California unemployment: EDD freezes pay for thousands of workers on New Year's Day

VALLEJO, Calif. (KGO) -- Millions of Americans were relieved when Congress extended unemployment benefits into the new year. However here in California, thousands of workers found out they're not getting benefits at all. The EDD shut down 1.5 million claims, looking for possible fraud.

Everyone hoped all the EDD chaos of 2020 would somehow evaporate in the new year. But not so. Instead, workers across the state woke up on New Year's Day to a brutal greeting from the unemployment agency.

"It's like the 2020 hangover," laughs Sarah Cain of Vallejo. She thought her troubles were over when the president signed the stimulus bill - extending unemployment benefits into the new year.

EXCLUSIVE: Homeless forced to wait for stimulus checks as company attributes delays to IRS

She'd lost her accounting job -- and the new benefits would arrive just in time to pay the rent.

But before she could pop a cork, Cain received a sobering message from the EDD.

"You've been suspended and you can't do anything about it," as Cain put it.

The notice mysteriously said: "Your claim is suspended because it may be tied to fraudulent activity."

RELATED: Bank of America freezes unemployment benefit accounts just before holiday

"I thought, 'Was it me? What did I do? Did I do something wrong?'" Cain wondered.

Nearly one and a half million Californians woke up to the same bleak New Year's message.

"Okay, we made it, it's 2021 and now this," said Lezlie Simmons of Milpitas. The news couldn't have come at a worse time for Lezlie and her 23-year-old son Darian, a laid-off restaurant server.

"His ears were hurting, his eyes were hurting, his face was hurting," said Lezlie.

VIDEO: Bank of America reveals it paid millions to 'double-dipping' EDD fraudsters
EMBED More News Videos

Bank of America reveals it paid EDD fraudsters millions. Getting it back has cost honest workers their money.



Darian tested positive for COVID-19 on New Year's Eve, and was quarantined in his room when he got that email from the EDD.

His benefits -- cut off too.

"My son texted me; he said, 'Mom what is this?'" said Lezlie.

"Wow, yeah, a way to start my year, huh? Four days in, got COVID, unemployment got suspended -- just weird," Darian said, coughing.

Adding to the stress, COVID-19 was spreading through their household - Lezlie now suffering symptoms.

"It's too much. That will push people over the edge we're already struggling, people are drowning, we're drowning and then we gotta deal with EDD," she said.

RELATED: 'People need help': As many as 1 in every 3 EDD claims is fraudulent, security firm says

The EDD notice gave little information, saying: "You will receive further instructions on how to verify your identity."

But no answers on why or how long it might take to get their money.

"It's really sad, and it's really tragic because people are desperate right now." State Senator Scott Wiener says EDD should have verified accounts before depriving struggling workers. "Instead they just ran out and froze everyone's account and asked for the information after. It's like ready, shoot, aim."

The EDD tells us it used fraud detection tools to identify "highly suspect or fraudulent claims." The agency quickly suspended 1.4 million accounts to avoid paying scammers the new $300 bonus in federal benefits, just signed into law.

But possibly hundreds of thousands of honest workers were cut off too. The EDD admits it can't always tell real claims from fraudulent ones because scammers used stolen identities to file phone claims.

EXCLUSIVE: Insiders reveal how scammers are stealing millions in CA unemployment benefits
EMBED More News Videos

It's a story you'll only see on ABC7 News: More local charges are likely to be filed in an inmate unemployment benefits scam sweeping the country.



Suddenly legitimate workers must prove they're not the bad guys.

"It's not fair to me as someone who has not committed fraud to prove I didn't commit fraud," said Sarah Cain.

"Then you're telling them 8 to 10 weeks with no money at all? That's crazy." Lezlie Simmons said.

EDD still has not revealed how many accounts are frozen - or how long it will take to unlock everyone's money. Some were told it could be months away! If your claim is frozen, let 7 On Your Side know about it. We'll be pushing for some relief.

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:
Copyright © 2021 KGO-TV. All Rights Reserved.