California unemployment: Bank of America reveals it paid millions to 'double-dipping' EDD fraudsters
SAN FRANCISCO (KGO) -- We've reported how EDD has paid scammers at least a billion dollars in phony unemployment claims.
Now, a stunning development. Bank of America has revealed it paid EDD fraudsters hundreds of millions of dollars too. The scammers had made false claims of fraudulent use of their EDD debit cards...it was fraudsters claiming fraud.
RELATED: California prosecutors reveal how Scott Peterson's name may be linked to unemployment scam
Now Bank of America is trying to claw back that money from criminals - but it's also taking money from honest workers with legitimate claims.
This all came out after state lawmakers demanded to know why Bank of America is draining EDD accounts.
The bank didn't really answer - but revealed scammers ripped off the bank as well, and it's trying to reel the money back in. Unfortunately, it's taking innocent workers' benefits too.
"It's unfair; when you lose your job, you're frantically trying to keep money together and then they take it away from you." Katharine Hauser lost her job at the YMCA when the pandemic hit. Unemployment kept her going - until her EDD account got hacked.
EXCLUSIVE: Insiders reveal how scammers are stealing millions in CA unemployment benefits
"I was about to buy burritos at Gordon's Taqueria..." Hauser begins. To her surprise, her debit card was declined. And her account was empty.
"I had $4,000 and it was gone like that," she says.
She believes someone skimmed her card at a gas station and ran up charges in Texas.
"$1,000 increments at a Target in Houston, Texas, then they went to a CVS," she explains.
Bank of America gave her back the $4,000 and after an investigation, BofA said the credits were "permanent."
But were they?
RELATED: 'People need help': As many as 1 in every 3 EDD claims is fraudulent, security firm says
"That said they found fraudulent stuff on my part, so they were taking it back out. I don't know how they could say that when they said the credit was permanent," says Hauser.
Bank of America suddenly pulled $700 out of her account. A letter said there was "suspicious activity" on the card.
Hauser says the bank told her "she" was under investigation.
"She said if you have filed a claim for fraud on your card you will be thrown into the mix of people who are actually committing fraud, which really made me angry because I was not committing fraud and I was thrown in a bucket with people who had," Hauser says.
It's happened to workers across California.
Bank of America said it is reversing credits on some EDD accounts as part of a crackdown on fraud.
VIDEO:Woman watches via text as scammer drains EDD benefits
Workers say they are unfairly lumped in with scammers.
Ann-Marie Garvey found thieves ran up $14,000 in charges on her EDD account - including $2,000 at Saks Fifth Avenue - before she even got her debit card in the mail.
"I'm the victim and I'm being treated like a criminal. It's total B.S.," says Garvey.
Bank of America immediately replaced the money. But two months later, the bank took all $14,000 dollars back out, leaving her with nothing to live on.
"I don't believe they treat their bank customers this way, they shouldn't treat the California unemployed this way as well. This is money people need critically for food, staples, to survive," said California Assemblyman Phil Ting.
RELATED: Here's how investigators caught inmates running EDD scam ring out of jail
59 state lawmakers fired off a letter to Bank of America's CEO demanding to know why the bank is draining legitimate accounts.
"There has been tremendous fraud and there are a ton of honest Californians who have been denied benefits, and it's not clear to us whether any of this is being addressed," says Assemblyman David Chiu.
Lawmakers said the bank response was vague. BofA wrote:
"Identifying legitimate claimants from among the fraudulent claimants is time-consuming and challenging."
VIDEO: Homeless mom and son finally receive EDD benefits
The letter also said some criminals were actually "double-dipping": they received EDD benefits and also filed false claims of fraud on their cards. BofA said:
"Criminals received credit from Bank of America in the hundreds of millions of dollars after filing false claims of loss... essentially attempting to double-dip."
Now, the bank is reversing the phony credits - but it appears thousands of legitimate claims are being thrown out too. Like Ann-Marie Garvey's, and Katharine Hauser's.
"It's a terrible feeling to be stolen from, to be the victim and then to be told you're the perpetrator. It's not a good feeling at all," says Hauser.
After we intervened, BofA did give Hauser her money back. Ann-Marie is now getting her benefits by check instead of trusting the bank. Lawmakers are still seeking better answers.
Take a look at more stories and videos by Michael Finney and 7 On Your Side.
Have a question for Michael and the 7 On Your Side team? Fill out the form HERE!
7OYS's consumer hotline is a free consumer mediation service for those in the San Francisco Bay Area. We assist individuals with consumer-related issues; we cannot assist on cases between businesses, or cases involving family law, criminal matters, landlord/tenant disputes, labor issues, or medical issues. Please review our FAQ here. As a part of our process in assisting you, it is necessary that we contact the company / agency you are writing about. If you do not wish us to contact them, please let us know right away, as it will affect our ability to work on your case.
App users: For a better experience, click here to view the full map in a new window
RELATED STORIES & VIDEOS:
- EDD shuts down 350,000 accounts for suspected fraud, but legitimate workers still left with no money
- Unemployment claims paused for 2 weeks as report reveals 600K awaiting benefits in EDD backlog
- Coronavirus employment recovery will not be equal across Bay Area, new report predicts
- $2.5 million in EDD fraud leads to arrest of 44 suspects in Beverly Hills, police say
- CA begins sending extra $300 per week in unemployment benefits, but many will not receive the supplemental aid
- California lawmakers to conduct emergency audit of EDD
- California woman's stolen information used to collect thousands in unemployment benefits
- Proposed $300 unemployment benefit 'inadequate,' Newsom says CA working on solutions
- California EDD: The most commonly asked questions we get about unemployment and PUA
- California woman shares hack for getting through EDD's overloaded unemployment helpline
- Florida man erroneously receives 12 letters from the California EDD
- California state senators request Newsom create 24-hour helpline for EDD
- Governor Gavin Newsom unveils new task force to tackle EDD backlog
- Out-of-work Californians finally receive benefits, only to be mysteriously cut off
- Unemployed workers share how they got through EDD system to finally receive benefits
- FAQ with EDD: From getting through on the phone to $600 payments, 7 On Your Side gets your questions answered
