Scammers have racked up an estimated $8 billion in benefits and taken from the pockets of a million and a half genuinely unemployed people, who then find themselves locked out of their accounts, as California’s unemployment fraud spirals out of control.
At first we thought it was funny when a Roseville woman used Dianne Feinstein’s name and social security number to scam $21,000 in fraudulent unemployment benefits. Though it seemed more serious when tens of thousands of prison inmates' names were fraudulently used to raid California unemployment funds intended for out-of-work gig workers, in what Sacramento County District Attorney Anne Marie Schubert said “appears to be the most significant fraud on taxpayer funds in California history.” At the time of those November and December reports, Bank of America estimated that the fraud totaled about $2 billion.
That figure now looks like peanuts, KGO reports that the new estimate is $8 billion in fraudulent unemployment benefits lost to scams. And the burden falls on the genuinely unemployed individuals, with Sacramento's KXTV noting that some 1.4 million unemployed Californians have been locked out of their accounts.
A particularly cruel ‘double-dip’ variant of the fraud has hit Bank of America customers, as explained in the above segment from KGO. Hackers crack into an Employment Development Department (EDD) account, essentially one’s benefits card and access to money, racking up mysterious charges in this case from a company called “WHOGOHOST - WEST AFRICA.” Then Bank of America locks the customer out of their legitimate account, letting the customers hang in the lurch with no access to money.
“Seven thousand dollars taken out of my account. It hurts,” unemployed bartender Diane Davis told KGO. “I’m on hold for three hours, then you finally get someone on the phone, and click, you get disconnected.”
It got worse. She then attempted to log into her own account, and was greeted with a big red X and the message “Your account cannot be accessed.” (After KGO’s report, Davis did get access to her account and funds reimbursed.)
"EDD has become an absolute catastrophe," Rep. Josh Harder (D-CA) told KXTV. " Every week that innocent people go without their unemployment check, they're making it more difficult for folks to buy groceries and pay rent, pay their mortgage. And the fact that this agency after a year still can't figure out the difference between fraud claims and legitimate needs is incredibly frustrating."
KXTV, who have really been on this story given their Sacramento focus, explains that there is a way to appeal EDD’s ruling if you’re locked out of your account. Unsurprisingly, it’s the kind of process where you could more quickly remove your own appendix. You have to submit a paper appeal form, and then wait for a field office to schedule you a phone interview to make your case. An employment expert tells KXTV that “The general overturn rate is over 50 percent in favor of the claimant,” which is great, except you’d rather unemployed people just not have to go through the nightmare in the first place.
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Image: Job seekers look at job resource pamphlets during the "Put Your Talent to Work" job and resource expo December 17, 2008 in Concord, California. The California Employment Development Department hosted the job fair that was geared towards unemployed contruction, real estate and mortgage workers. Over 1,200 people attended the event that had been expected to draw closer to 400. (Photo by Justin Sullivan/Getty Images)