Banking on misfortune

New debit cards for unemployment benefits funnel more fees and customers to Bank of America


Unemployed San Franciscans are now receiving monthly benefit payments through a mandatory Bank of America debit card. While presented as a benefit to both recipients and the state, the initiative is the latest chapter in a long history of banks profiting off of the less fortunate.

In July, the California Employment Development Department (EDD) began distributing Bank of America debit cards to all California residents who receive unemployment benefits, "in what is one of the largest pre-paid card programs in the nation," EDD spokesperson Dan Stephens tells the Guardian.

The cards, a result of a recent contract Bank of America won to implement the EDD's new debit card system, replace the monthly unemployment check residents receive. The cards are also being used for disability insurance and paid family leave payments.

"We wanted a faster, safer, more convenient way for our customers to access their benefits," Stephens says. But figuring out the new system takes time, usage fees can surface, and complaints have arisen.

"Now I have against my will been forced to become a B of A customer, which I don't like," says Cliff Liehe, a part time business teacher at City College who collects unemployment benefits during the summer. "I don't want to do business with B of A. I hate them, and there's a lot of staff members that feel the same way, throughout the state, not just City College."

Liehe says that he dislikes B of A because it has a "corporate philosophy that I've disagreed with," as well as, "terrible customer service and high fees." Bank of America, the largest bank in the nation, angered the public by receiving a $20 billion federal bailout after buying Merrill Lynch in 2009, in the wake of the financial meltdown from which banks quickly recovered but the average American still hasn't.

Money can be accessed on the debit card through purchases, unlimited ATM withdrawals, or transferred to a bank account. Liehe opted to have the money transferred to an account independent from B of A, but says he found the process challenging, and the information and instructions difficult to find.

Bank of America is not paying the EDD, but the new system will save the EDD approximately $4 million in initial savings due to decreased paper, printing, mailing, and check processing costs, Stephens tells the Guardian. He remains vague about the EDD's plans for this money, but does make it clear that the agreement is a "no-cost contract" between parties.

However, Bank of America's participation is far from charitable. "B of A is covering its costs through fees paid by banks and merchants who honor the cards. Interchange fees are received from businesses that use the ATM network," Stephens says.

With 1.7 million Californians receiving unemployment benefits and using their cards at ATMs and retail establishments, Bank of America will be receiving a percentage off all this money spent, as well as gaining more than a million new customers, unless recipients have the know-how to have their money transferred to a different bank. This adds up to a substantial potential profit for America's richest bank.

"We generally don't comment on the profitability of individual programs or products, but we are pleased to be working with the EDD to provide more secure and convenient benefit payments to its constituents," bank spokesperson Jefferson George told us.

What consumers don't consider when using a credit or debit card to make purchases is that with each purchase, the merchant is paying a percentage back to the bank or other credit card processor. Here at the Guardian, for instance, we lose a significant percentage of our ad profits when advertisers pay with a credit card. With MasterCard and Visa, we lose 3.5 percent of the sales amount, and with American Express it's 4.15 percent, on top of monthly processing fees.


I wrote this to my state legislators:

"I only have a comment about Unemployment Insurance payment services
being turned over to Bank of America. To talk to live customer service
I had to talk to someone in Tennesee. Someone who is presumably not a
public employee and not even in California where the EDD is addressing
our unemployment . Isn't that ironic that the major business contract
B of A must have gotten to do this does not include a requirement of
"local " hire???"

Posted by Guest on Sep. 17, 2011 @ 10:27 pm

I here that the state of California is seceding the the union and will become a state in the "United States of Bank of America."

Posted by Guest on Oct. 04, 2011 @ 7:30 pm

Meatlock, Matlock can always be counted on to leak his a stinking gasbag of a brain and embarrass himself.
Even when attempting to post anonymously.

Posted by Guest on Oct. 04, 2011 @ 8:42 pm

"Money can be accessed on the debit card through purchases, unlimited ATM withdrawals, or transferred to a bank account. Liehe opted to have the money transferred to an account independent from B of A, but says he found the process challenging, and the information and instructions difficult to find."

