California extends contract with Bank of America for unemployment program despite criticism that criminals can tap into cards

Bizar Male

California’s unemployment agency has extended its contract with Bank of America to issue debit cards containing benefits for jobless residents despite criticism from state lawmakers that criminals were able to tap into the cards to commit widespread fraud.

The Employment Development Department exercised an option to extend the bank’s contract for two years, even though officials with the financial institution indicated that they would like to end their work for the state unemployment system. The bank has had the exclusive contract since 2010.

“Under the contract, the state had the sole option to extend and chose to do so,” said Bill Halldin, a spokesperson for Bank of America. “We have advised the state that we would like to exit this business as soon as possible. In the meantime, we will continue to administer unemployment payments and meet the requirements of the contract.”

Although the bank receives a fee when debit cards are used, bank officials have told lawmakers that the company has lost “hundreds of millions of dollars” administering the program since the COVID-19 pandemic began and millions of Californians were forced out of work as businesses shut down to reduce the spread of the coronavirus.

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