Bank of America Sued for Failing to Protect Unemployment Insurance Recipients

UPDATE:

• Bank of America has been ordered by a federal judge to provide preliminary relief to Class Members whose accounts were frozen after fraudulent charges were made.

Jennifer Yick relies on unemployment insurance to survive the COVID-19 economic downturn. Unfortunately, Yick, a former real estate agent and property manager from San Francisco, had her last $400 stolen from her account because of unauthorized transactions.  

Yick claims Bank of America, the financial institution in charge of administering the unemployment benefits where she lives, doesn’t do enough to properly protect fund recipients like her from potential fraud. 

Yick filed a class action suit Friday against Bank of America in San Francisco federal court accusing the bank of being unwilling or unable to stop criminals from breaching its systems and stealing millions of dollars of Employment Development Department (EDD) benefits. Yick aims to represent a class of unemployment benefit recipients who have also found themselves in similar situations as victims of fraud.

Yick’s story may sound familiar to many Americans. Every day there is a new story of an EDD recipient who has gone to use their Bank of America EDD debit card, only to discover that the money in their account was suddenly gone, according to the complaint. 

“It’s kind of like a nightmare. . . . Every day I’m wondering what’s more important. Do I get on the phone with the bank and try again so I have a place to sleep tomorrow, or do I just accept that I’m going to be on the street and focus on my job search? Because you can’t do both,” said one EDD cardholder and fraud victim, according to the complaint.

Bank of America has a “zero liability” policy stated in its own EDD cardholder agreement, to deal with potential fraud. However, Bank of America has failed to offer any assistance to the numerous defrauded EDD cardholders, instead opting to deal with the situation in a range of harmful ways including not answering the customer service phone lines for EDD debit cardholders, opening claims and closing them before a full review could be completed, crediting funds and debiting without any notice to the cardholder, not abiding by the legal requirements to provide provisional credit to EDD cardholders, and freezing EDD cardholder’s accounts unaffected by fraud. 

The suit alleges that Bank of America violated California’s consumer privacy and unfair competition laws and the federal Electronic Funds Transfer Act, and also accuses the bank of negligent performance of contract, negligent failure to warn, breach of contract, breach of implied contract, breach of the implied covenant of good faith and fair dealing, and breach of contract concerning third-party beneficiaries.

Customer service representatives at Bank of America have voiced their frustrations at being unable to offer real support to affected customers. 

“We’re actually no longer allowed to tell them [defrauded EDD cardholders] a timeframe, because we have no clue . . . . Every day, I talk to 30 people with the same story. I just pray for them after my shift, honestly.” 

A Bank of America spokesperson told Law360, “As California’s unemployment program faces billions of dollars in fraud, Bank of America is working every day with the state to prevent criminals from getting money and ensuring legitimate recipients receive their benefits.”

On May 19, U.S. District Court Judge Vincent Chhabria hit Bank of America with an injunction in the class action lawsuit. The order requires Bank of America to provide some urgently needed relief to Class Members who were frozen out of their accounts after the bank failed to protect them from fraud.

In the order, the judge cited a “strong likelihood of success” concerning the plaintiffs’ claims and extended certification of the Class to all benefits cardholders who contacted Bank of America to report fraud.

“The harm being suffered by class members is irreparable,” stated the order, which also noted that Class Members are in dire need of assistance after their unemployment benefits were stolen and then locked in frozen Bank of America accounts.

“Continued denial of these benefits will seriously hinder the ability of many class members to feed their families and keep a roof over their heads,” wrote Judge Chhabria in his order.

Details of the relief that will be provided to Class Members under the order will be hashed out in the following week, according to court documents.

Over the years Bank of America has faced a range of class action lawsuits. In Oct. 2020, a class action lawsuit was filed against the bank for ATM bank fees that consumers weren’t informed about. 

Have you been a victim of fraud, or had unemployment benefits stolen from your account? Share your experiences in the comment section below.

The Unemployment Insurance Recipients Class Action Lawsuit is Yick v. Bank of America, N.A., case number 3:21-cv-00376, in the U.S. District Court for the Northern District of California.

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