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Debit Card Distribution Weak Link in EDD Fight to End Unemployment Benefits Fraud

SACRAMENTO (KPIX) -- Lawmakers are trying to help millions of California residents who have been receiving their unemployment benefits via debit cards sent from the state Employment Development Department.

Those cards are susceptible to fraud and identity theft and victims are demanding change.

At present, Bank of America has an exclusive contract with the EDD. People receiving unemployment insurance benefits can only get those funds via a BofA debit card or by check.

Security experts say debit cards without security chips are more susceptible to scammers who can "skim" data from the magnetic strips.

One lawmaker is trying to change that and believes it could solve some of the rampant fraud problems.

"EDD needs to figure out a way to ensure that people have the option for direct deposit," said California Assemblywoman Lorena Gonzalez.

Since KPIX began reporting on scams targeting EDD Bank of America debit card accounts, more than 75 people have contacted the newsroom saying their cards have been hacked. Many accounts were drained of thousands of dollars.

More than $2,700 disappeared from Brook Suchomel's benefits debit card last month. She's spent countless hours on the phone with EDD and Bank of America trying to get her money back.

"It's insane to me that it has to be on a card because it's very hard to pay your rent with a debit card. You know, it's like it. This process makes it very, very difficult to to pay for the kind of necessities when you're unemployed," Suchomel said.

"I think if we could get as much pressure from the legislature as possible we can get movement much quicker," Gonzalez said.

Gonzalez will introduce a bill in soon that would require the Employment Development Department to offer direct deposit for unemployment benefits.

"The agency can do it now. There's nothing in the contract with Bank of America that wouldn't allow them to offer this. We read the contract and we want to push them to get it done," Gonzalez said.

California is one of only three states that does not currently offer direct deposit as an option.

"To give people the option to deal with their own bank -- to deal with their own bank account -- would be a lot easier and avoid a lot of fraud and avoid a lot of problems that we are seeing now," Gonzalez said.

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