On April 1, 2021, Altshuler Berzon LLP, together with co-counsel Cotchett, Pitre & McCarthy LLP, filed a Consolidated Class Action Complaint and Motion for Preliminary Injunction against Bank of America, N.A., seeking immediate relief for tens of thousands of California unemployment benefits recipients who have been denied access to their public benefits as a result of the Bank’s alleged misconduct.
Since 2010, Bank of America has had an exclusive contract with the California Employment Development Department (EDD) to distribute EDD benefits, including Unemployment Insurance (UI) and Pandemic Unemployment Assistance (PUA) benefits, through the use of Bank of America-issued prepaid debit cards. During the pandemic, Bank of America has distributed EDD benefits through Bank-issued debit cards to millions of Californians eligible for unemployment benefits.
Over the course of the pandemic, thousands of cardholders have had their unemployment benefits stolen out of their accounts through fraudulent transactions and account hackings, which the lawsuit alleges resulted from the Bank’s failure to meet basic industry standards for fraud prevention and detection. For example, the lawsuit alleges that the Bank used outdated and easily hacked magnetic stripe technology on its EDD debit cards rather than the far more secure EMV chip technology used on the Bank’s other commercial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.
The lawsuit also alleges that despite the Bank’s own “Zero Liability” policy and its federal statutory obligations to promptly reimburse cardholders for unauthorized transactions, the Bank has summarily denied claims of third-party fraud without investigation or explanation. The Bank has also allegedly frozen the accounts of benefits recipients who report third-party fraud, thereby preventing them from being able to access any remaining public benefits funds still in their account and cutting off their ability to receive ongoing unemployment benefits from EDD. According to the consolidated class action complaint, despite the Bank’s promises to provide 24/7 customer support to fraud victims, account holders who call Bank of America’s customer service hotline to try to reopen their claims and unfreeze their accounts are routinely kept on hold for hours, disconnected, and/or told the Bank is unable to assist them.
As detailed in more than three dozen supporting class member declarations, the Bank’s alleged misconduct has had devastating consequences for Californians who depend on unemployment benefits as a lifeline to help them weather this pandemic. As a result of the Bank’s challenged policies and practices, countless victims have found themselves unable to pay their rent, car payments, phone and utility bills, childcare expenses, and medical bills, while struggling to feed themselves and their families.
The motion for preliminary injunction asks the Court to require the Bank to unfreeze the accounts and reopen the fraud claims of claimants whose accounts were frozen based on their reports of fraud; maintain customer service levels that ensure cardholders can report fraud and obtain assistance; reopen fraud claims of claimants who request such reopening through a streamlined process; conduct reasonable, good faith, and timely investigations into all fraud reports; and credit claimants’ accounts for the amount of the stolen funds as required by law.