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Bank of America Mishandling of EDD Unemployment Benefit Fraud Class Action

In California, the Employment Development Department (EDD) issues unemployment insurance benefits through an exclusive agreement with Bank of America (BOA). BOA provides the EDD benefits via accounts and Visa debit cards. Unfortunately, the cards have been subject to fraud. In October 2020, BOA “froze the accounts of roughly 350,000 EDD cardholders.” The bank also reversed credits it had given for fraudulent withdrawals, depriving fraud victims of their unemployment benefits.

BOA puts out an account agreement for EDD recipients. In it, BOA claims to offer recipients a “Zero Liability Policy for Unauthorized Transactions” if they are reported “within a reasonable time thereafter.”

BOA is supposed to offer twenty-four-hour customer service for EDD cardholders, but those who call are subjected to “long waits, dropped calls, and [elusive] answers.”

The complaint alleges that the cards provided by BOA are “outdated” and “easy for hackers to target” because they operate with magnetic stripes rather than EMV chips. The complaint alleges, “Upon information and belief, BoA EDD cards are the only debit or credit cards Bank of America issues that do not have EMV chips.”

One of the plaintiffs in this case, Alex Yuan, lost his job and began receiving unemployment benefits. In August 2020, two different unauthorized transactions, of $900 each, took money from his BOA EDD account. In October, BOA determined that the transactions were fraudulent and credited $1800 to Yuan’s account.

Shortly after that, however, BOA reversed the credit, leaving the account with a negative balance. Subsequent EDD payments went into paying off the negative balance.

Yuan tried to clear up the matter with the EDD customer service line. During this time, another $900 was fraudulently taken from his account. Yuan then took his own measures to divert funds from the EDD account into another account and to disable the ATM feature on his card.

In December 2020, BOA froze Yuan’s account again. Later it unfroze the account, without notice to him. Yuan then asked EDD to send him paper checks for his benefits. The complaint asserts, “Had Yuan not personally instituted the security measures described above, it is likely that his BoA EDD Benefits account would have fallen victim to yet another unauthorized withdrawal.”

Three subclasses which together form the class for this action:

  • The Declaratory and Injunctive Relief Subclass is all persons who were issued a BOA EDD card to access unemployment benefits between March 1, 2020 and the present.
  • The Access Denial Subclass is all persons who were issued a BOA EDD card to access unemployment benefits, who were denied access to unemployment benefits, in whole or in part, due to BOA’s decision to freeze accounts between March 1, 2020 and the present.
  • The Regulation E Subclass is all persons who were issued a BOA EDD card to access unemployment benefits, who, between March 1, 2020 and the present, reported a fraudulent transaction on the card, were given a credit, and then had the credit reversed by BOA.
Article Type: Lawsuit
Topic: Government Programs or Benefits

Most Recent Case Event

Bank of America Mishandling of EDD Unemployment Benefit Fraud Complaint

April 20, 2021

In California, the Employment Development Department (EDD) issues unemployment insurance benefits through an exclusive agreement with Bank of America (BOA). BOA provides the EDD benefits via accounts and Visa debit cards. Unfortunately, the cards have been subject to fraud. In October 2020, BOA “froze the accounts of roughly 350,000 EDD cardholders.” The bank also reversed credits it had given for fraudulent withdrawals, depriving fraud victims of their unemployment benefits.

Bank of America Mishandling of EDD Unemployment Benefit Fraud Complaint

Case Event History

Bank of America Mishandling of EDD Unemployment Benefit Fraud Complaint

April 20, 2021

In California, the Employment Development Department (EDD) issues unemployment insurance benefits through an exclusive agreement with Bank of America (BOA). BOA provides the EDD benefits via accounts and Visa debit cards. Unfortunately, the cards have been subject to fraud. In October 2020, BOA “froze the accounts of roughly 350,000 EDD cardholders.” The bank also reversed credits it had given for fraudulent withdrawals, depriving fraud victims of their unemployment benefits.

Bank of America Mishandling of EDD Unemployment Benefit Fraud Complaint
Tags: Debit Card, Fraud, Unauthorized Credit or Debit Card Charges, Unemployment Insurance