Right now the state is handing out billions of dollars to millions of households. And scammers know it. The debit card contract with Money Network called for putting security chips on those cards. But did that ever happen?
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Byron Foreman of Martinez was happy to get this $700 debit card from the state for inflation relief.
"I was amazed. I couldn't believe it," he said.
Then a scammer managed to swipe more than half of the money.
7 ON YOUR SIDE FAQ: Here are the most frequently asked Middle Class Tax Refund questions
"It was very disheartening," Foreman said.
It happened after Foreman went to his ATM in Martinez and withdrew $300 dollars off of the card.
All good -- until the very next day when he tried to withdraw the rest of the money.
"And it says, 'No funds available,'" he said.
The money was gone. Foreman checked the account. It showed someone went to an ATM in San Leandro and drained the rest of the $393 dollars.
"So that left only a $1.50 left on the card," he said.
Right away Foreman filed a claim with the debit card provider, Money Network, which agreed to refund his money and put it on a new card.
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But was that safe?
"California gave them a tremendous amount of money so they could issue those cards and then they failed to secure it," Foreman said.
He believes that a card skimmer was used to capture his information, allowing the thieves to clone his card and use it to withdraw money elsewhere.
7 On Your Side learned the Franchise Tax Board's $25 million contract with Money Network required security chips on the cards to prevent this type of fraud.
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The contract says: "The state shall require the use of an EMV chip-enabled card to offer the maximum protection possible."
(EMV stands for "Europay, Mastercard and Visa;" the chips create codes to identify individual transitions.)
In fact, the marketing materials show the card with a chip right there -- embedded on the back of the California grizzly bear.
Foreman shows us his debit card -- no chip.
RELATED: Californians reluctant to cash in their inflation-relief debit cards: Here's why
In fact none of the cards we've seen at 7 On Your Side have a chip either.
"That doesn't seem right. I don't know why that ball got dropped," Foreman said.
So 7 On Your Side asked.
The Franchise Tax Board tells us it's a supply chain issue, saying "during the competitive bidding process... we learned the supply of chips is limited due to a nationwide shortage..."
The contract allows Money Network to issue cards without chips rather than wait for a supply.
Officials said chips "are only one security measure" to protect the billions of dollars now flowing to households.
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Californians are still reeling from massive fraud found in the Employment Development Department's distribution of unemployment benefits during the pandemic, when scammers drained millions in unemployment benefits from EDD debit cards.
RELATED: Californians get inflation relief payments, but confusion arises about cards, issuing bank
Weeks passed and Money Network still had not mailed Foreman's refund. The company referred 7 On Your Side's inquiries to the Franchise Tax Board, and after we reported the theft on Foreman's account, the refund finally arrived.
Foreman finally got his refund -- on a new card with no chip -- so he cashed it pronto.
"Oh yes, I feel much better now thanks to you," he said.
Already 7 On Your Side has received other fraud reports. A North Bay man said his card was drained after he used it at a supermarket. Three other viewers said someone stole their cards from the mail and were able to cash them in. If you have a debit card issue, let 7 On Your Side know.
Take a look at more stories and videos by Michael Finney and 7 On Your Side.
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