Scammers drain growing number of Middle Class Tax Refund cards

ByRenee Koury KGO logo

Saturday, December 24, 2022

Scammers drain growing number of Middle Class Tax Refund cards

A number of Californians are reporting that scammers have drained their Middle Class Tax Refund cards in what appears to be rampant "remote fraud."

SAN FRANCISCO (KGO) -- A growing number of Californians are reporting that scammers have drained their inflation relief debit cards, prompting one state lawmaker to raise alarms about what appears to be rampant "remote fraud" akin to the EDD fraud scandal of 2020.

Reports are pouring in to state officials and to 7 On Your Side from Californians who say someone cashed in all or most of the money on their Middle Class Tax Refund debit cards, often before they had a chance to use them.

The state Franchise Tax Board contracted with debit card vendor Money Network based in Wisconsin to issue the debit cards - which were supposed to have security chips - but do not.

MORE: Here are the most frequently asked Middle Class Tax Refund questions

The cards are loaded with up to $350 per person plus dependents to help with inflation relief.

So far, Money Network has issued about eight million of the 11 million debit cards going out right now to California residents. The cards sent so far are loaded with a total of about $4.3 billion of taxpayer funds.

ABC7 viewers have flooded offices of 7 On Your Side this week with emails saying scammers drained most or all of their money, often right after the cards were used once. Some said scammers stole the money even before the cards were activated.

MORE: Californians get inflation relief payments, but confusion arises about cards, issuing bank

Jeannia in Petaluma writes: "I drove through a McDonalds and charged $10, then drove to a gas station next door, and the card was empty. Someone used my card at a Ross in Anaheim to charge $232.16 - the remainder on the card."

Bob in Concord writes, "Before I even used the card, bandits had illegally purchased $335 in goodies. My next door neighbor experienced the same phenomenon and so have other people in the neighborhood."

Many say they tried to reach Money Network to dispute the unauthorized charges but were unable to get through.

"We tried to use our card and it was drained,'' one couple reported. "It had $1,050. Now gone. The phone number to report this was just busy and then it hung up on us."

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"This appears to be even potentially worse than the EDD problems with fraud,'' state Assm. Jim Patterson, (R-Fresno), said. "And the reason I say that is, it looks like this actually is fraud by remote control. Apparently these fraudsters are able to drain these accounts without having the card in their possession, but also having the pin numbers. So somebody or a group of somebodies are doing this, perhaps on the dark web. And they're pushing buttons and they're draining accounts."

Patterson said his office has received "a growing number of reports of fraud on the debit cards." He compared it with the rampant fraud on EDD debit cards loaded with unemployment benefits and issued by Bank of America during the pandemic. They too lacked security chips, but authorities said the scams went beyond skimming data off the cards. Fraudsters apparently used dark web data and insiders to steal account information.

7 on Your Side has contacted the Franchise Tax Board with questions about how much money fraudsters may have stolen, and how debit card holders can claim a refund for unauthorized charges. If your card was compromised, contact 7 On Your Side at ABC7news.com.