EDD Switches Over To Money Network For Benefit Payments Following $32 Billion in Fraud

Department switches bank networks following $32 billion in fraudulent unemployment claims during pandemic

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The Employment Development Department officially switched over from Bank of America to Money Network for unemployment, disability, and Paid Family Leave debit card payments, following years of issues with BofA issued cards.

According to the EDD, old Bank of America EDD Debit Cards will continue to work for now. However April 15, 2024 will be the last day that claimants will be able to use the old cards.  Customers will need to transfer any remaining balance on their debit cards to a different account or request a check for the funds from BofA by that date.

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“With Money Network, customers get the benefits of embedded microchips and state-of-the-art encryption for making contactless payments when using that card,” said EDD Deputy Director Loree Levy in an announcement on Friday.

The switchover from BofA has been in the process for years, dating back to the COVID-19 pandemic. During the COVID-19 pandemic, the EDD was slammed with a record number of requests for unemployment following the shutdown of many businesses in March 2020. The EDD approved so many requests, even lifting their own anti-fraud measures. In January 2021, California Labor and Workforce Development Agency Secretary Julie Su said that the number of fraudulent claims was at S11.4 billion. By the time anti-fraud measures were firmly in place and that all claims could be thoroughly checked, the amount had climbed to $32 billion.

Investigations into the fraud were launched, with Governor Gavin Newsom launching his own investigation. There, they found that the high number of BofA cards issued did not have fraud prevention chips in them, allowing for so many fraudsters to receive them during the pandemic. Task forces soon recommended not only cards with fraud prevention chips, but also cards with tap to pay technology and the option for direct deposits to help combat fraud.

Bank of America, while also struggling to combat the fraud, said that “The vast majority of unemployment fraud is committed by those filing false applications. When fraudulent transactions occur on benefit cards, we review those claims and restore money to legitimate recipients.”

Bank of America – Money Network switchover

Despite this, Bank of America quickly decided to get out of providing unemployment benefits, because of their part in the $32 billion in fraud and giving out outdated cards with no fraud prevention chips. Needing a new partner for benefit payments, the EDD turned to Money Network. The company, which proved itself by sending the Middle Class Tax Refund out in late 2022, won the bid, with the transition between BofA and Money Network starting last year.

This led to the debit card changeover officially happening on Friday. In addition to the provider switchover, the EDD added that a direct deposit option will be implemented later this year, with the EDD to pay Money Network around $32.3 million over the next five years to cover the costs of direct deposit transactions alone. This is all part of the EDDNext program, which while making claims processing easier and faster, will also drastically increase protection against fraud.

Click here to read the full article in the California Globe

Comments

  1. So the EDD screws up badly to the tune of 32 billion and trys to blame B of A? So my question is who got fired for this?? What state department heads lost their jobs and retirements? NONE. If this was a private
    company I’m sure many people would have lost their jobs. But being its government Nah we’ll promote them. Everyone from hair gel to the person running EDD to the top 10 at EDD should have been fired!!

  2. Why should EDD care?
    It’s not like it’s their money …
    🤡

  3. I thankfully fled Kommiefornia in 2018. $32 plus billion in fraud. Someone in EDD should be in prison.

  4. Agree with all stated above. They need to dig a little deeper…..starts with corrupt EDD and corrupt staff wouldn’t you THINK??

  5. Fran Freedle says

    The fraud was not in the bankcards, it was in providing benefits to ineligible recipients – EDD error not that of any financial institution. This is projecting the blame for their incompetence to a business – though BOA needed to improve their systems as well.

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