Riddled by fraud, EDD freezes unemployment recipients' debit cards

SAN FRANCISCO - At least 350,000 recipients of Employment Development Department (EDD) unemployment payment debit cards have had their cards frozen. This drastic step was largely made necessary, apparently due to EDD's own making.

Whether individual con men or organized crime, EDD is wracked with hundred of thousands of what may look to be fraudulent claims to some, but unfairness to those already approved.

Back in May, EDD's director stated the mission of getting Pandemic Unemployment Assistance (PUA), federal pandemic felief, to California freelancers, gig workers, and independent contractors, who don't quality for state unemployment assistance.

"The main goal for us is to be able to pay people as quickly as possible," said EDD Director Sharon Hilliard.

We spoke with EDD claimant and applicant Alexander Rowe.

"We are maxed out," said Mr. Rowe  Rowe is a married father of one who, because of bureaucratic bungling, has been forced to use $13,000 to $15,000 in savings and credit card lines.

"They've already approved me. It's just, 'Why haven't you paid yet?' That's the question," said Rowe.

In fact, after months and months of waiting, Rowe finally did get a debit card from the EDD but with a glaring, debilitating, humiliating problem. 

"You put your card in it's is gonna come out. Not with EDD. You sent me a card, you sent me a PIN number, you sent me all this stuff, you sent me an approval letter and then, you don't send me any business. Well, OK. Thanks. Got me some souvenirs here," said Rowe.

He is caught up in something not of his making, at least 350,000 EDD debit cards rendered unusable. Labor lawyer and former EDD Director Mike Bernick says EDD has a massive issue on its hands.

"Riddled by fraud and that's why EDD is taking these actions and it's not just California," said Mr. Bernick. Colorado reports three-fourths of its pandemic claims are fraudulent.  

Arizona reports half of its claims as possibly fraudulent. "The PUA Program was very hastily put together. The guidelines are very loose. It's hard for anyone to understand," said Bernick.

But EDD is locked-down by law and regulation. "EDD has the responsibility to balance expediting claims with anti-fraud and other requirements of the system. That's all to say, that's to say none of this is a good explanation. It's all cold comfort and I don't offer it as any defense," said Bernick.

There's not much EDD can defend. "There have been days when I called like 200, 300 times just to get someone who tells me they can't help me," says the still waiting Rowe.