Randy Mac looks at the way the money was paid out posed a security risk and the quick fix that could help get money safely into people’s hands, for the NBC4 News on Friday, Jan. 29, 2021.
Fraudsters continue to steal money from unemployed Californians, by swiping it from their EDD debit cards. This is leaving people who need the money most - often penniless. But one lawmaker says she has a simple solution that could prevent a lot of this fraud, while lawyers are demanding change right now.
Amanda Bailey has been living off savings since she lost her job back in April, and let her unemployment benefits accumulate on her EDD debit card. So she was stunned when she recently tried to withdraw some money from her debit card.
"The account was totally empty," said Bailey. "I couldn't even get $30 out of it." Bailey said $16,000 had disappeared.
And she's not alone. The I-Team's been hearing stories like Bailey's for months. Security experts tell us they believe the cards, issued by Bank of America, are getting hacked, because they contain a magnetic stripe instead of a more secure chip. Bank of America told the I-Team the cards don't contain chips because the state didn't ask for them. But attorney Brian Danitz says that doesn't matter.
"Bank of America failed to implement even basic security measures to protect these unemployment benefits," said Danitz.
Danitz says the bank has long promised the state "the highest level of security and fraud safeguards" and "multi layers of extensive security." He says the bank has failed to provide that. Danitz filed a lawsuit against Bank of America, seeking class action status.
"The catastrophic failure to implement security measures on these cards has led to a great deal of suffering," said Danitz. "We intend to wake up Bank of America so that they respond to these victims."
Bank of America didn't respond to the I-Team's request for comment on the lawsuit.
But Assemblywoman Lorena Gonzalez has a different solution. She introduced a bill that would give unemployed workers the option to have their benefits directly deposited to their bank account.
"Some people love the debit card, we want to keep that as an available option," said Gonzalez. "But i think the majority of folks would really prefer it directly deposited into their bank account." Gonzalez says this would eliminate a lot of fraud. She points out that California is one of just three states that doesn't allow direct deposit.
"We all know that it's easier to deal with our own bank and our own bank account when something goes wrong, than dealing with a bank that we're not a customer with," said Gonzalez.
As for Bailey, after the I-Team reached out to Bank of America, it returned the missing $16,000 to her account. It didn't comment on the situation, but said if you have any issues, you should call them right away.
Gonzalez said it'll take awhile for her bill to work through the legislature. But she says EDD can implement direct deposit without a law telling it to do so. The I-Team asked EDD if it's considering it, but we didn't get a response.
For more on Danitz's lawsuit, go here.
Editor's note: After we posted this story, Bank of America circled back to us with the following statement:
"As California’s unemployment program faces billions of dollars in fraud, Bank of America is working every day with the state to prevent criminals from getting money and ensuring 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. While the vast majority of unemployment fraud is committed by those filing false applications, when fraudulent transactions occur on benefit cards we review those claims and restore money to legitimate recipients."
