in 7 to 10 business days from the date you order it. Once you order a replacement card, avoid requesting a second one. Ordering a second card will permanently block the first one and this may cause a delay in receiving your payments.
Note: Bank of America representatives cannot answer questions about your claim or pending payments.
Card Activity within the Last 90 Days or $20 or Greater Balance
If you have activity on your card within the last 90 days, or if there is a balance of $20 or more, Bank of America will automatically mail you a new card before your card expires.
No Card Activity within the Last 90 Days and Balance Less Than $20
If you did not have any activity on the card within the last 90 days, or if you have a balance of less than $20, contact Bank of America debit card customer service to request a new card. You can check your remaining balance by calling one of the telephone numbers listed in the Additional Information section of this page.
If you no longer want to use your card, contact Bank of America to retrieve any remaining funds, and then destroy your card. Do not mail your card to the EDD for any reason. The EDD cannot accept returned debit cards and cannot remove funds from the debit card. If you return a card to the EDD, we will forward it to Bank of America for destruction. If you have an overpayment established on your claim and would like to make a payment to the EDD, visit Benefit Overpayment Services to learn how.
It takes at least three weeks to process a claim for unemployment benefits and issue payment to most eligible workers. Payment information for Unemployment Insurance is updated daily and is available through your UI Online account or by calling the UI Self-Service Phone Line at 1-866-333-4606.
Payment information for Disability Insurance or Paid Family Leave can be accessed through your SDI Online account or by calling one of the toll-free numbers provided at Contact Disability Insurance and Paid Family Leave.
Emergency Cash Assistance
Bank of America can assist you with a domestic emergency cash transfer if you need cash from your debit card immediately, such as if your card is lost or you are still waiting for your card to arrive in the mail. You can speak with a Bank of America customer representative by calling one of the phone numbers listed in the Additional Information section of this page. Visit Bank of America’s website and select Fee Information for information about emergency cash transfer fees.
Track Your Payments
Keep track of your debit card payments and balance information by downloading the Bank of America Prepaid Card app from any app store. Payment information is updated daily and is available through your UI Online or SDI Online account or by calling one of the toll-free numbers provided on Contact EDD.
Disclosures and Fees
You will receive a welcome packet with your card. Be sure to read all information including fees for the debit card. For digital wallets, view the Digital Account Fees and Disclosures (PDF). Careful use of this card will help you avoid unnecessary fees.
For more information about your debit card, visit Debit Card FAQs or Bank of America Debit Card FAQs.
If you need more help, you can speak with a Bank of America Customer Service representative 24 hours a day, 7 days a week by calling one of the following phone numbers:
- Within the United States: 1-866-692-9374
- Outside of the United States: 1-423-262-1650 (Collect)
- TTY: 1-866-656-5913
Important: Bank of America representatives cannot answer questions about your claim or EDD programs.
You can reset your PIN by logging into your account on Bank of America’s website. Go to My Settings, select My PIN, then select Forgot PIN.
Keep your card in a safe place and never share your card, personal identification number (PIN), or other confidential information with anyone.
Important: The EDD and Bank of America will never contact you to request your debit card account number or PIN. If this information is requested by phone or email, do not respond.
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Just how dysfunctional is California’s unemployment department?
Apparently so dysfunctional that Bank of America, which since 2010 has had an exclusive contract with the state to deliver unemployment benefits through prepaid debit cards, wants to end the contract — even though the Employment Development Department just renewed it for another two years.
The news, first reported by ABC 7 in San Francisco, comes about a month after a federal judge — as part of a class-action lawsuit first reported by CalMatters — ordered Bank of America to stop using an automated fraud filter that blocked tens of thousands of legitimate claimants from accessing their benefits after they reported suspicious account activity. The bank said it received 230,000 claims of debit card fraud from October 2020 through March 2021.
Bank of America’s desire to end the contract is striking, given that both the bank and the state rake in merchant fees whenever an unemployment debit card is swiped. EDD has pocketed millions in fees amid the pandemic: It earned more than $47 million from March 2020 through April 2021, even though the claims of more than 1.1 million jobless Californians remain in limbo.
However, Bank of America told state lawmakers it lost “hundreds of millions” of dollars on the contract last year as it scrambled to respond to California’s rampant unemployment fraud, which experts say could total upward of $31 billion.
- Bank of America: “We have advised the state that we would like to exit this business as soon as possible.”
Ultimately, the cost of California’s unemployment fraud will likely fall on taxpayers. And businesses will likely shoulder the staggering weight of California’s unemployment insurance debt, which experts estimate could reach $26.7 billion by the end of the year.
Meanwhile, EDD is still struggling to answer the millions of calls it receives each week — so much so that California’s 80 state assemblymembers were just given the green light to hire two staffers each to handle EDD problems.
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1.State prison rules upheld for now
California can keep its rules that give 76,000 inmates the opportunity to shorten their prison sentences — for now, according to a superior court judge’s tentative Tuesday ruling. The order is a temporary rebuke to Sacramento County District Attorney Anne Marie Schubert, a 2022 attorney general contender who sued Gov. Gavin Newsom’s administration with 43 other district attorneys — though the judge said there is a “likelihood” the prosecutors will ultimately prevail. In challenging the new California Department of Corrections and Rehabilitation policy, which was quietly adopted in May, the prosecutors said it violated state law and endangered public safety. The Newsom administration said it encouraged good inmate behavior.
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