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Federal Judge Requires Bank Of America To Stop Freezing Some Unemployment Benefit Accounts

Gerald Carter
Flickr / Creative Commons

A federal judge in San Francisco is requiring Bank of America to show more proof of fraud before freezing people’s unemployment benefit accounts.

In California, unemployment benefits are distributed by the Employment Development Department through Bank of America debit cards.

That program has come under scrutiny over the last year for ongoing fraud — and now, one of the bank’s attempts at stopping fraud is causing other problems. Some legitimate cardholders have had their accounts frozen by the bank, which uses an automated fraud filter to screen accounts.

A group of 15 Californians who had their accounts frozen have brought a class action lawsuit against the bank. They represent as many as 60,000 other Californians with the same problem.

A U.S. District Judge in San Francisco issued a preliminary injunction in the case, Tuesday, which stops Bank of America from freezing people’s unemployment accounts based only on the fraud filter. He’s requiring the bank to more thoroughly investigate claims of stolen benefits, and set up new phone support lines operating 6 days a week.