Bank of America Bungles Handling of Unemployment Benefits, Class Action Alleges

Bank of America (BoA) owes customers thousands of dollars after bungling its delivery and management of unemployment insurance benefits during the pandemic, a new class action lawsuit alleges.

The latest class action lawsuit, filed in California on April 20, is one of at least three class action lawsuits the bank is facing over its management of California state unemployment insurance payments.

Lead Plaintiffs Jonathan Smith and Alex Yuan allege that the bank knowingly sent out insecure debit cards that use outdated strip technology that can easily be hacked, did not manage subsequent hacks well, and caused customers to lose thousands of dollars – on top of causing stress and anxiety at the height of the pandemic.

Smith, a Los Angeles resident, says that the first time he tried to use his BoA issued card at one of the bank’s ATMs his card displayed a negative balance, despite him having collected unemployment insurance without spending any of it.

He quickly realized his account had been hacked and drained of $900, the class action lawsuit claims. When he notified the bank, he was given a $900 credit and an investigation concluded he had been hacked. However, a month later the bank reversed the credit without notifying Smith and froze his account, according to the claim.

When Smith tried to follow up with the bank, he was subjected to long wait times and dropped calls, the class action states.

On the rare occasion Smith managed to get into contact with a customer service representative, they behaved discourteously toward him and accused him of lying about his circumstances, according to the class action lawsuit.

“During that period, Smith suffered severe stress and anxiety wondering how he would be able to pay for basic necessities, including, but not limited to, rent, groceries, and therapy. Smith was ultimately forced to borrow money from friends and family to cover said costs.”

Yuan, a San Jose local, had a similar experience, according to the class action, having his BoA issued card hacked twice – to a total loss of $1,800, the class action lawsuit states. When Yuan contacted Bank of America, his account was credited $1,800, however, much like Smith, the credit was reversed. While Yuan was dealing with the situation, he was hacked again bringing the fraudulent withdrawals to $2,700.

Despite numerous attempts to contact the bank to retrieve the benefits owed to him, Yuan remains out of pocket several thousands of dollars, the class action states.

According to the class action lawsuit, thousands of dollars of unemployment insurance benefits have been stolen from people left unemployed during the pandemic through unauthorized transactions – including ATM withdrawals and unauthorized purchases on food delivery apps.

At the heart of the class action lawsuit is BoA’s alleged knowing use of old and easily hackable debit cards. The bank’s decision not to issue unemployment benefit cards with chips technology was “catastrophic” and led to widespread hacks that caused the bank to freeze the accounts of approximately 350,000 unemployment California residents, the class action lawsuits claims.

“With these actions, Bank of America has effectively deprived EDD cardholders of unemployment insurance benefits to which they are lawfully entitled and on which they heavily rely. Notably, many EDD cardholders remain unable to access their unemployment insurance benefits to date – months after Bank of America first froze their accounts.”

Smith and Yuan want to represent a Class of people through three subclasses: the Declaratory and Injunctive Relief subclass, the Access Denial subclass, and the Regulation-E subclass. They are suing for negligence, breach of contract, and violation of California’s privacy and business laws.

They are seeking certification of the Class, restitution, injunctive relief, damages, legal costs, and a jury trial.

Did you receive a Bank of America debit card to collect your unemployment insurance benefits? Let us know in the comments section!

Smith and Yuan are represented by Daniel L. Warshaw, Bobby Pouya, and Sophie R. Sedaghat of Pearson, Simon & Warshaw, LLP, and Raymond P. Boucher of Boucher LLP.

The Bank of America Debit Card Hack Class Action Lawsuit is Smith, et al. v. Bank Of America, N.A., et al., Case No. 2:21-cv-03385, in the U.S. District Court Central District of California.  

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