Throughout September, levels of Employment Development Department (EDD) unemployment fraud through debit cards reached new highs, with dozens of arrests occurring in Beverly Hills this month alone and over $2.5 million reported to have been on stolen EDD debit cards.
44 arrested fraudsters in Beverly Hills
44 people, mostly out-of-state non-residents, have been arrested since September 3rd in Beverly Hills according to a Beverly Hills Police Department (BHPD) press release. 129 stolen EDD cards were found during the busts with values on them approaching $2.5 million, along with almost $300,000 in cash. The Beverly Hills cases join a growing string of recent EDD fraud cases, including reported cases in Riverside, Fresno, and other places across the state.
“Scammers are using a complex profile of stolen personal identifying information most likely obtained from national and global data breaches,” said the BHPD in a statement.
As EDD debit cards can hold as much as $20,000 at one time, the fraudsters have used stolen identities with EDD benefits and had them loaded up on numerous cards. As much as $1,000 can be withdrawn every day can be withdrawn from a card, creating a system of constant money generation through stolen EDD accounts and withdrawals.
Debit cards don’t often work online and could be easily traced, so the fraudsters focused on physical stores to make purchases with withdrawn cash, although in many cases cards were still used. This led fraudsters to Beverly Hills, where high-end goods and other expensive products could be bought, and where luxury apartments and cars could be easily rented.
“As soon as we knew what to look for, like EDD cards, we started questioning them more severely,” said Jan, a Rodeo Drive-based store employee, to the Globe. “Our store had the BHPD go through our records, and many had actually shopped here.
“The EDD tries to make the card look as normal as possible, which was largely unfavorable to us. I know they don’t want to make people feel embarrassed when they use them, but they should really state on the card what it is so we can make an easier judgement call.”
“But, right now, we’ve simply been asking for ID and other checks on them. One customer today we actually quickly found their Facebook as they had shaved and we needed another way to verify it. That’s how stringent we are now do to all of these people grabbing cards out of people’s mailboxes and whatnot.”
Police departments, stores, EDD close gaps in system that allow fraudsters to currently operate
Stores across Beverly Hills and the luxury store lined Rodeo Drive have, since the rise of EDD fraud earlier this month, been implementing new security checks. The BHPD has sent letters on ways to detect fraudsters to help the stores out. Other luxury store areas, such as around the Union Square area of San Francisco and shopping centers in Los Angeles and Orange County, have had similar warnings.
The EDD is also increasing security to help eliminate fraud. As most of the fraudsters have used people with Pandemic Unemployment Assistance (PUA) to receive the stolen benefits, the EDD shut down automatic backdating of claims, eliminating many ‘easy’ fraud possibilities in the department and leading to a large decline of PUA claims.
“The EDD took action to shut down automatic backdating in the PUA program,” said the EDD in a statement. “Following that, PUA applications dropped sharply to 145,790 last week, a decline of more than 72%.”
The rise in EDD benefit fraud is expected to decline soon as the fraudsters had exposed ‘holes’ in the system and have immediately remedied them, such as automatic backdating of PUA applicants and increased ID checks on debit cards.
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