How criminals siphoned off unemployment payments directly from recipients’ accounts

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As millions of Americans received unemployment payments to get through the crisis, scammers developed a new way to steal cash directly from recipients’ accounts, according to an investigation by CNBC.

When one single mother’s account was emptied, she had to crack open her child’s piggy bank to survive. Another victim choked up when telling CNBC how she left a grocery store empty-handed. A musician said he had to live in his car for a few weeks after his funds were stolen. 

As part of a package of bills, California lawmakers are looking to allow unemployment-insurance recipients to bypass cards altogether to deposit funds directly into their regular bank accounts.

California’s Employment Development Department, as well as Bank of America, told CNBC that they’re in the process of transitioning to cards with chips in them to improve security for recipients. 

Maryland recently transitioned away from debit cards to direct deposits or paper checks for unemployment insurance. Nevada is the only other state that doesn’t allow for direct deposit, but recently switched vendors with new cards that include chips, the state told CNBC. 

Other states, like Oklahoma, are using technological solutions for their recent fraud problems. IDEMIA provides identity verification solutions for 34 state agencies, using facial recognition and biometric identification technology.

Oklahoma’s Employment Security Commission is one of those agencies, having implemented the security solution in December 2020. Shelley Zumwalt, executive director of the commission, said the state was able to prevent about 40 percent of fraud within the first 30 days of implementing the IDEMIA solution.

“While we had a global health pandemic, we had a national pandemic in terms of identity fraud and theft,” said Matt Thompson, senior vice president of civil identity for North America at IDEMIA.

For those who say their benefits were already stolen, the main way to replenish those funds is through the banks that oversee the accounts and debit cards. 

Ultimately, Moon, Koole and Rivera were given a credit from Bank of America for their missing funds. But they say that their lives had already been upended. 

“This is people’s lives that you’re messing with,” Rivera said. “I feel very, like, punched in the gut.”