On January 26, 2021, Altshuler Berzon LLP, together with co-counsel, filed a federal class action lawsuit brought by plaintiffs Roland Oosthuizen and Rosemary Mathews on behalf of themselves and thousands of other Californians who have been victimized by fraudulent transactions in their Bank of America-issued unemployment benefit debit card accounts. The lawsuit seeks to hold Bank of America, N.A. accountable for its role in enabling widespread fraud and in depriving fraud victims of access to their unemployment benefits for months on end.
Since 2010, Bank of America has had an exclusive contract with the California Employment Development Department (EDD) to distribute EDD benefits through the use of Bank of America-issued prepaid debit cards. EDD is the state agency responsible for administering numerous benefit programs that provide Californians particularly critical lifelines during the COVID-19 pandemic, including Unemployment Insurance (UI) and Pandemic Unemployment Assistance (PUA) benefits, among others. EDD benefits are issued on a Bank of America prepaid debit card by default; and California is one of only three states that does not offer a direct deposit option for unemployment benefits recipients.
The lawsuit alleges that, notwithstanding its assurances to the State and to cardholders that it would provide highly secure accounts and best-in-class fraud monitoring services, Bank of America failed to meet even basic industry standards for fraud prevention and detection. For example, the Bank used outdated and easily hacked magnetic stripe technology on its EDD debit cards rather than the far more secure EMV chip technology used on the Bank’s other commercial consumer cards, causing thousands of unemployed Californians to lose their EDD benefits to fraudulent transactions and to account hackings that could have been prevented.
The lawsuit further alleges that Bank of America failed to honor its commitment to provide 24/7 customer support to fraud victims and violated its legal duty to protect EDD account holders from liability for unauthorized transactions. Many EDD fraud victims report being repeatedly kept on hold with customer service for hours, only to be disconnected or given the run-around. Others report having their claims summarily closed without proper investigation, being denied legally required provisional credit while their claims remain under investigation, or having their accounts frozen without warning or explanation. As a result, thousands of Californians have been denied access to crucial unemployment income that they desperately need to pay for rent, food, and other basic necessities.
The complaint seeks damages as well as declaratory and injunctive relief.
Altshuler Berzon is co-counseling this lawsuit with Kemnitzer, Barron & Krieg, LLP.
A copy of the complaint can be accessed here.
News coverage of the lawsuit can be accessed here.