Victims of EDD debit card fraud say Bank of America made it too difficult to
It was an unpleasant surprise for Jennifer Yick when the Bank of America debit card holding her unemployment benefits was declined by a store. The San Francisco resident knew she had more than $400 in the account.
She logged into the bank website and saw four hefty DoorDash charges — even though she has never used the food delivery service.
“I felt sucker punched,” she said. “They just drained it.”
Then she embarked on a lengthy quest — “the tale of unending phone calls, hours on hold,” she said — to contact Bank of America about the theft.
Scores of jobless people tell similar stories about having their unemployment benefits hijacked from their Bank of America debit card accounts, and then struggling with the bank to get their money returned. A major class-action lawsuit against Bank of America, filed Thursday in U.S. District Court in San Francisco, seeks immediate changes to help those who lose funds, such as making it easier to report theft and not freezing accounts.
“This is a disaster for thousands of unemployed Californians who have lost their only lifeline in this pandemic,” said Brian Danitz, an attorney with Burlingame’s Cotchett, Pitre & McCarthy, who is co-lead counsel on the case, which consolidates nine previous lawsuits.
Bank of America was hired by the California Unemployment Development Department, which administers unemployment, to provide the debit cards. It has issued more than 9 million since the pandemic began.
The bank said in a statement that it works hard “to prevent criminals from getting money and ensur(e) legitimate recipients receive their benefits.”
“We have added thousands of agents to answer phone calls and investigate claims for the areas of the program we are responsible for and, as a result, our average wait time for callers has dropped dramatically,” bank spokesman William Halldin said. “When fraudulent transactions occur on benefit cards we review those claims and restore money to legitimate recipients.”
Faiz Ahmad, Bank of America managing director and head of global transaction services, told lawmakers in January that the bank has lost hundreds of millions of dollars on the California EDD contract, both through fraud losses and “the cost of serving the contract to the highest extent possible.”
Bank officials are keen to emphasize that most unemployment fraud was committed by criminals who submitted bogus unemployment claims using stolen or fake identities. That fraud, which the state said amounts to at least $11 billion, is a separate issue, and not tied to Bank of America.
But the incidents of legitimate claimants whose funds were stolen from their cards is specifically covered by the bank’s agreement with California EDD. Its contract calls for claimants to incur zero liability if their funds were stolen. The lawsuit say the bank violated this provision.
Lawmakers say they’ve heard from thousands of constituents who’ve had EDD funds stolen. The bank shed some light on the volume of the fraud in a February letter to Assemblywoman Wendy Carrillo, D-Los Angeles.
“Since the pandemic began, we have reimbursed cardholders hundreds of millions of dollars for claims made where they may have been the victim of an unauthorized transaction or fraud on their card,” wrote Brian Putler, the bank’s head of California government relations. “Monthly (transaction-fraud) claims have ballooned from about one thousand claims in a month to tens of thousands late last year.”
Compounding the issue, Danitz said, is that the bank often freezes accounts once fraud is reported, so even if the victims get a replacement card, they cannot access any remaining funds or future benefits.
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