EDD takes tax refund, garnishes wages of man who reported unemployment fraud in his name

ByRenee Koury KGO logo
Saturday, January 21, 2023
EDD takes tax refund, garnishes wages of man who reported ID theft
Some ordinary citizens are paying the price as the California EDD tries to reclaim money given to scammers.

BRENTWOOD, Calif. (KGO) -- It's been nearly three years since the pandemic first threw millions of Americans out of work. You'll recall the Employment Development Department was so overwhelmed with unemployment claims, it unwittingly paid billions of dollars to scammers.

Now, after all this time, some ordinary citizens are paying the price.

Criminals were using stolen identities to file fraudulent unemployment claims. Now, the EDD is trying to claw back that money. But often, the EDD ends up going after the ID theft victims instead of the real scammers.

"You already kept our money, and now you're gonna take more," said Ronald Huang of Brentwood. He has been trying for months -- years, really -- to alert the EDD that somebody used his identity to claim unemployment benefits.

"They just kept coming after me, coming after me," Huang said.

Huang's ordeal began back in 2020, when his employer got a notice saying Huang had filed an unemployment claim.

VIDEO: EDD tells young woman to prove she's a real worker, then locks her out as deadline approaches

The Department of Labor has agreed not to make workers repay benefits they received by mistake, as long as they were not obtained by fraud.

But he never did.

"It was a real curveball," said Huang.

The company replied that Huang was working full-time, and Huang himself filed a fraud report on the EDD website, warning someone had claimed benefits in his name.

"They used my name, my Social Security, but a different address," he said.

Huang never heard back.

"And then two years later, we have this surprise," said Cherry, Ronald's wife.

MORE: EDD wrongly denies hundreds of thousands of CA unemployment claims every year, report shows

A new state report says the EDD is wrongly denying benefits to hundreds of thousands of unemployed workers each year -- even though they are eligible.

Without any warning, the EDD confiscated their tax refund last June. $6,400 was gone. The Internal Revenue Service notice said it was for "unemployment fraud."

"We just can't believe it. Like, how can something like this happen?" Cherry asked.

It didn't end there. The EDD began garnishing Huang's wages, ordering him to pay another $9,000.

Turns out the EDD had paid the scammer more than $15,000 even after Huang reported the fraud.

"And it's been hard. Because single family income with three kids. I have a 9-year-old and two 4-year-old twins..." Cherry said.

The couple contacted 7 On Your Side.

MORE: EDD estimates nearly $20 billion paid to fraudsters since start of pandemic

We asked the EDD why it didn't stop the fraud after Huang reported it. A spokesperson didn't address it exactly, saying in part: "perpetrators have been extremely aggressive and we understand how upsetting it can be for victims who are trying to rebuild their lives and unwind the fraud."

It took a few weeks, but the EDD finally did return their money.

"It's definitely taken the stress off, because it was a large amount of money," Huang said.

"We're just so grateful to have the help from you guys," Cherry said.

Huang says he was told by the EDD that his fraud report was lost in transition after EDD upgraded its computer system. The EDD says it's working on improving communications between departments to better prevent fraud.

Take a look at more stories and videos by Michael Finney and 7 On Your Side.

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. Due to the high volume of emails we receive, please allow 3-5 business days for a response.



Please note the address uses the letter "O", not zeros. Be sure to include your full name, email, street address, and phone number.
Now Streaming 24/7 Click Here

If you're on the ABC7 News app, click here to watch live