California’s Unemployment Fiasco Takes Surprising Turn: Bank of America
California’s unemployment fiasco takes a surprising turn. Bank of America, which has had an exclusive contract with the state to deliver unemployment benefits through prepaid debit cards since 2010, wants to end the contract, despite the fact that the Employment Development Department just renewed it for another two years.
Just How Dysfunctional Is California’s Unemployment Department?
The announcement comes a month after a federal court ordered Bank of America to cease employing an automatic fraud filter that stopped tens of thousands of genuine claimants from obtaining their benefits after reporting questionable account activity. From October 2020 to March 2021, the bank received 230,000 debit card fraud claims.
Both the bank and the state get merchant fees when an unemployed debit card is swiped. EDD received more than $47 million from March 2020 to April 2021, even though 1.1 million unemployed Californians’ claims remain pending.
Bank of America told state legislators it lost “hundreds of millions” on the deal last year as it hurried to react to California’s massive unemployment fraud, which might reach $31 billion.
Bank of America
“We’ve told the state we want out of this company shortly.”
California taxpayers will likely pay for unemployment fraud. California’s unemployment insurance debt might exceed $26.7 billion this year, warn experts. Businesses will likely pay this large sum.
EDD still struggles to answer the millions of calls it gets each week; California’s 80 state assemblymembers were were granted permission to recruit two workers apiece to tackle EDD difficulties.
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