Bank of america edd fraud claim process

The court required the bank to reopen possibly tens of thousands of claims that were automatically denied as fraud swept through the EDD system. The judge ruled the bank likely was violating federal law by failing to investigate each of the claims before shutting them down and often freezing EDD accounts of legitimate workers.

RELATED: Bank of America addresses freezing accounts, fraud in state assembly hearing

This is a huge victory for struggling workers who found hundreds or even thousands of dollars missing from their accounts. They say the bank denied their claims with no explanation and in some cases, froze their EDD benefits entirely.

Tuesday's order requires Bank of America to reopen all claims that were denied using an automated fraud filter and not an actual investigation. The judge also ordered the bank to stop using filters to freeze all benefits when someone reports fraud on their cards.

Hundreds of workers have contacted our sister station ABC7 News after finding fraudsters stole their EDD benefits - saying Bank of America simply closed their claims with no explanation. It left many with nothing to live on in the pandemic.

VIDEO: CA EDD admits paying as much as $31 billion in unemployment funds to criminals

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Tuesday's order is part of a class-action lawsuit that claims Bank of America failed to prevent fraud, did not put security chips on the debit cards, then denied claims when the fraudsters attacked.

A class action attorney says the judge realized the urgency of getting folks their money right away.

"The court recognized the serious impact that Bank of America's practices have had on unemployed Californians, and that immediate relief is necessary," said Brian Danitz, class action attorney. "People are living out of their cars, they're late, they don't have money for food or medicine."

EXCLUSIVE: Insiders say California EDD unemployment benefit scam was get-rich-quick scheme

Bank of America said it has always provided a way for cardholders to reopen their claims simply by asking. And thousands have done so. However, it said today's order provides yet another avenue for relief.

A class-action lawsuit accuses Bank of America of exposing unemployed California workers to large-scale fraud and cutting off access to jobless benefits during the pandemic.

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A new federal lawsuit takes aim at Bank of America for failing to secure the unemployment debit cards of thousands of Californians, part of a chaotic response to record jobless claims that has made the state Employment Development Department the target of widespread fraud.

The complaint filed Jan. 15 in U.S. District Court in San Francisco alleges that the bank acted negligently and proved “either unwilling or unable to stop criminals” from breaching unemployment debit card accounts. In the process, thousands of out-of-work Californians were left unable to access badly needed unemployment funds, or in some cases penalized for alleged fraudulent charges.

“This case is pretty unique,” Brian Danitz, a Bay Area partner at plaintiff law firm Cotchett, Pitre & McCarthy, told CalMatters. “This is a $286 billion financial Goliath. The CEO makes $25 million a year, and they did not provide even basic security measures to protect EDD cardholders.”

The CEO makes $25 million a year, and they did not provide even basic security measures to protect EDD cardholders.

Brian Danitz, PLAINTIFF’S ATTORNEY

As CalMatters exclusively reported, confusion over mass unemployment fraud during the pandemic has led to finger pointing between the state and Bank of America, which has been contracted since 2010 to electronically pay out unemployment benefits. The lawsuit was filed as a class action case, pending court review, and Danitz said his office has been “flooded with other victims” since filing the suit.

Among the issues raised in the 67-page complaint are the lack of secure microchips in unemployment debit cards, a “failure to secure” private account information and a sluggish response to consumer fraud reports. The complaint cited reporting by CalMatters on the bank’s exclusive state contract, its promise to deliver the state “best-in-class” fraud monitoring and how the confusion over fraud has impacted jobless Californians.

On Feb. 3, a second class-action complaint was filed against Bank of America by an attorney who previously represented victims’ families after Oakland’s deadly 2016 Ghost Ship warehouse fire. The new suit against the bank, similar to the one filed in January, alleges that the debit card provider acted negligently and breached its contract by failing to prevent fraud on the accounts of unemployment claimants.

