State to re-hire company that had problems in running Middle Class Refund program

We first introduced you to stand-up comic Pete George last fall. The funnyman told us trying to get his Middle Class Tax Refund was no joke. 

His debit card, loaded with $350, never came. He eventually learned a scammer had stolen the card and drained the funds at a nearby ATM. 

“I just don’t like people getting away with things like this, or companies getting away with it,” said George.

The same thing happened to Jay Ryan.

“It was stolen out of the mail. Of course, it was used. That’s why criminals steal cards,” Ryan said. 

The I-Team heard from dozens of consumers with the same problem. They say trying to reach someone at Money Network, the company hired to run the program, was nearly impossible.

“I think one time I waited an hour and a half,” said George.

And hundreds of thousands of consumers may have had the same problem. 

The state auditor released a report saying Money Network failed to answer 900,000 of the 2 million calls from residents who wanted to speak with an agent about the program or problems with their cards. 

And because of that, the auditor said it’s impossible to track how much fraud occurred, even though, per its $25 million contract with the state, Money Network was supposed to limit the rate of fraud to 1%.

Assemblymember Tom Lackey isn’t happy with the audit results. 

“It’s clearly a failure. It’s not a good grade,” he said. 

Lackey wants more accountability, especially since the state just signed another $32 million contract with Money Network to handle unemployment, or Employment Development Department (EDD) benefits. 

“We should have an accountability piece in the contract that says they’re going to respond better than they did in the past. These are accountability measures aren’t rocket science,” he said.

The EDD told the I-Team that things are different under this new contract. For starters, it’s requiring Money Network to operate call centers 24/7, and 80% of the calls must be answered within 30 seconds. 

The debit cards will also all contain a chip, something that hasn’t been done in the past, which will make them harder for scammers to hack, and therefore, should reduce fraud.

“Total fraud is hard to eliminate. But we should clearly do a more responsible job in reacting to the problem,” said Lackey.

In response to the audit, Money Network noted the auditor said it generally followed certain best practices for fraud management. Money Network also said it absorbed the cost of fraud.

The Franchise Tax Board, the agency in charge of the Middle Class Tax Refund, said this, in part, about the audit: “We concur there are important lessons to be learned for any future large-scale financial relief programs.”

Most viewers who reached out to the I-Team about problems with their Middle Class Tax Refund did get their money back after we got involved.

But not everyone has used their cards. According to the audit report, more than 1 million debit cards, worth approximately $611 million, haven’t been activated yet. 

The audit did point out that the state and Money Network did a good job distributing the money quickly. You can read the audit report and the state’s response to it.