For Dara Haenel, work has been scarce.
The 34-year-old tax preparer and single mother, like millions of others statewide, saw her livelihood dry up shortly after the coronavirus pandemic hit early last year.
So Haenel, a Compton resident, joined more than 8 million others in turning to the California Employment Development Department for help — enrolling, for the first time in her life for unemployment benefits.
For months, Haenel received money on a debit card issued by Bank of America, the designated distributor of roughly $120 billion in state unemployment benefits since the pandemic’s onset, amounting to about $4 million a week.
But the system, officials say, has also been a target of fraud — rife with stolen debit cards and identity theft, among other issues. EDD officials have responded, the agency said in a Jan. 15 press release, by strengthening the screening process on 9.7 million unemployment claims filed since the pandemic began. That has resulted, the department said, in more than 1.4 million unemployment claims identified as fraudulent.
Bank of America, for its part, has identified more than 640,000 accounts for suspicious activity, according to a recent letter from the company to state leaders. That includes 76,000 cards sent to beneficiaries out of state and numerous cases of multiple cards sent to a single mailing address, the letter said.
Bank of America, together with EDD, froze 345,000 accounts in September, the company’s letter said, comprising an estimated $2 billion in fraudulent activity. Another 62,000 accounts were also frozen by the bank for various other fraud alerts. Most of the cases involved people falsely applying for benefits or identity theft.
But the anti-fraud efforts have led to an unintended consequence: Some valid recipients, such as Haenel, have been flagged erroneously — their money denied and their accounts frozen. That’s according to Haenel and Bank of America officials, and hinted at in the EDD’s letter.
The EDD responded to requests for comment about eligible recipients having their accounts frozen — as well as Haenel’s case specifically — by sending its recent press release to the Southern California News Group.
That release did not directly address why some eligible claims get flagged as potentially fraudulent.
But it did say the department sent out requests earlier this month to verify the identities of flagged claimants, in an effort to distinguish legitimate recipients from fraudulent ones.
“As claimants have their identity verified,” the department said in the release, “EDD is removing barriers on claims so payments can continue for eligible claimants – something that can occur in a matter days.”
But Haenel said she has not found the process so simple. Despite multiple attempts to satisfy the EDD, Haenel said in a recent interview, her unemployment account has remained frozen for more than a month.
“It feels pretty bad,” Haenel said, “because I am doing the best I can to keep a roof over my and my daughter’s head on top of putting her through school, not being able to work and then wondering how I will come up with my rent.”
Types of fraud
Generally, there are two main types of fraud EDD and Bank of America deal with: false unemployment claims and transaction fraud.
The former type, for which EDD has strengthened its protocols, comprises the vast majority of cases and occurs when someone files for unemployment but either is not eligible or uses a false name, said William Halldin, a spokesman for Bank of America.
Both EDD and the bank can flag potentially false claims, preventing the money from going into someone’s account. But the bank is charged with investigating potential fraud if EDD’s attempts to verify a person’s identity do not quell concerns.
But the EDD’s procedures also mean that eligible recipients who get flagged will go without much-needed cash until the problem gets fixed.
“EDD requires additional information to validate identity or eligibility,” the department’s press release said, “so payments can resume for eligible claimants.”
And make no mistake: Eligible claimants do, in fact, get mistakenly flagged, Halldin said — an unfortunate, but inevitable result of preventing actual fraud.
The second type of fraud, meanwhile, involves unemployment debit cards.
That occurs when online hackers steal a claimant’s identity or are able to obtain debit card information.
In those cases, Bank of America is in charge of identifying the fraud and stopping it, much like the company would if a regular client’s debit card was hacked.
The bank, though, also deals with the reverse of online hackers: People who spend the money they received but later say they didn’t.
Investigating either type of transaction fraud, Halldin said, can be difficult, particularly with EDD cases since the bank often does not have relationships with recipients in the same way it does with regular clients.
“We review any claim, Halldin said, “and restore the money to the debit cards when appropriate.”
But not everyone is pleased with the bank’s ability to protect clients from transaction fraud.
A recently filed federal class-action lawsuit argues Bank of America exposed unemployed California workers to fraud and suspended jobless payments after it failed to properly safeguard their benefits account.
Halldin did not directly respond to the allegations in the lawsuit. But in an official Bank of American statement, the company did say it works with the state every day to prevent criminals from getting money and ensuring legitimate recipients get their benefits.
“When fraudulent transactions occur on benefit cards,” the statement said, “we review those claims and restore money to legitimate recipients.”
The lawsuit’s arguments, though, hint at how the two types of fraud — false claims and stolen debit cards — can compound problems for those legitimately needing unemployment insurance:
A hacked account can also lead to a person’s overall unemployment claim being flagged as potentially fraudulent.
From victim to suspect
That’s exactly what happened to Haenel, the Compton tax preparer.
The single mother had her identity stolen by online hackers in October. They stole $3,000 total from her account over three separate transactions, Haenel said.
She initially tried to deal with the bank directly, Haenel said, but her efforts failed.
So Haenel hired an attorney to write a letter to Bank of America, stating she was the victim of identity theft and demanding the funds be returned to her account. The letter, however, went unanswered, Haenel said.
Last month, a reporter from Southern California News Group contacted Halldin about the situation. Then, two days before the end of the year, Haenel said, her money was back.
Halldin, who ultimately helped Haenel get the money back in her account, said he was unable to comment specifically on her case. But in general, he said, the bank works to resolve conflicts.
But Haenel’s story does not end there.
Almost immediately after hackers stole $3,000 from her, Haenel said, EDD froze her account.
The department did not confirm to the Daily Breeze that her account was frozen. But Haenel said she received a letter from the department explaining her account was flagged for possible fraudulent activity. The letter, Haenel said, informed her that to reactivate her account, she needed to verify her identity with the state agency.
But she has been unable to do so — despite multiple attempts.
Haenel, for example, tried twice to verify her identity through the department’s online system. Each time she finished, she said, the system responded by saying her information was under review.
Haenel, who has been out of work for nearly a year now, has not received unemployment payments since Dec. 14, Haenel said. And, on Friday, Jan. 22, Haenel said she still lacked access to her account.
And the EDD letters have kept coming — and have become, Haenel said, increasingly intimidating. They have made her feel, she said, as if she’s being accused of fraud.
“The letters they are sending now,” she said, “make it sound like I did something wrong.”
‘Riddled’ with fraud
Halldin, for his part, said the bank has been tasked with a mammoth job and there were bound to be recipients whose accounts were flagged in error. When investigators can sort it out, Halldin said, they do.
“If we have denied a claim, we encourage legitimate unemployment recipients to contact us and ask for reconsideration of the claim,” he said, “and we can certainly take another look at the circumstances.”
Still, Halldin said, fraud has hit unemployment programs hard — and EDD and Bank of America are doing what they can to prevent it.
“Unfortunately, unemployment programs have been riddled with billions of dollars in fraud, including California’s,” the spokesman said. “Criminals have found ways to steal money from the state and the debit cards of legitimate unemployment recipients.
But Bank of America, he added, has “helped stop billions of dollars in tax dollars from getting into the hands of criminals.”
For folks like Haenel, however, having their legitimate claims frozen remains frustrating — no matter the reason.
“Unemployment is the only way for people to survive under” the pandemic, Haenel said, “and now they are ripping it away from people.
“It’s aggravating,” she added, “especially when you are just trying to get answers.”
Source: Orange County Register
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