Joseph Wood went to buy gas in Ventura in anticipation of driving up the coast to visit his children this week. The 39-year-old gig driver knew he had money on a debit card connected to his unemployment payments when his purchase was declined.
Unable to fill up his tank, he found his card was frozen. By the time it unlocked Monday, $1,380 had disappeared.
In what appears to be the latest problem at the besieged state Employment Development Department, unemployed Californians say their accounts are being erroneously frozen, leaving them unable to access a financial lifeline amid the pandemic. Reports surfaced last week and continued over the weekend with beneficiaries reporting their 鈥� where benefits are deposited and spent 鈥� , or drained of money.
Amid a backlog of , angry lawmakers and out-of-work residents, California鈥檚 unemployment agency placed a two-week pause on new claims to implement an automatic identity-verification tool to speed up processing times. The move was among a list of recommendations from Gov. Gavin Newsom鈥檚 strike team to improve call center service and outdated technology. To date, more than 13 million claims have been filed and the agency has doled out about $94 billion in benefits.
Now as the department resumes full operation with a new identity verification system, a new issue has emerged: people can鈥檛 get their money out.
The $1,380 that disappeared for Wood looked familiar. It鈥檚 the same amount he lost to a Burbank fraudster and then had returned by EDD this summer.
Over the weekend, he shuttled back and forth between the department and Bank of America, the bank contracted by the state to issue debit cards, each side deferring to the other about the freeze and the disappearing cash 鈥� labeled 鈥淒ispute Adjustment.鈥� Wood uploaded more documents to reverify his identity, but the money is still missing, and he can鈥檛 get clarity from either group.
鈥淚鈥檓 incredibly frustrated,鈥� he said. 鈥淚 was supposed to go up and pick up my kids on Monday, but I couldn鈥檛.鈥�
Freeze first, verify second
The department seems to be freezing accounts first and asking questions second.
The state that extra steps were necessary to vet claims amid reports of . But legitimate claimants appear to be caught up in the verification process, leaving them with few answers and no way to access money already dispersed to them.
One Sacramento TV station, KCRA, obtained a that some EDD employees were given to help answer questions about the situation. It tells callers that they will receive an email, text, or notice in the mail within five to seven days of their account being frozen.
The agency, which didn鈥檛 respond to a request for comment, told lawmakers at a committee today that it is currently working with Bank of America to review some 358,000 debit cards issued to unemployed Californians. It is unclear how many of those accounts may have been frozen.
EDD Director Sharon Hilliard also said at the hearing that identity verification is underway for 315,000 unpaid unemployment claims, and that the agency鈥檚 27 fraud investigators currently have 75 open cases. When pressed by lawmakers on how much taxpayer money may have been lost to unemployment fraud during the pandemic, Hilliard said the agency does not have an estimate.
鈥淚t鈥檚 going to be in the hundreds of millions,鈥� Sacramento Democratic Assemblymember Jim Cooper said during the hearing. In the meantime, much of the burden for investigating EDD debit card fraud has fallen to local law enforcement.
Beverly Hills Assistant Chief of Police Marc Coopwood told lawmakers his investigators have arrested over 100 people for EDD fraud and confiscated 200 EDD debit cards. 鈥淲e will not arrest our way out of this problem,鈥� Coopwood said. 鈥淲e need to see systematic changes at EDD.鈥�
To complicate matters, President Trump on Tuesday tweeted on another coronavirus stimulus package before the election. He later tweeted he would support funding , . Without additional aid to state and local governments as well as the unemployed, it dashed hopes of extending a .
Money missing with no warning
Jesika, whose last name is not being published for worries about finding a new job, has been receiving Pandemic Unemployment Assistance 鈥� the benefits aimed at contract and gig workers 鈥� sporadically throughout the year. The Glendale resident checked the balance in her account on Thursday: around $1,500. The next day, she started seeing Facebook posts about cards being locked, and she tried to check her account again.
It was frozen.
A series of weekend calls did nothing to clear things up. Bank of America first told Jesika the state had closed her account due to fraud, then told her all they could see was a freeze. One EDD representative told her she must have mistyped her password multiple times. Another told her she needed to reverify her identity. A third said her account had been frozen because of a flag.
She was frustrated that her money could be blocked with no warning.
鈥淚 get where they have to verify,鈥� Jesika said. 鈥淪end a text message and say, 鈥楬ey,鈥� or an email, 鈥榊ou have 10 days to comply or your ATM card is going to get blocked.鈥� What if I had no other cash or means for the weekend?鈥�
The professional caregiver, who has lost her car and is now on the brink of bankruptcy, has struggled with the EDD for months. Rarely do the benefits come easy; she says it feels like her new job is trying to reach the department over the phone.
After a weekend of calls and scanning old documents to reverify her identity, the account did reopen and Jesika was able to make withdraws Monday.
鈥淚 feel like their little puppet,鈥� she said.
A double bind
The agency is being overwhelmed by the volume of unemployment filings in the coronavirus recession 鈥� and recent fraud is adding to that strain.
Hilliard said that the federal government鈥檚 unprecedented Pandemic Unemployment Assistance program for out-of-work contract workers 鈥渙pened the door for fraud in a way it never has before,鈥� because of fewer 鈥渃hecks and balances鈥� than traditional unemployment insurance.
and identity theft have bloomed across the state. These are not victimless crimes, Jessica Bartholow of the Western Center on Law and Poverty points out 鈥� Californians whose identities are used by scammers can be blocked from their own deserved benefits.
At the same time, the freezing of accounts seems to fly in the face of a recommendation in the strike team鈥檚 : the agency shouldn鈥檛 allow anti-fraud practices to prevent timely access to benefits.
Bartholow said that even if funds aren鈥檛 available for a few days, payment fees and overdraft charges can stack up, on top of the stresses for unemployed Californians looking to access their money.
鈥淭here are monetary costs,鈥� Bartholow said, 鈥渁nd there are real and tangible harmful impacts to people.鈥�
Hilliard told lawmakers today that she is 鈥渧ery confident鈥� EDD will clear its 1.6 million-claim backlog by January, and that the agency has taken action on about half of the governor鈥檚 strike team鈥檚 recommendations.
CalMatters reporter Lauren Hepler contributed to this report.
This article is part of , a collaboration among newsrooms examining income inequity and economic survival in California.