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EDD Fraud: Class Action Suit Filed Against Bank of America Over Hacked Unemployment Debit Cards

SAN FRANCISCO (CBS SF) -- A class action suit has been filed against Bank of America for its role in the widespread fraud involving California Employment Development Department (EDD) debit cards provided by the bank to people receiving unemployment benefits.

KPIX 5 first exposed how hackers took advantage of people in need. A San Francisco law firm filed the class-action lawsuit Thursday alleging a laundry list of failings by Bank of America, saying the suit is a wakeup call for the bank and that the problems could have been foreseen.

Bank of America and EDD say they are working to solve what they admit is at least a $2 billion dollar fraud problem involving the debit cards.

The suit alleges the bank violated the California Consumer Privacy Act, the Unfair Competition Law, parts of the Electronic Funds Transfer Act, along with breach of contract with the EDD.

"Bank of America was required to provide secure accounts for unemployment payments,but failed to provide basic security measures, such as industry-standard chip technology to safeguard EDD debit cards," said a statement from attorney Brian Danitz of Cotchett, Pitre & McCarthy law firm. "As a result, thousands have lost their only lifeline due to fraudulent transactions and hacked accounts."

About 1.4 million accounts have been frozen to investigate possible fraud. Over the last few months, KPIX 5 has spoken to dozens of people who say not only are they victims of fraud, but they've had no luck trying to get help from the bank or from the EDD.

"This lawsuit is intended to be a wake up call for Bank of America," said Danitz, who filed the complaint late Thursday.

"Bank of America isn't taking this seriously," said EDD fraud victim Brooke Suchomel. "It absolutely feels like we are being treated like second-class citizens."

"Like everyone else, I was on the phone on hold two-to three hours, click, call again," said EDD fraud victim Maria Ramirez.

"As soon as I told her, 'There's fraud on my card,' she said 'I'm unable to help you,'" said Jennifer Yick, a San Francisco resident who is a plaintiff in the case.

"I want Bank of America to be held accountable. I want our voices to be heard, I don't want to feel like I'm second class just because I have an EDD card. And that's how they made me feel," said Yick.

Yick is back to work in real estate. While she only lost $400 in her account, she says it's the principle of not having her case resolved that bothers her. Yick also said she is worried about others who have lost much more.

"When I heard others losing $4,000, $7000, I thought, 'What's the recourse these people will have?' I'm thinking what recourse is there for these families with rent to pay?" said Yick.

"We believe that the damages in this case are in the tens or hundreds of millions of dollars because there are so many victims," said Danitz.

Bank of America sent KPIX 5 the following statement in response to the lawsuit:

"As California's unemployment program faces billions of dollars in fraud, Bank of America is working every day with the state to prevent criminals from getting money and ensuring legitimate recipients receive their benefits."

Kenny Choi contributed to this story.5203835

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