State jobless fraud likely tops $ 2 billion, bank says

SACRAMENTO » Bank of America said Monday it is likely California paid at least $ 2 billion in fraudulent unemployment benefits, offering a glimpse of the potential size of the problem that has plagued states across the country during the pandemic.

Bank of America contracts with California to issue unemployment benefits via debit cards. From March 1 to Nov. 21, the bank issued more than 8.2 million cards containing a total of $ 105.1 billion as the state has been flooded with unemployment claims because of economic damage of the pandemic.

State officials had previously asked Bank of America to freeze 345,000 accounts because of suspected fraud. In a letter to state lawmakers on Monday, Bank of America said its assessment of those accounts revealed only “a very small percentage” was legitimate, estimating fraudulent activity “on the order of approximately $ 2 billion.”

The bank said it has identified at least 295,000 other suspicious accounts it says California should investigate, said Brian Putler, Bank of America’s director of California government relations. Putler said those accounts were flagged for a variety of reasons, including instances where hundreds of debit cards were sent to a single mailing address or multiple cards were associated with a common phone number or email address.

He said at least 76,000 of those cards were sent to people in states that do not border California.

“Although in our experience red flags such as these and others are highly correlated with the risk of fraudulent activity, the application of these filters will inevitably impact some legitimate claimants,” Putler wrote. “( California) and Bank of America therefore must work to investigate and resolve matters for recipients who are inadvertently impacted by the measures necessary to weed out fraudulent activity.”