The Employment Development Department hopes it will be the end of an era of brazen scams, which wreaked havoc for laid-off workers and fueled police busts involving stacks of ill-gotten debit cards issued at the department’s direction by then-contractor Bank of America.
EDD said Monday that it plans to begin notifying 850,000 benefit recipients of the new payment provider: Money Network, an electronic payment company owned by finance tech company Fiserv.
The contract will primarily be paid for through a debit card revenue-sharing agreement, similar to the EDD’s previous deal with Bank of America. The agency will also pay $32 million over five years for Money Network to offer a long-discussed direct deposit option to workers’ bank accounts, which the EDD says will launch in spring 2024.
In mid-January, people receiving unemployment, disability and paid leave benefits from the EDD will be mailed new Money Network debit cards. Payments will officially begin on these cards on Feb. 15. Anyone who still has a Bank of America EDD debit card will have until April 15, 2024, to spend the money.
In the meantime, fraud analysts tracking an uptick in attacks on government benefit debit cards — not just California’s unemployment program, but also food assistance and others — will be watching to see what lessons have (or haven’t) been learned from the pandemic. The new EDD cards will include both security chips and tap-to-pay options common in consumer credit cards.
Still, the EDD is advising cardholders to be vigilant: “Beware of scammers. We will never request your personal information by text message, e-mail or on social media.”
Revenue shortfall
California faces a $26 billion revenue shortfall in 2022-23 and a $58 billion shortfall through the 2024-25 fiscal year, the state’s Legislative Analyst’s Office said Friday in an updated forecast.
Total income tax collections fell 25% in 2022-23, the office said, citing data after receipt of tax filings, delayed several months by a deadline extension from both the state and the feds for taxpayers affected by last winter’s storms.
They attributed the drop to a slowdown in investment in California companies because of higher borrowing costs due to the Federal Reserve’s repeated interest hikes. One of the big effects of that is the number of California companies that went public in 2022 and 2023 declined more than 80% from 2021. The office also pointed to stock market woes in 2022 as a factor. Those factors, combined with home sales that the analysts said have fallen by half in the past couple of years — also due to higher interest rates — have cooled the state’s economy.
All of that has pushed the state’s unemployment rate up to 4.8%, with the number of unemployed workers climbing nearly 200,000 since the summer of 2022, the office noted.
Though the Legislative Analyst’s Office has yet to release its analysis of the projected shortfall’s impact on the state budget — that will come this week — politicians were quick to react.
— From CalMatters economy reporter Levi Sumagaysay:
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