12-04-2023 8:29am

EDD switches unemployment contractor after scams

Anita Johnson-Brown Editor

December 4, 2023 By Anita Johnson-Brown

California has hired a new contractor to handle unemployment and disability payments after the state was hit by a multi-billion-dollar pandemic fraud. The Employment Development Department (EDD) hopes that this move will put an end to the brazen scams that caused chaos for laid-off workers and led to police busts involving stacks of ill-gotten debit cards issued by the previous contractor, Bank of America.

According to CalMatters, the EDD plans to notify 850,000 benefit recipients of the new payment provider, Money Network, which is an electronic payment company owned by finance tech company Fiserv. Money Network was also used by the federal government and Governor Gavin Newsom to pay out COVID-era stimulus funds, which attracted waves of debit card scams.

Money Network won the EDD contract after a competitive bidding process. This comes as the agency embarks on a five-year, $1.2 billion tech overhaul known as EDDNext.

The contract will primarily be paid for through a debit card revenue-sharing agreement, similar to the EDD’s previous deal with Bank of America. The agency will also pay $32 million over five years for Money Network to offer a long-discussed direct deposit option to workers’ bank accounts, which the EDD says will launch in spring 2024.

Starting mid-January, people receiving unemployment, disability, and paid leave benefits from the EDD will be mailed new Money Network debit cards. Payments will officially begin on these cards on February 15. Anyone who still has a Bank of America EDD debit card will have until April 15, 2024, to spend the money.

Fraud analysts are tracking an uptick in attacks on government benefit debit cards, not just California’s unemployment program, but also food assistance and others. They will be watching to see what lessons have (or haven’t) been learned from the pandemic. The new EDD cards will include both security chips and tap-to-pay options common in consumer credit cards.

The EDD is advising cardholders to be vigilant and beware of scammers. They will never request personal information by text message, email, or on social media.