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U.S. District Court prohibits Bank of America from freezing some EDD debit card accounts

The preliminary injunction also prohibits the bank from denying claims based on multiple factors.

SAN FRANCISCO — A preliminary injunction by the US District Court in San Francisco will prevent Bank of America from disrupting some Californians' access to unemployment and disability benefits.

In January 2021, a class action lawsuit alleged Bank of America "breached its exclusive contract with the California Employment Development Department (EDD) and violated the rights of thousands of California benefits recipients." An additional eight similar class-action lawsuits were soon filed. In March, all nine were consolidated by the court. 

The plaintiffs alleged Bank of America failed to "implement basic security measures, including its failure to include industry-standard security chips on the cards." Instead of investigating fraud claims, the bank "denied cardholder claims and froze their accounts." The suit also claims many were left without access to their prepaid debit card after the bank "failed to handle the high volume of customer service calls from cardholders."

On Tuesday, June 1, the court issued an order, prohibiting Bank of America from:

  • Freezing accounts based on its automated fraud filter.
  • Denying claims of unauthorized transactions based on the automated filter.
  • Denying claims or provisional credit without conducting an investigation.
  • Denying claims without providing a written explanation of the bank’s findings.

The claim also requires the bank to:

  • Reopen any claim the bank closed or denied based on its automated fraud filter, and provide written notice to cardholders that their claims have been reopened.
  • Provide provisional credit if the new or reopened claim cannot be resolved within 10 business days, and complete the investigation within 45 days.
  • Establish a direct toll-free number to enable class members to reach the Claims Initiation Call Center, and expand the call center’s hours to 24 hours per day, 7 days per week within 60 days after the order.
  • Establish a direct toll-free number to enable class members to authenticate their identity and resolve challenges to blocked accounts, to be open 24 hours per day, 7 days per week.
  • Staff the call centers such that the average speed to answer is no more than five minutes, 90% of the time.
  • Provide written notices to class members regarding the new toll-free numbers.

In a statement on the decision, Bill Halldin, spokesman for Bank of America, said the bank's goal "has been to ensure legitimate recipients could access their benefits."

"With this agreement, we are committing to additional measures to help those entitled to unemployment benefits receive those benefits as quickly as possible," Halldin said.


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