The letter made public today comes days after CalMatters detailed how the state’s exclusive unemployment payment contract with the bank has been strained by unprecedented demand and brazen fraud during the pandemic, ensnaring more than 350,000 unemployment debit cards in mass account freezes.
Also under fire for its role in long payment delays is the California Employment Development Department (EDD), which first signed the contract with Bank of America in 2010 and earlier this year amassed a backlog of 1.6 million unpaid jobless claims amid mounting concern about rooting out fraud.
“Constituents report they are unable to get through to your call centers, or when they do, the issue is not resolved,” states the letter, which was signed by more than three dozen state senators and assembly members. “It is simply unacceptable that Californians entitled to benefits are suddenly not able to obtain them due to a Bank of America determination that is impossible to appeal.”
Among the questions the lawmakers want Moynihan to answer: Bank of America’s criteria for freezing accounts and seizing jobless benefits, who’s on the hook for paying back fraudulent charges, and how their constituents can resolve outstanding debit card claims. Below is a copy of the letter from lawmakers.
Dear Mr. Moynihan:
Every legislative office in our state has experienced an unprecedented number of constituents contacting them requesting assistance to resolve issues with the California Employment Development Department (EDD), as well as with their Bank of America debit cards. We commend our California EDD and the Bank of America employees for their hard work over the last eight months, creating better systems to get funds to constituents as quickly as possible.
Today, we write with a new and significant concern about frozen Bank of America debit cards.
Most beneficiaries receive their weekly Unemployment Insurance (UI) or Pandemic Unemployment Assistance (PUA) funds on a debit card issued and managed by Bank of America
under contract with CA EDD. Over the last six weeks, reportedly due to significant fraud, hundreds of thousands of UI, PUA and State Disability Insurance (SDI) recipients have had funds taken from their cards or their cards frozen, leaving them unable to access their benefits. EDD reports to legislative staff that Bank of America has a proprietary formula to detect fraud and has taken it upon themselves to freeze cards and take money from recipients. The only recourse that EDD and our offices can currently provide constituents is to call Bank of America when these problems occur.
However, constituents report they are unable to get through to your call centers, or when they do, the issue is not resolved. Many of our own staff have also tried to reach Bank of America to no avail. It is simply unacceptable that Californians entitled to benefits are suddenly not able to obtain them due to a Bank of America determination that is impossible to appeal.
The press reports at least 350,000 Californians are currently unable to access UI, PUA and SDI benefits owed to them. That said, EDD is unsure of the exact number, as they state they only receive data from Bank of America after cards are frozen.
EDD also informs us that less than 8 percent of debit card cases have been resolved.
With this in mind, we are writing to ask that you provide us specific answers to the following questions:
- Why is Bank of America taking funds and freezing cards?
- What criteria is Bank of America using?
- When California EDD clears fraud or verifies identity on their end, why is Bank of America not immediately unfreezing the cards that California EDD asks Bank of America to unfreeze?
- Our offices have many cases in which Bank of America states that EDD froze the card. Our staff call EDD, who claims the problem is entirely on Bank of America’s end. What is the solution to this problem?
- What needs to happen for a constituent to have their card reactivated and funds restored?
- Will you significantly increase staff tasked with reactivating cards and restoring funds to resolve these issues by December 1, 2020?
- Has Bank of America had to pay any penalties due to fraud or failure to respond to alleged fraud within a certain timeframe related to California UI or PUA claims?
- If so, to whom and for what?
- Can Bank of America proactively contact consumers when their card is deactivated, or funds will be taken so they are not forced to discover this when they use the card?
- What can Bank of America do to stop the automatic freezing of multiple cards at one address without first checking with EDD to see if they may be legitimate?
- Who pays for fraudulent charges when it is not the consumer’s fault?
- Bank of America or another entity?
- Are there time limits under federal law by when Bank of America must unfreeze a debit card in a suspected fraud case? If so, what are they? Are there exceptions?
- Will you please provide an explanation to Governor Gavin Newsom and the California Legislature as to how to unfreeze valid cards in a timely manner and prevent this problem from happening again by December 1, 2020?
We appreciate in advance your timely attention to addressing these problems and responding to
this letter.
Sincerely,
Philip Y. Ting
Anthony Rendon
Brian Dahle
Mike McGuire
Bill Dodd
Jim Nielsen
Andreas Borgeas
Bob Wieckowski
Scott D. Weiner
Anna M. Caballero
Jerry Hill
Hannah-Beth Jackson
Scott Wilk
Mike Morrell
Maria Elena Durazo
Henry I. Stern
Thomas J. Umberg
Patricia C. Bates
Megan Dahle
Jim Wood
James Gallagher
Cecilia M. Aguiar-Curry
Marc Levine
Susan Talamantes Eggman
Timothy S. Grayson
Buffy Wicks
Rebecca Bauer-Kahan
David Chiu
Bill Quirk
Kevin Mullin
Marc Berman
Kansen Chu
Devin J. Mathis
Ash Kalra
Mark Stone
Robert Rivas
Joaquin Arambula
Rudy Salas Jr.
