SAN FRANCISCODuring the COVID pandemic, hackers stole close to $2 billion in unemployment benefits, but Bank of America is denying victims’ claims. Bank of America has an revenue-sharing agreement with the Employment Development Department that is profitable for both the bank and the state, and as of November 19,2020, more than $8 million unemployment Bank of America accounts held altogether more than $110 billion.

Hackers have been stealing the identities of claimants on the “dark web” and duplicating their cards and security pins, to steal thousands of dollars both on the west and east coast.

“In the last week I’ve taken about 250 of these calls,” said an Employment Development Department call center employee who chose to stay anonymous and spoke to KPIX 5. He reached out to the news agency after seeing reports of hacks of EDD debit cards. 

He testified that Bank of America has been freezing the hacked accounts, but is not giving  victims the funds they have on the accounts. “The bank would not give them the funds that they still have on that debit card.” The anonymous EDD call center claimed that some 345,000 Bank of America accounts were frozen due to these hacks. 

The dilemma for these hundreds of thousands of victims of EDD debit card fraud is that they do not have access to funds needed. Gonzalo Arceo, an ID theft victim who spoke with KPIX 5, had his account locked after getting charged $1,000 from an ATM “far away” from his residence. “All the money that I had, over $8,000 is there.” The money was needed to care for his daughter with physical disabilities. Instagram videos and photos show him caring for her daughter, who is in a wheelchair. 

EDD has been sending him paper checks, but three months later, Bank of America refuses to unlock the funds. “Most people are still locked out of their accounts,” said the anonymous EDD call center employee.  

Gonzalo Arceo, an ID theft victim who spoke with KPIX 5, got his accounts unlocked and access to the funds. Through a short iPhone interview, Arceo said he considered the efforts to resolve the issues frustrating. “This is just ridiculous. Zero straight answers.” 

Bank of America spokesman and Senior Vice President Bill Halldin in a statement assured the public that “ongoing and productive dialogue” with state officials helped to stop billions of dollars in fraud. Bank of America and EDD are in a partnership to solve what they believe to be a $2 billion fraud problem involving these debit cards. 

“We have had an ongoing and productive dialogue with state officials over the last several months to identify and stop fraudulent activity to protect taxpayer dollars,” Halldin said.

“The program is unfortunately riddled with billions of dollars in fraud. Criminals have found ways to steal money from the state and the debit cards of legitimate unemployment recipients. We have helped stop billions of dollars in theft by these criminals and protected taxpayer dollars, in partnership with state and law enforcement officials. We commend the state for its recent actions to suspend payments to 1.4 million recipients over fraud concerns and require identity verification before resuming those payments.”

Bank of America spokesman Bill Halldin. Photo courtesy of LinkedIn.

There has been hardship and difficulty in communication between Bank of America and EDD, evident in private emails obtained by KPIX 5, between former EDD Director Sharon Hilliard and Bank of America’s Regional Executive Bobby Chestnut.

In an excerpt of message exchanges released by the news agency, former EDD Director Hilliard opened up with a message stating the urgency of unlocking the hacked accounts and the difficulty in communication between the two parties. “It is imperative that we meet right away,” she said. “It appears that a number of issues between BOA and EDD have not been resolved.”

Bobby Chestnut, representing Bank of America responded. “Can we discuss? My plan is to schedule a business meeting tomorrow.”

Hilliard responded, mentioning a theme of delay while stressing the urgency that every minute is vital during the economic fallout during the COVID-19 pandemic. “Is there reason for the delay? EDD is ready now. Every minute we wait we have people impacted by a lack of funds.”

In September 2020, EDD asked Bank of America to freeze 345,000 bank accounts. EDD wanted Bank of America to unfreeze 256,000 accounts perceived to be legitimate, so that they may be regained by the victims. By mid-October, Bank of America had only unfrozen 51,000 accounts. 

During the same time frame, an additional 56,000 accounts were frozen by Bank of America without consulting EDD. In response, EDD’s Lead Counsel, Carole Vigne, wrote in an email, “To the extent, that EDD has asked you to unfreeze accounts, or has not asked you to freeze an account, Bank of America is acting without EDD’s authorization.” 

Replying to this email, Bank of America’s Regional Executive Bobby Chestnut responded, “As EDD is well aware, the cardholder agreement gives the bank the specific right to freeze. If we suspect irregular, unauthorized, or unlawful activities may be involved.” 

One notable case of EDD Debit Card fraud was the theft of $35,000 caught on camera some time between 12 a.m. and 2 a.m. on October 11, 2020. Chestnut pointed out that the cards in question had a history of usage in such crimes. 

“The cards in question were used at a Bank of America ATM between midnight and 2 a.m. on October 11, when a single individual (caught on clear, color video tape) accessed the ATM with a stack of EDD prepaid cards in hand and fed them into the terminal, one after the other, until he managed to withdraw over $35,000.”

Commenting on this incident, the anonymous EDD call center worker said the criminals would steal in this way as if it were a job, and with multiple cards. “They are just going in with multiple debit and credit cards and withdrawing money, every day and all day. That’s their job.” 

Halldin said the hackers and fraudsters stealing EDD debit card information during the serious health crisis are fervent to deceive Bank of America and news media in tireless efforts to steal money from legitimate EDD debit card unemployment recipients.

“The criminals don’t ever stop, even calling Bank of America and the news media trying to get money from the bank with fake claims,” Halldin said. 

Giving the general idea of how a hacked account is restored in the light of claimants unable to retrieve their accounts, he explained:

“We review every claim and restore money to the debit cards of legitimate unemployment recipients. In instances where we deny a claim, we encourage people who disagree with our decision to ask for reconsideration. We take any new information or further identity verification from the account holder, and if it addresses our concerns we will credit the customer’s account.”

Thousands of agents are working to answer phone calls and investigate claims, and making improvements and progress, he noted. “We have added thousands of additional agents to answer phone calls and investigate claims for areas of the program we are responsible for and, as a result, our average wait time for callers has dropped dramatically,” said Halldin.

Professional credit and debit card fraud investigators collaborate with the police, and they are experts in sophisticated fields such as forensic accounting, information technology, and financial security systems. The San Francisco Police Department has a Financial Crimes Unit. Halldin made mention of Bank of America’s collaboration with such units stating, “We report wrongdoing to law enforcement and assist them in their prosecution of the criminals trying to steal money and undermine this program.” 

According to the Employment Development Department, the unemployment rate in November 2020 was 8.2 percent. There were 825,000 claims processed, and $5.17 billion in claims paid.

The SFPD Financial Crimes Unit can be contacted via the SFPD Special Victims Unit (SVU) at 1-415-553-1521, from 8 a.m. to 5 p.m. on weekdays, located at the Hall of Justice, Room 500, 850 Bryant Street, San Francisco, CA 94103.