Home>Articles>Bill That Would Allow Direct Deposit For EDD Benefits Introduced in Assembly

Assemblywoman Lorena Gonzalez. (Photo: Kevin Sanders for California Globe)

Bill That Would Allow Direct Deposit For EDD Benefits Introduced in Assembly

California is one of three states without a direct deposit option for unemployment benefits

By Evan Symon, December 8, 2020 2:51 pm

On Monday, a bill that would allow a direct deposit option for unemployed benefits by California recipients was introduced in the Assembly.

Assembly Bill 74, authored by Assemblywoman Lorena Gonzalez (D-San Diego), would allow for all Employment Development Department (EDD) payments, as well as those on state disability insurance and paid family leave, to choose for a direct deposit option rather than a mailed check or debit card deposit. The bill would also have California join most of the rest of the states in having a direct deposit for unemployment benefits option, as California is currently one of three states not to have one.

Assemblywoman Gonzalez wrote the bill to get around some of the hardships the current system places on Californians. As checks can take time to get mailed and ATM withdrawals are largely capped at $1,000 a day, Gonzalez argues that this creates a hurdle for many Californians when it comes to paying bills and rent on time, especially during the COVID-19 pandemic. Frozen or lost cards also complicate payments to recipients.

Fraud was another big issue addressed by the Assemblywoman. As EDD debit cards don’t have chips and rely on magnetic strips, this makes the cards more susceptible to fraud, as evidenced by the massive EDD fraud cases earlier this year. Lost or stolen cards would also lead to more fraud and more fees in comparison to direct deposit.

“This will solve it. I mean, you can check and just say, “I want my entire check to come into my own bank account and operate in a way that I’m used to operating. The vast majority, I’m going to say, have a bank account because they’re used to receiving a paycheck. They’re used to receiving direct deposit—one of these ways in which they deal with their own bank. So, they don’t have those same barriers.

“After too many Californians have already waited months for their unemployment benefits to be approved, widespread problems with debit cards have prevented countless families from putting food on the table or paying the bills. Making a direct deposit option available is a simple, commonsense solution to so many challenges we know California residents are facing.”

AB 74 and fraud

However, while AB 74 has significant support going in, some experts have warned that it would only lead to new problems.

“In the same way we’re protecting against fraudsters in having direct deposit, it also actually helps different kinds,” financial consultant Robin Reeves explained to the Globe. “Many don’t have to resort to stealing ATM cards because, in other states, they already got a name or two and send the money to other accounts. Then, they simply withdraw via ATM and move it to their real account. It’s extra steps, but it makes it look like everything is on the up and up. It’s also much harder to detect.”

“That’s the trade-off in California. Yes, it will reduce fraud overall. But it will make all fraud from direct deposits much harder to find. They’re trying to sell this bill as a complete stopgap, but it really isn’t. It would just have fraudsters find a different avenue through direct deposit. It’s not as easy, but again, o it right and it would make everything look almost normal.”

“I’m not saying it’s a bad bill. It definitely helps people who need their money fast. But it complicates finances, allows full access to funds all at once, and can lead to harder to detect fraud.”

As many bills have been backed up since last year, and there are indications that COVID-19-centric bills could be more favored again this session, Gonzalez is trying to move the bill quickly through.

“We will still move the bill because we want it to be a right that’s preserved in law,” Gonzalez said last week. “What we’re hopeful to do is really bang the drum on this by introducing legislation and getting a ton of co-authors and really pushing the administration to move quicker than that.”

AB 74 is expected to be sent to committee in the next few weeks.

Print Friendly, PDF & Email
Evan Symon
Spread the news:

 RELATED ARTICLES

2 thoughts on “Bill That Would Allow Direct Deposit For EDD Benefits Introduced in Assembly

  1. California has made the verification and certification harder than it should be in our “post 911” area. Returning to my home state has been a nightmare. Starting with Transferring my Taxes from Iowa W-2,!099 information in order to apply for housing ,changing ID from there to Calif. my birth place of Fresno required me to get birth certificate. DMV wouldn’t except valid Iowa ID. EDD has proved to be more so an pain in the GTO. Social Service was cut off because they’re Reps. didn’t keep time frame . Housing Authority problem too. Not everyone is seeking to Steal from the programs that aid those of us who have never drawn unemployment, social services,ect..! We want to help end this hellish situation we all are enduring. Each case has its own story. Emphy everyone Please!!!

  2. I believe you are wrong in there. IRS uses direct deposit why not EDD use our IRS bank account on file. Do you say that is fraudulent as well? IRS?

Leave a Reply

Your email address will not be published.