Vince Fong
Tom Lackey
Chris R. Holden
Laura Friedman
Jesse Gabriel
Ed Chau
Wendy Carrillo
Eduardo Garcia
Ian C. Calderon
Cirstina Garcia
Jose Medina
Mike A. Gipson
Sharon Quirk-Silva
Steven S. Choi
Cottie Petrie-Norris
Brian Maienschein
Todd Gloria
Shirley N. Weber
Lauren Hepler covers the California economy for CalMatters, a nonprofit and nonpartisan media venture.
I’d like to add to two questions to the 14 posed by the legislators in their letter to the bank CEO. The first is a personal one: where the hell is the signature of my assembly representative Evan Low?
I’m sure that if it was an issue that negatively affected his big tech contributors, many of which can now maintain anonymity with Low’s blessing, he would be all over it (https://calmatters.org/projects/closed-doors-secret-donors-legislator-tech-caucus-foundation-silicon-valley-charity/; https://calmatters.org/projects/state-investigates-evan-low-tech-foundation-calmatters-report/). Or if it had any possible deleterious impact on dentists, he’d run to the rescue (https://californiaglobe.com/section-2/assemblyman-lows-legislation-conflict-of-family-interests/). Or even if evangelical Christians who support conversion therapy for gays had made a stink, Low would have surely accommodated, even it meant smacking down the constituency on whose identity he has based his entire career (https://www.desertsun.com/story/news/politics/2019/06/21/california-lawmakers-advance-resolution-condemn-gay-conversion-therapy/1501606001/).
After all, as Barack Obama would surely attest, employing identitarianism in politics is only useful if you can weaponize it in the interests of your wealthy donors, especially against the people who share your outward identity (https://jacobinmag.com/2017/12/obama-foreclosure-crisis-wealth-inequality)? Low’s missing signature suggests his low prioritization for unemployed and financially-stressed constituents and/or his higher prioritization of the banking lobby in Sacramento (https://www.calbankers.com/state-government-relations).
My second, and more substantive, question is: why the hell do our elected representatives defer, demur, kowtow and prostrate and humiliate themselves in dealing with the Bank of America? Why the polite, fawning language? Why do they give the bank the benefit of the doubt? The bank is a state vendor, so deal with it like any other state vendor. The state contracts for the goods or services and if the vendor can’t deliver or answer to state needs, take state money (our tax dollars) and go elsewhere.
In particular, establish a state public bank that fulfills all the state’s banking needs for a fraction of what the Bank of America or Wells Fargo or others presently charge the state. You know, like the 101-year -old Bank of North Dakota (https://bnd.nd.gov/history-of-bnd/). Just a year ago, the state of California formally and legally enabled the establishment of public banks (https://www.latimes.com/business/story/2019-10-02/public-banks-can-be-formed-under-bill-signed-by-newsom). If we had a public bank at the state level, the hundreds of billions that pass through Sacramento (https://lao.ca.gov/Publications/Report/4263) could be managed and mediated without paying tens of millions in fees and commissions to the charlatans in the private banks (https://www.justice.gov/opa/pr/bank-america-pay-1665-billion-historic-justice-department-settlement-financial-fraud-leading; https://www.justice.gov/usao-cdca/pr/wells-fargo-agrees-pay-3-billion-resolve-criminal-and-civil-investigations-sales; https://www.latimes.com/business/story/2020-01-27/wells-fargo-scandal; https://www.lexisnexis.com/LegalNewsRoom/financial-fraud-law/b/blog/posts/jpmorgan-chase-defrauded-100-000-people-california-alleges).
Such a bank would, furthermore, give the state much broader fiscal space to embark on healthier and heftier levels of public investment and, like the Bank of North Dakota, afford greater revenue stability and fiscal maneuverability allowing it to finance its debt (https://www.sanjoseinside.com/news/as-community-lenders-sell-out-or-go-under-can-publicly-owned-banks-restore-local-control/;https://www.sanjoseinside.com/opinion/op-ed-public-banking-can-recharge-south-bays-economy/).
A public bank would also serve a development function by eliminating capital allocation decisions based solely on private profit considerations. We need more affordable housing; the public bank will fund such projects. We need more and better public infrastructure: public banks will fund this. We need better school facilities and more public hospitals and clinics: public banks can and will fund these too. We need environmental protection, restitution and reparation; the public bank can lead the way. The state can directly produce what we need, when we needs it and can finance it without bankers and the wealthy weighing in and taking a cut (think fire departments).