California may change how unemployment gets paid


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In summary

Could jobless Californians soon receive benefits by direct deposit? State legislators are considering reforms and asking Bank of America for answers following a CalMatters investigation into payment problems impacting more than 350,000 unemployment debit cards.

San Diego Assemblymember Lorena Gonzalez said today that she will introduce a new bill to require California to offer a direct deposit payment option for unemployment and other state income-replacement benefits. CalMatters previously reported that the state’s continued reliance on Bank of America unemployment debit cards and paper checks has made California one of only three states nationwide not to offer jobless benefits by direct deposit.

“Widespread problems with debit cards have prevented countless families from putting food on the table or paying the bills,” Gonzalez said in a statement. “Making a direct deposit option available is a simple, commonsense solution to so many challenges we know California residents are facing.”

The proposed change comes after a bipartisan group of California lawmakers asked Bank of America CEO Brian Moynihan for answers about unemployment payment problems that have upended the lives of thousands of jobless Californians who rely on the bank’s prepaid debit cards.

The letter made public just before the Thanksgiving holiday came 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 state Employment Development Department, 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 four dozen state senators and assemblymembers. “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.

Updated Dec. 3, 2020 with introduction of direct deposit bill.


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