Assemblymembers listen as Faiz Ahmad, Bank of America managing director of transaction services, makes opening comments during a budget subcommittee hearing on unemployment insurance on Jan. 26, 2021. Photo by Anne Wernikoff, CalMatters In summary
State payment contractor Bank of America was pitted against California employment officials at a legislative hearing on monthslong benefit delays and rampant fraud.
California unemployment debit card contractor Bank of America lost “hundreds of millions” of dollars last year as it scrambled to address record jobless claims, rampant fraud and a flood of consumer complaints, a senior bank executive told lawmakers today.
The assertion came at a state hearing hours after a new audit slammed the California Employment Development Department for years of mismanagement and technical errors that culminated in a failure to respond to skyrocketing unemployment after COVID-19 lockdowns. More than an hour into the contentious Assembly budget committee meeting, the bank, which contracts with the state agency, was directly asked how much it has made on the contract it has held since 2010 — a question that both the bank and the state have repeatedly refused to answer when asked by CalMatters .
“With respect to what the bank has earned last year, we’ve actually lost hundreds of millions of dollars on the contract,” said Faiz Ahmad, managing director of transaction services for Bank of America. “We never really mention it because it pales in comparison to the scale of the human cost of the pandemic.” Assemblymembers listen as Faiz Ahmad, Bank of America managing director of transaction services, makes opening comments during a budget subcommittee hearing on unemployment insurance on Jan. 26, 2020. Photo by Anne Wernikoff, CalMatters Bank of America previously told state officials that it has increased customer service staffing more than twentyfold, to more than 6,000 people, as it responded to intense anxiety about unemployment fraud in California and other states where it administers unemployment debit cards. The bank’s decade-old contract with the agency was offered at no direct cost to the state, with the bank instead earning revenue from merchant transaction fees and gaining access to millions of potential customers, a copy of the contract obtained by CalMatters shows.
In the COVID-19 era, however, that deal has been complicated by finger-pointing between the bank and the state about who is to blame for jobless Californians ensnared in fraud crackdowns, some losing their homes or struggling to care for loved ones while […]
