Bank of America executives and officials with the California Employment Development Division faced tough questions about fraud and inefficiencies at a hearing in front of the Assembly Budget Committee on Tuesday.
Lawmakers say both the bank and EDD officials are to blame for the department’s ongoing problems.
1.4 million accounts have been frozen as law enforcement, Bank of America and EDD continue to investigate a massive fraud scheme.
Investigators now believe that identities stolen during data breaches at Equifax, MasterCard and Target were used to perpetrate the fraud.
Legislative analysis found that most of the fraudulent claims were targeted at the federal pandemic unemployment assistance program, which was meant to provide benefits to self-employed and gig workers.
But some of the accounts that were frozen in an effort to cut off fraudsters actually belonged to innocent people.
“We’ve staffed up the contract as much as we possibly can to ensure that claimants are served properly,” said Faiz Ahmad, Managing Director of Transaction Services at Bank of America. "We believe the overwhelming majority of frozen accounts represent frauds that were stopped, representing hundreds of millions or billions or more in criminal activity.”
The bank is working to restore funds and access to people who can verify their identities, but Ahmad says the problem is extensive and not unique to California.
Carol Williams, Chief Deputy Director of Operations for EDD, became choked up while acknowledging people who lost their jobs only to lose access to their unemployment benefits because of the fraud scheme, but said it was a necessary step.
“It was a data driven decision. We finally had comprehensive data analysis on suspected fraud in our inventory… and if we didn’t take action, more of the same victimization of innocent people would have occurred.”