Bank of America Massachusetts Unemployment Debit Card Fraud Class Action

This class action bring suit for Bank of America’s (BOA’s) “egregious maladministration of its obligations” for the Massachusetts Department of Unemployment Assistance (DUA) benefits payment programs. The complaint alleges that BOA did not protect from fraud the benefits DUA was handing out to unemployed persons, using outdated BOA-DUA debit cards and offering inadequate customer service services and policies.

The class for this action is all Massachusetts residents who were Bank of America DUA debit cardholders, at any time between January 1, 2020 and the present, whose eligibility for benefits has not been revoked by DUA for failure to establish valid identity.

Eight subclasses have also been proposed, including the Claim Denial Subclass, the Failure to Issue Provisional Credit Subclass, the Failure to Issue Permanent Credit Subclass, the Credit Rescission Subclass, the Account Freeze Subclass, the Failure to Unfreeze Subclass, the Security Breach Subclass, and the EMV Chip Subclass.

During the Covid-19 pandemic, DUA administered unemployment and other benefits for those who’d lost their jobs, in cooperation with BOA who issued and administered the cards.

But the complaint alleges that BOA took less care with the DUA cards than it did with its own consumer debit and credit cards. The complaint alleges that BOA’s own cards were issued with “industry-standard, fraud-preventing EMV chip technology” but that the government benefit cards were issued with “only outdated magnetic stripe technology, which makes those cards far more susceptible to skimming, cloning, and other schemes that have allowed third parties to fraudulently use and access” the debit cards and accounts.

In addition, the complaint claims that BOA failed to protect the DUA recipients’ personal and financial information, “including by failing to ensure that this information was appropriately handled and not misappropriated by the Bank’s subcontractors and their employees and agents, including by customer service representatives and other call center agents.” This enabled others to use the DUA recipients’ information and make other fraudulent transactions on their cards and accounts.

To make this all worse, the complaint alleges that BOA has left itself poorly equipped to make good on claims of fraud by not having available the means to offer “prompt and effective identification of fraud claims…, provisional access to already-approved benefits during the course of the Bank’s investigations of fraud claims, prompt and accurate resolution of those claims, and prompt reimbursement of funds stolen” from accounts.

Instead, the complaint claims that BOA’s customer service practices require DUA recipients to spend “dozens of hours on the phone” and then, when they do reach representatives, having their claims denied without investigation and their accounts frozen, so that they cannot access subsequent benefits.

Despite this, the complaint says that the cardholder agreement between BOA and the DUA recipients details a “Zero Liability” policy, under which the DUA recipients should be shielded from the consequences of fraud on their cards or accounts.

Article Type: Lawsuit
Topic: Contract
Tags: Breach of Contract, EFTA, Negligence