California’s Employment Development Department announced that it has dropped Bank of America and will now use Money Network to deliver payments.
The move comes after the state estimates that tens of millions of dollars were lost in fraud since the start of the COVID-19 pandemic.
The big picture: Moving to Money Network will have the state issue new prepaid debit cards that have microchips in them.
- People will also be able to receive a new direct deposit option later in the new year.
- Bank of America prepaid cards will still be able to be used normally for now.
- EDD will pay Money Network $32.3 million over five years as part of the deal.
The backstory: EDD fraud was extensive during the COVID-19 pandemic, with the state estimating that $20 billion was paid out to fraudsters.
- Other estimations, such as one from Lexis Nexis Risk Solutions, put the total fraud at well over $30 billion.
- Along with the fraud, Bank of America also faced criticism for sometimes blocking payments to legitimate recipients.