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Bank of America EDD Funds Fraud and Lack of Response Class Action

In the “economic devastation” of the Covid-19 pandemic, millions of people are relying on unemployment and similar government benefits to provide money for basic living expenses. California’s Economic Development Department (EDD) has chosen to have its unemployment benefits distributed in the form of a prepaid debit card, issued by Bank of America, NA. The complaint for this class action brings suit against the bank, because of the rampant theft of funds from card recipients and because of its inadequate response to the thefts.

The class for this action is all persons who got, or are entitled to get, EDD benefits via a Bank of America EDD account or debit card, who have suffered or are threatened with a legal injury caused by Bank of America, as described in this complaint, between January 1, 2020 and the present.

Cybercriminals appear to have been draining funds from the EDD accounts attached to the cards. The complaint alleges, “Day after day, there are new reports of yet another EDD benefits recipient with a Bank of America EDD prepaid debit card … who went to use their card only to discover that all the money in their Bank of America EDD account…—oftentimes, the only money that they had to survive—was suddenly gone.”

Bank of America claims to have a “Zero Liability” policy in such situations, but the complaint says it does not appear to be applying it to the victims of the theft.

The complaint lists a number of ways in which it says the bank is failing to provide an adequate response to the fraud: “not answering the customer service phone lines it advises EDD cardholders to call; opening claims and then closing them so soon thereafter such that a full review could not have been done; crediting funds to EDD accounts and then later reversing those without notice to the EDD cardholder; failing to extend provisional credit to EDD cardholders as required by law; and freezing EDD accounts unaffected by fraud.”

According to the complaint, the bank is responsible for administering the payouts and EDD is not able to force Bank of America to change its ways.

One opinion on the widespread fraud is that Bank of America could have prevented it if it had used the current best security standards and issued the cards with EMV chips, rather than using what the complaint calls “outdated, fraud-prone ‘magnetic stripe’ technology.” The bank uses EMV chips in its own debit cards, calling it “an important tool in increasing card security.”

According to the complaint, Bank of America has violated California laws “and Regulation E of the Electronic Funds Transfer Act; has negligently failed to warn EDD cardholders about the risks associated with its EDD cards and accounts; and has negligently performed its contract with the California EDD, among other violations of law.”

Article Type: Lawsuit
Topic: News

Most Recent Case Event

Bank of America EDD Funds Fraud and Lack of Response Complaint

March 1, 2021

In the “economic devastation” of the Covid-19 pandemic, millions of people are relying on unemployment and similar government benefits to provide money for basic living expenses. California’s Economic Development Department (EDD) has chosen to have its unemployment benefits distributed in the form of a prepaid debit card, issued by Bank of America, NA. The complaint for this class action brings suit against the bank, because of the rampant theft of funds from card recipients and because of its inadequate response to the thefts.

Bank of America EDD Funds Fraud and Lack of Response Complaint

Case Event History

Bank of America EDD Funds Fraud and Lack of Response Complaint

March 1, 2021

In the “economic devastation” of the Covid-19 pandemic, millions of people are relying on unemployment and similar government benefits to provide money for basic living expenses. California’s Economic Development Department (EDD) has chosen to have its unemployment benefits distributed in the form of a prepaid debit card, issued by Bank of America, NA. The complaint for this class action brings suit against the bank, because of the rampant theft of funds from card recipients and because of its inadequate response to the thefts.

Bank of America EDD Funds Fraud and Lack of Response Complaint
Tags: Breach of Contract, Debit Card, EFTA, Unauthorized Credit or Debit Card Charges, Your Bank