By Hannah Albarazi

Law360 (April 2, 2021, 8:04 PM EDT) -- Bank of America's failure to protect California unemployment benefit recipients from fraudsters and subsequent freezing of fraud victims' accounts must end, a proposed class of public benefit recipients seeking an injunction told a California federal judge Thursday, including a mother who recounted breaking her son's piggy bank to buy groceries.

The proposed class of public benefits recipients asked U.S. District Judge Vince Chhabria on Thursday to grant them immediate relief by blocking Bank of America NA — which is the Golden State's partner in unemployment benefits administration amid the pandemic-linked economic downturn — from continuing its alleged "malfeasance."

The California benefits recipients urged Judge Chhabria to order Bank of America to "unfreeze the accounts and reopen the fraud claims of claimants whose accounts were frozen based on their reports of fraud" and to grant provisional certification to a class of California public benefits recipients dating back to Jan. 1, 2020.

One plaintiff said — via a declaration to the court — that when Bank of America froze the account where she received unemployment benefits following a fraud claim, she had to "break my son's piggy bank so we could have money for food."

Another plaintiff, in a similar bind, described having to live in their car for a month after losing housing. Yet another plaintiff, a single mother, said she found herself "living week to week, rationing out food for my child" when she couldn't access her public benefits through Bank of America.

Brian Danitz, a partner at Cotchett Pitre & McCarthy and interim co-lead counsel for the proposed class, told Law360 on Friday that plaintiffs are asking the judge "to require Bank of America to live up to its legal obligations by handling fraud claims in a timely way and unfreezing the accounts of innocent cardholders who did nothing more than report a fraud on their account."

Danitz said many of these accounts have been frozen for months.

"This is a disaster for thousands of unemployed Californians who have lost their only lifeline in this pandemic. The motion seeks immediate relief for thousands of [California Employment Development Department] cardholders who have been denied access to their unemployment benefits," Danitz said.

Michael Rubin, a partner at Altshuler Berzon and interim co-lead counsel for the proposed class, said, "For many months the bank has been preventing our most needy Californians from accessing benefits essential to themselves and their families. Injunctive relief is critical to restore these benefits."

Bank of America must maintain customer service levels that ensure that public benefit recipient cardholders are able to report fraud and obtain assistance, as well as reopen their fraud claims if they so choose, the recipients demanded.

The putative class members told Judge Chhabria that the consequences of Bank of America's "unlawful practices" and its mishandling of fraud claims has led to the loss of life-sustaining benefits during the pandemic and has been "catastrophic" for the neediest of Californians.

San Francisco resident Jennifer Yick filed the proposed class action in January accusing Bank of America of failing to protect California unemployment insurance benefits recipients — such as herself — from fraudsters.

Yick, who aims to represent a class of unemployment benefits recipients whose benefits from the California Employment Development Department were allegedly stolen out of their accounts, claims the bank holds the exclusive contract to administer unemployment insurance and other benefits that the Employment Development Department issues.

The benefits recipients are issued prepaid Employment Development Department debit cards by Bank of America, but Yick said in her complaint that numerous recipients have reported the sudden disappearance of all the funds in their accounts.

Yick said she couldn't get through to the bank's customer service phone lines to ask for help on the matter.

She also claimed that the bank froze benefits accounts that weren't affected by fraud, failed to provide provisional credit to defrauded customers, and opened fraud claims before closing them "so soon thereafter such that a full review could not have been done."

Fourteen additional named plaintiffs have since joined Yick's suit. 

On Thursday, the putative class urged Judge Chhabria to require the bank to conduct — and complete within 45 days — reasonable and good-faith investigations into each of its new, pending or reopened fraud claims.

A Bank of America spokesperson told Law360 on Friday that the bank has added thousands of representatives to answer phone calls and investigate benefits fraud claims, which has reduced the average wait times experienced by customers.

"As California's unemployment program faces billions of dollars in fraud, Bank of America is working every day with the state to prevent criminals from getting money and ensuring legitimate recipients receive their benefits," the spokesperson said.

The bank spokesperson said that "when fraudulent transactions occur on benefit cards, we review those claims and restore money to legitimate recipients."

Counsel for the bank did not immediately respond to requests for comment Friday.

The customers are represented by Brian Danitz, Andrew F. Kirtley, Joseph W. Cotchett, Anne Marie Murphy and Karin B. Swope of Cotchett Pitre & McCarthy LLP and Michael Rubin, Stacey M. Leyton, Matthew Murray and Connie K. Chan of Altshuler Berzon LLP.

Bank of America is represented by Laura A. Stoll and David Rossiter Callaway of Goodwin Procter LLP and Barry W. Lee of Manatt Phelps & Phillips LLP.

The case is Jennifer Yick et al. v. Bank of America, N.A., case number 3:21-cv-00376, in the U.S. District Court for the Northern District of California.

--Additional reporting by Emilie Ruscoe. Editing by Bruce Goldman.

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