Bank of America said Monday it is likely California paid at least $2 billion in fraudulent unemployment benefits, offering a glimpse of the potential size of the problem that has plagued states across the country during the pandemic.Bank of America contracts with California to issue unemployment benefits via debit cards. From March 1 to Nov. 21, the bank issued more than 8.2 million cards containing a total of $105.1 billion as the state has been flooded with unemployment claims because of economic damage of the pandemic.State officials had previously asked Bank of America to freeze 345,000 accounts because of suspected fraud. In a letter to state lawmakers on Monday, Bank of America said its assessment of those accounts revealed only “a very small percentage” was legitimate, estimating fraudulent activity “on the order of approximately $2 billion.”The bank said it has identified at least 295,000 other suspicious accounts it says California should investigate, said Brian Putler, Bank of America’s director of California government relations. Putler said those accounts were flagged for a variety of reasons, including instances where hundreds of debit cards were sent to a single mailing address or multiple cards were associated with a common phone number or email address.He said at least 76,000 of those cards were sent to people in states that do not border California.“Although in our experience red flags such as these and others are highly correlated with the risk of fraudulent activity, the application of these filters will inevitably impact some legitimate claimants,” Putler wrote. “(California) and Bank of America therefore must work to investigate and resolve matters for recipients who are inadvertently impacted by the measures necessary to weed out fraudulent activity.”The $2 billion estimate is less than 2% of the $110 billion California has paid in unemployment benefits since March. But Bank of America said the scale of fraud in California was unique when compared with other states, having reached “unprecedented levels.”The Los Angeles Times reports California’s Employment Development Department could not confirm Bank of America’s estimate because it is “verifying identities on claims the department has separately identified as non-fraudulent,” said Crystal Page, spokeswoman for the California Labor and Workforce Development Agency, which oversees the department.The department has struggled to process more than 16 million claims since the pandemic began — an unprecedented volume that has overwhelmed the agency. The department has been under immense pressure to work through a backlog of pending claims that at one time totaled more than 1.6 million people.But its efforts to quickly process claims, coupled with more permissive federal programs, makes the system more vulnerable to fraud. Last month, a group of local and federal prosecutors revealed the state had approved benefits for more than 30,000…
Go to the news source: California EDD fraud likely tops $2 billion, Bank of America says
