Written by Will Hekman
The debacle that is the California EDD continues as Bank of America wants out of its exclusive contract with the department after just signing a new contract. Bank of America has a contract with the EDD to deliver unemployment benefits through prepaid debit cards which started in 2010 and was just recently renewed for another two years. Bank of America now wants out of the contract after numerous issues with EDD.
A month ago, Bank of America was told to stop using a fraud detection system after a class-action lawsuit was filed against them. They blocked out tens of thousands of legitimate claims for unemployment benefits through this system, and the lawsuit claimed that Bank of America did not do enough to prevent fraud, then automatically deny claims without any further investigations. Bank of America reported having 230,000 claims of debit card fraud from October 2020 to March 2021. Bank of America also told California lawmakers that they lost $200 million last year, in part due to the COVID-19 pandemic and the rise in fraudulent unemployment claims that followed which many say could cost the state up to $31 billion.
The decision to void the contract is rather odd some say, both Bank of America and the state of California receive merchant fees anytime an unemployment debit card is swiped. From March 2020 to April 2021, EDD has earned more than $47 million in merchant fees, five times more than what it received in 2019.
Unemployment problems continue to plague California, as the unemployment insurance debt is estimated to reach $26.7 billion by the end of the year. EDD is struggling so much, that the 80 members of the California State Assembly have been allowed to hire two staffers to help in handling EDD problems, as more than 1.1 million Californians unemployment claims are still pending.