“The events of 2020 were hard enough without Bank of America making life even more difficult for California’s unemployed,” attorney Mary Alexander said in a statement. “These are hard-working people who were unable to pay rent, heat their homes or put food on the table due to Bank of America’s negligence.”

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While some labor attorneys have raised the prospect of litigation against the Employment Development Department for its role in mass unemployment payment freezes, the complaints assert that Bank of America violated a “zero liability” clause in its exclusive state contract, which shields unemployment cardholders from having to pick up the tab for any fraud.

William Halldin, a spokesperson for Bank of America, told CalMatters that the bank is committed to returning funds to legitimate unemployment claimants and has increased relevant staffing more than twenty-fold during the pandemic, to some 6,150 workers nationwide. Though fraud investigations are ongoing in California and other states where Bank of America holds similar contracts, the bank contends that the “vast majority” of recent unemployment fraud in California is linked to state application vetting, rather than hijacked unemployment debit cards. 

“California’s unemployment program faces billions of dollars in fraud,” Halldin said. “Bank of America is working every day with the state to prevent criminals from getting money and ensuring legitimate recipients receive their benefits.”

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The lawsuit filed in January revolves around the experience of San Francisco property manager Jennifer Yick, who felt like she was “sucker punched” when she discovered more than $400 had been drained from her Bank of America unemployment debit card, including large out-of-state DoorDash charges at a cake shop and a barbecue restaurant. Yick told CalMatters that she has never used the food delivery service, did not receive any fraud alerts and when she tried to report the suspected fraud in early December, she was repeatedly hung up on by Bank of America customer service. 

The money still hasn’t been refunded to her account, but Yick said she had a bigger motivation for filing suit on behalf of others in similar situations: “Am I a second-class citizen?” Yick said. “That’s how I felt.”

At the center of the controversy is California’s ongoing struggle to distinguish fraud from legitimate claims at a time when unemployment claims are going back up. The CEO of the identity-security firm ID.me told CalMatters that domestic and international fraud rings are targeting California because of its size and leniency in paying backdated claims, which can allow criminals to quickly accumulate thousands of dollars per fraudulent claim.

Still, fraud experts have warned that unraveling who is responsible for picking up the tab for large-scale criminal activity is likely to get complicated — and maybe even leave taxpayers on the hook.

How are you getting by on unemployment benefits? 

We invite you to share your story here.

¿Cómo te las estás arreglando sin los beneficios del Seguro de Desempleo?

Te invitamos a compartir tu historia aquí.

“If it turns out that California should not have approved all these claims,” said Mason Wilder, a research specialist at the Association of Certified Fraud Examiners, “then regardless of what their agreement says with Bank of America about debit cards, I would think that ultimately the taxpayers are going to be on the hook for California’s errors.”

All told, the state has paid out $113 billion in unemployment benefits since March. The bank declined to comment on how many California unemployment claimants have filed debit card fraud complaints during that time.

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Does Bank of America refund stolen money?

You're protected by Bank of America's $0 Liability Guarantee: Fraudulent transactions made using Bank of America credit and debit cards are covered by our $0 Liability Guarantee as long as you report them promptly; please visit our account and card security page for additional details.

How long does it take for Bank of America to refund stolen money?

If the bank or credit union can't complete its investigation within ten (or 20) business days as applicable, it must generally issue a temporary credit to your account for the amount of the disputed transaction, minus a maximum of $50, while it continues to investigate.

How do I report fraud to EDD in California?

The best way to report false claims is by visiting Ask EDD and selecting the Report Fraud category to submit a Fraud Reporting Form online. You can also fax 1-866-340-5484 or call the EDD Fraud Hotline at 1-800-229-6297 (for reporting fraud only). When reporting fraud: Provide all relevant information about the issue.

What to do if there is an unauthorized charge on debit card?

Report a suspicious charge or debit immediately Contact your bank or card provider immediately if you suspect an unauthorized debit or charge. If a thief charges items to your account, you should cancel the card and have it replaced before more transactions come through.