Prior to 2010, if you were receiving unemployment benefits in the state of California you received your compensation in the form of a paper check. In 2010, however, the State struck a deal with Bank of America on how to best distribute your tax payer dollars. To summarize, the deal was that EDD would give Bank of America the unemployment monies to distribute, and based off the projected revenue from fees, etc., Bank of America would pay the State. Since 2010 it’s estimated that Bank of America and few other institutions have made more than $500,000,000.00 in fees.
California is one of only three states that doesn’t offer direct deposit for unemployment. Still unclear as to why. It can’t be a safety issue, as social security and taxes are typically administered by the government either by direct deposit or by check.
Bank of America has openly admitted to losing billions in fraud, and they’ve also failed to respond to why the cards didn’t have chips - which are known to increase security. The bank has even admitted that a large number of fraudulent accounts that were funded were able to file for additional monies claiming that their original claim monies had been stolen. The losses thus far are estimated at more than $2 billion dollars.
$400 million in unemployment benefits was paid on claims improperly filed by the names of inmates in state prisons.
Worse yet, almost half of a million claims unemployment debit cards remain frozen, and according to one of the managing directors, it is unclear how many of the claims are legitimate.
Long story short, Bank of America doesn’t give a shit about unemployment insurance, or the unemployed. They care about their bottom line and profits. It was a good business decision by them to take on Unemployment because they were able to get access to peoples information, make millions in fees, and since EDD is so overwhelmed in bureaucracy, they knew the backlash would be minimal. Worse case scenario, they could blame it on the state. State agencies, like DMV, due to prolonged years of mismanagement, are huge targets. Sadly though, the state government leadership can just retire with their pension, they’ll replace them with the next ‘visionary’ and keep the machine going.
The only way to make significant change is to stop banking with them. Most won’t, however, because it’s an inconvenience to open a new account. Even if it saves money and operates on a higher standard. We love convenience.
The contract is up in 2021.
Be on the lookout for your share of the bill at tax time.
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