CA EDD is still struggling to deliver benefits, stop fraud

By Lynn La – CalMatters
CalMatters Network
December 4, 2024

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By CalMatters investigative reporter Lauren Hepler:

Money vanishing from EDD debit cards. Big-dollar bets on the technology that powers California’s job safety net. Billions in unemployment debt with no clear path forward.

No, this isn’t a pandemic flashback. 

It’s today’s unsettled reality for the California Employment Development Department and the workers and businesses who still rely on it. A year after CalMatters investigated the EDD’s unemployment crash, legislators have moved on but key issues remain unresolved.

When it comes to fraud, California was let off the hook after the federal government agreed to absorb billions in losses from scams targeting pandemic programs. But now, workers are reporting newer issues with debit card fraud, even after ex-EDD payment contractor Bank of America bowed out early this year.

Lea Bitton was navigating a high-risk pregnancy when $4,000 disappeared from her debit card managed by new EDD contractor Money Network — an ordeal that made her one of at least 74 Californians who have filed lawsuits or complaints this year about Money Network and its government debit cards to the federal Consumer Financial Protection Bureau. 

Financial regulators haven’t yet analyzed more recent fraud reports. The EDD and Money Network say the fraud is more limited in scale, and that claimants should report all concerns.

• Matthew Loker, fraud attorney: “It’s deja vu a little bit. It’s a difficult problem, but it shouldn’t be the consumers who are left holding the bag.”

While workers play whack-a-mole with fraud, a new report warns that the state is approaching a bigger financial breaking point. 

California is still more than $20 billion in debt to the federal government after taking on loans to cover pandemic unemployment benefits, costing taxpayers $1 billion in annual interest. Now, as the dust settles and people are back at work, the system is on track to keep losing $2 billion a year as it fails to bring in enough revenue to cover expenses, according to the report by the California Legislative Analyst’s Office.

• Chas Alamo, LAO principal fiscal and policy analyst: “If we had a UI tax financing system that wasn’t broken, these costs wouldn’t exist. This is entirely avoidable.”

• This article was originally published by CalMatters.

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Read more on the state of EDD in the story.

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