Judge orders Bank of America to stop auto-denying EDD fraud claims, reopen cases

SAN FRANCISCO -- A victory on Tuesday for legions of jobless workers in California. Thousands reported that fraudsters had drained the money off their EDD debit cards - and Bank of America denied them a refund. But Tuesday a federal judge ordered the bank to stop automatically denying their claims for refunds, as required by law.

The court required the bank to reopen possibly tens of thousands of claims that were automatically denied as fraud swept through the EDD system. The judge ruled the bank likely was violating federal law by failing to investigate each of the claims before shutting them down and often freezing EDD accounts of legitimate workers.

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This is a huge victory for struggling workers who found hundreds or even thousands of dollars missing from their accounts. They say the bank denied their claims with no explanation and in some cases, froze their EDD benefits entirely.

Tuesday's order requires Bank of America to reopen all claims that were denied using an automated fraud filter and not an actual investigation. The judge also ordered the bank to stop using filters to freeze all benefits when someone reports fraud on their cards.

Hundreds of workers have contacted our sister station ABC7 News after finding fraudsters stole their EDD benefits - saying Bank of America simply closed their claims with no explanation. It left many with nothing to live on in the pandemic.

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Tuesday's order is part of a class-action lawsuit that claims Bank of America failed to prevent fraud, did not put security chips on the debit cards, then denied claims when the fraudsters attacked.

A class action attorney says the judge realized the urgency of getting folks their money right away.

"The court recognized the serious impact that Bank of America's practices have had on unemployed Californians, and that immediate relief is necessary," said Brian Danitz, class action attorney. "People are living out of their cars, they're late, they don't have money for food or medicine."

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Bank of America said it has always provided a way for cardholders to reopen their claims simply by asking. And thousands have done so. However, it said today's order provides yet another avenue for relief.

The bank is required to notify everyone who's entitled to a new review of their claim.

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