SAN RAFAEL, Calif. (KGO) -- As we've reported, millions of Californians received their Middle Class Tax Refunds on debit cards. Now, for the first time, the Franchise Tax Board is urging cardholders to withdraw the money off those cards as soon as possible -- due to the threat of fraud.
It's a stunning turnabout. More than nine million debit cards have gone out, loaded with about $5 billion of taxpayer money, one time payments meant for inflation relief. But hackers have taken a bite -- officials won't say how much -- but they are urging cardholders to cash in the cards before scammers do.
Tom Koerber of San Rafael and his husband received a $700 debit card from the state to ease the pain of inflation.
But when they tried to use it, they found the money was already gone.
"The recorded message says, 'You have zero balance.' And I said, 'Oh, that's odd,' because we've never used it," Koerber said. "I thought, well, we've been hacked."
MORE: Here are the most frequently asked Middle Class Tax Refund questions
Koerber was even more surprised to see where the thief spent his money.
"All in Alabama. One at a Burlington Coat Factory, one at a Ross store, and one at a children's hospital in Alabama," he said.
Elizabeth Webb of San Francisco never got to use her card either. Someone drained the cash just days after she activated her card -- as it sat in her kitchen drawer.
"We need to get boots, we want to get rain gear... I go to use the card, it says declined," Webb said. "Wiped out my complete card."
She tried to report it to the debit card company, Money Network of Wisconsin.
"Complete waste of time," she said. "No matter what button you push it says, 'Due to the high volume of calls, we're not accepting calls, goodbye.'"
RELATED: Scammers drain Middle Class Tax Refund debit cards without security chips
Tatiana Villeda of Hayward and her husband realized scammers had used the $350 they had remaining on their $1,050 debit card, spending it at a Marshalls store in Texas and a pizza place in Illinois.
"And I'm like, wait, I'm in California, and never traveled to Texas," she said.
Money Network tells fraud victims it will take up to 90 days to investigate their claims and decide whether to refund their money.
"It's unsettling because it is our tax dollars that should be returned to us that we paid into," said Tom Koerber.
"I mean, that's, that's millions of dollars of our money, we pay taxes, this is our money that we're getting back. But we're not getting it back," said Elizabeth Webb.
MORE: Accidentally throw out your Middle Class Tax Refund debit card? Here's how to get a new one
The Franchise Tax Board won't reveal how many taxpayers filed fraud claims, but said Money Network reports the fraud rate is less than 1% as required under its contract.
And yet officials said in an email that cardholders should "withdraw their funds or transfer them to a bank account as soon as possible to reduce the threat of fraud."
State Assemblyman Jim Patterson (R-Fresno) also is urging constituents to empty their debit cards immediately.
"Apparently these fraudsters are able to drain these accounts without having the card in their possession," said Assemblyman Patterson.
"When you get the card, activate it and then go to the ATM, the bank and get all the money. If you wait between the time you activate and the time you use, the balance, it could be gone," he continued.
It appears that activating the card opens it up for remote fraud -- that is, hacking the accounts online. And folks tell 7 On Your Side it's getting harder and harder to reach Money Network to dispute the transactions. If it happens to you, let us know about it. 7 On Your Side can help.
Take a look at more stories and videos by Michael Finney and 7 On Your Side.
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