EDD halts some unemployment payments amid fraud problems

A widening fraud probe has prompted the state Employment Development Department to suspend unemployment payments to some California workers even as coronavirus- linked business shutdowns have left people without a job.

The halt in payments for an unknown number of workers comes at a time when the EDD is reporting that its backlog of unpaid unemployment claims is again swelling. The agency, criticized for antiquated technology and a call center that can’t handle the volume of workers who need help getting their money, may have sent out an estimated $2 billion in fraudulent claims.

The brutal bottom line: Many California workers are failing to receive the unemployment benefits they are seeking, either due to fraud concerns or because they are trapped in a logjam of unpaid legitimate claims. Some have been without work since the coronavirus started ravaging the state and businesses were ordered closed to help combat the virus.

“As part of ongoing efforts to fight fraud, EDD has suspended payment on claims considered high risk,” the state labor agency said in a Jan. 3 tweet.

Two workers told this news organization they received an email from the EDD telling them their claim was suspended. The workers also observed a similar message when they accessed their respective accounts at the EDD site.

“You have been receiving unemployment benefits, but we have temporarily suspended your claim because it may be tied to fraudulent activity,” the EDD told the workers who were seeking information on the state agency’s website about their payments.

At the same time, the

EDD’s efforts to whittle away a mammoth backlog of unpaid legitimate claims appear to have floundered.

The agency appears to be scrambling this week to hire hundreds of phone agents quickly, according to another Jan. 3 tweet. The EDD said in the tweet it hopes to hire 300 phone agents to answer calls from unemployed workers and others.

In September, the EDD vowed it would erase the backlog of jobless claims by the end of January.

The total number of unemployment claims that are stuck in the EDD backlog was 777,760 for the week that ended on Dec. 30, a dashboard posted on the EDD’s website shows. That’s an increase of 32,124 from the prior week’s backlog.

The backlog consists of two categories:

— 468,149 claims from workers who filed a firsttime unemployment claim but have been waiting more than 21 days to receive their first payment or be told they don’t qualify for any benefits. These are officially known as initial claims.

— 309,611 claims from workers who received at least one payment but have been waiting more than 21 days to receive an additional payment or notification from the EDD that they don’t qualify for further payments. These are known as continuing claims.

Casey Osborne, a resident of the Ventura County city of Simi Valley, said he was notified on the EDD website that his claim was suspended due to suspected fraud.

Osborne, however, is skeptical because he had initially filed an unemployment claim in November 2019 — prior to the coronavirus-linked business shutdowns — and the EDD had been paying him for months with no problem.

Things changed abruptly at the end of December for Osborne, who has held multiple blue- collar jobs, including as a driver for an automotive retailer.

“I got a notice on the EDD website that my account was frozen because of possible fraud,” Osborne said in an interview. “I think the EDD is lying. They are just trying to quell the demand from the new unemployment claims. So they are just saying it’s fraud when it might not be the case.”

The EDD did not respond to a request for comment.

“We are informing those affected that their identity will need to be verified starting this week before payments can resume,” the EDD said in the Jan. 3 tweet.

The agency promised that more information would be made available in the coming days.

In December, Bank of America, which handles the debit card-based payments to unemployment claimants, estimated that the total amount of fraud could be at least $2 billion.

Also last month, federal prosecutors charged three women — a former EDD worker, a prison inmate, and a parolee — in a scheme to defraud California’s scandal-scarred unemployment insurance system.

Gov. Gavin Newsom, who has come under increasingly harsh criticism for his response to the agency’s woes, has appointed a new director to head the reeling department. Rita Saenz, with stints in both the private sector and in state government, is being paid about $204,900 a year as EDD director.

Meanwhile, countless workers in California must ponder a forbidding economic landscape of no jobs and no unemployment payments.

“There is a lot of despair right now,” Osborne said. “My car has been repossessed because of this. People have lost their homes. The EDD doesn’t realize the problems it is causing, the trouble people are having.”