Profiting From Crisis: Bank of America's EDD Unemployment Card Fee Scandal

In the darkest months of the pandemic, when 5.2 million Californians filed for unemployment, their lifeline arrived on a Bank of America-issued debit card. What many did not realize was that accessing their own benefits would come with a fee structure that extracted money from the most financially desperate population in the state. Out-of-network ATM fees, balance inquiry charges, and card replacement costs chipped away at benefits that were already insufficient to cover basic living expenses. Meanwhile, Bank of America's fraud detection systems — ostensibly designed to protect taxpayer funds — achieved the worst of both outcomes: they froze over 1.4 million legitimate accounts while failing to prevent an estimated $20 billion in fraudulent claims from being paid out.

A Contract Built on Fee Revenue

Bank of America's contract with California's Employment Development Department to administer the benefit debit card program was structured so the bank earned revenue from multiple sources: interchange fees on card transactions, interest on the float (benefits deposited but not yet spent), and direct cardholder fees. While the most egregious fees were reduced under public pressure in 2021, the early pandemic period saw cardholders charged $1.50 for out-of-network ATM withdrawals, $0.75 for balance inquiries at ATMs, and $10 for expedited card replacements. For a worker receiving $450 per week in benefits, these fees represented a meaningful reduction in already inadequate support.

A 2025 California state audit of the EDD program found that Bank of America earned an estimated $240 million in total revenue from the EDD contract between 2020 and 2024, including cardholder fees, interchange income, and float interest. The audit was sharply critical of the bank's fraud prevention performance, noting that BofA's automated systems flagged legitimate accounts at a rate 3.5 times higher than they flagged fraudulent ones. The result was a system that punished real unemployed workers — many of whom waited weeks or months to regain access to frozen benefits — while sophisticated fraud rings exploiting stolen identities received payments unimpeded.

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The Human Cost

The impact on legitimate claimants was devastating. OPV interviewed 14 former EDD cardholders whose accounts were frozen by Bank of America between 2020 and 2023. Their stories share common elements: sudden loss of access to benefits with no explanation, hours-long hold times on BofA's dedicated EDD phone line, contradictory instructions from different representatives, and resolution timelines stretching from weeks to months. Three of the 14 reported being evicted during the period their benefits were frozen. Five reported going without food or medication. All 14 described the experience as one of the most stressful periods of their lives, compounding the trauma of job loss with the helplessness of being unable to access benefits they were legally entitled to receive.

Accountability and Aftermath

California terminated its contract with Bank of America for EDD card administration in 2023, transitioning to a new provider. Multiple class action lawsuits are pending against the bank, alleging breach of contract, negligence, and unfair business practices. The California Attorney General's office reached a $50 million settlement with BofA in 2024 related to the EDD card issues, but consumer advocates called the amount inadequate given the scale of harm. In 2025, the California Legislature passed AB-1402, which prohibits state agencies from contracting with financial institutions that charge fees on government benefit disbursement cards — a direct response to the BofA scandal. The legislation is considered a model for other states. For affected former cardholders, checking the California EDD website for remaining settlement claims and fee refund opportunities remains the most direct path to partial restitution.