SFBG - do everyone a favor: Find out what the process was - publish it and share that knowledge...

oh wait... I googled it... hire me! :)

7. How can I transfer my funds to my checking or savings account?
You may transfer some or all of your benefits to your checking or savings account by performing a one-time or recurring direct deposit transfer online at or by calling customer service at 1.866.692.9374. Please Note: The Employment Development Department will not contact you under any circumstances to request personal bank account information. Any direct deposit transfer request must be initiated by you through Bank of America.

Ok so this is like having a direct deposit from an "employer" made into your bank account or credit union account - except this goes from the EDD via BofA to your bank / credit union etc

I'm sure BofA's "customer service" will try to persuade you to keep your money with them and I'm pretty sure you know what to tell 'em

Better article idea - How to get your money from BofA and not be financially illiterate in the 21st century.

Posted by Nusfrat Jones on Sep. 19, 2011 @ 12:10 am

FYI - The operative phrase in the above cut and paste is

"some or all of your benefits"


Posted by Nusfrat Jones on Sep. 19, 2011 @ 12:34 am

I immediately set up automatic transfer to my Credit Union with a phone call, and I think an online form. No hassle. Go to EDD website; search for 'Debit Card', all info is there.
@Oona. Thanks for drawing attention to this. I posted a comment some months ago.
IMHO this is just more criminal collusion between our 'representatives' and the Wall Street crooks. Unemployment and our economic downfall are largely attributable to their activities, and none of them are being held to account. I thought I had severed all relationships with BofA, and the rest of them, several years ago when I consolidated all my financial affairs with the SF Fire Credit Union, seems not. I do not think the unemployed or others receiving 'benefits' we have paid for, have any option other than using BofA debit card. We subsidized their 'bail out' with billions of dollars of our money. They hoarded or 'reinvested' it. They are now collecting interest on our UI after having caused the economic crisis, massive layoffs, downsizing etc.
We are comparatively powerless in the face of this Multinational Corporate conspiracy. However one small thing EVERYONE can do is transfer all your money and business transactions over to a local Credit Union or similar financial institution. While they will still probably find a way, like this Debit Card, to keep their hooks in you, but at least you can get their boot off your neck.,_Unaccountable,_Unrepentant_/15...

Posted by Pat Monk.RN. on Sep. 19, 2011 @ 8:14 am

Exactly Pat.. get your money out of their hands where ever possible. They've clearly demonstrated they don't know what to do with it!

I can't comment on your theory of criminal collusion, but I do know that one of the main reasons to shift to debit cards & electronic payments is an attempt to stop the enormous theft and fraud by criminals (both petty and organized) of the benefits system.

It's just pathetic & sad that a greedy, incompetent behemoth like BofA was put in charge of the operation...

Posted by Nusfrat Jones on Sep. 19, 2011 @ 2:54 pm
Posted by Pat Monk.RN. on Sep. 19, 2011 @ 8:28 am

In a free democracy we would be allowed to have our money deposited directly into the financial institution of our choice.

Posted by Pat Monk.RN. on Sep. 19, 2011 @ 3:37 pm

You raise the very azimuth of a thinking person's economic politik about where their money goes...

IRAs 401ks SEPs 403s under my mattress, in the feed container... etc

Every financial instrument that generations have invested in over decades have been destroyed by greedy individuals playing with other people's money...

It is really not that complicated.

Financial literacy for all now!

Posted by Nusfrat Jones on Sep. 19, 2011 @ 10:05 pm

you can have your funds deposited directly into another account, it's acually very easy. you call the # on the back of the card1-866-692-9374 and tell them you like to have your funds derectly deposited into another account ( in my case it waved my account fees).

Posted by ohmy on Feb. 15, 2012 @ 3:27 pm

Also from this author

  • Hiding the condoms

    Safeway's decision to move condoms into locked cabinets worries public health advocates

  • Alerts

  • Alerts