California EDD: Misinformation, Poor Communication, Miserable Claimant Services, Fraud Issues

California’s Employment Development Department new claim that it told state legislators and others of the “New Year’s Eve Massacre,” which saw unemployment benefits summarily cut off to 1.4 million people a week before it occurred, is being met angry derision on the part of lawmakers.

EDD claimed in a recent email that it informed “all parties mentioned” when asked by the California Globe if and when it had warned the Governor’s Office, legislators, and vendors, including the identification verification service ID.me it was going to rely upon to attempt to weed out fraudulent accounts, of the move, citing a press release they sent out on Christmas Eve, 2020.

The massive benefit suspension led to countless panicked unemployment claimants attempting to contact their local legislator, none of whom were able to offer immediate assistance because they, too, were completely unaware of EDD’s plans.

The EDD took a week to provide further information on the matter, leaving claimants desperate and legislative offices scrambling to help in any way they could, but usually to no avail until later in the month (the majority of the suspensions were lifted through March; it is not clear exactly how many accounts turned out to be actually fraudulent).

“No member was notified by the EDD,” said Senator Jim Nielsen (R-Red Bluff). “The thousands and thousands of calls that it generated to our office, and others offices, continue to this day.  They are one of the most egregious agencies and they are trying to avoid responsibility again.”

Interestingly, EDD’s own press release would seem to contradict itself and to back up Nielsen and other legislators’ accounts.  The release they say serves as prior notification references the end of the year confusion as to whether or not supplemental pandemic-related federal benefits would continue, how that issue would be handled, and end of the year benefit status.  It makes no mention of the New Year’s Eve suspension of benefits, that those benefits would be suspended due to “suspected fraudulent activity” (a wholly different subject), or that re-starting those benefits would require in most cases going through a new identification verification process.

The agency even goes as far to claim that there was no “suspension of benefits,” despite the reality of the actual suspensions and that the subject line of the email/internal message the EDD sent out late on New Year’s Eve, 2020 to everyone impacted was in fact “Suspension of Benefits.” (The agency used the word suspended in the body of that message and again in a January 15, 2021, press release on the issue).

The entirety of the EDD email response to our request is as follows:

There was no New Year’s Eve “suspension of benefits.” The initial disbursement of CARES Act unemployment benefit provisions provided in response to the pandemic ended on December 26, as covered in this December 24, 2020 news release, which was distributed to all parties mentioned in your inquiry, as of the document date.

The week after the Department announced that the Department had begun the process of expediting a December 27 extension to the CARES Act provisions that expired on December 26, and began delivery of supplemental federal payments including Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC) as early as January 3.

Thank you,

EDD Media Services

EDD’s claim it “began delivery” of the additional federal funds is, at best, misleading.  While it is true that claimants who were not suspended on New Year’s Eve may have received some benefits January 3, it would have been impossible for anyone who had been suspended to have received benefits as the agency did not inform claimants of the new process until days after that, on Jan. 7 at exactly 5:28 p.m. (the time Nielsen’s office received its first informational email.)

ID.me, the identification vendor that was essentially saddled overnight with 1.4 million additional discrete tasks to perform, declined to comment directly on the timing issue. The Globe reported recently about this questionable third party EDD vendor and how the EDD ignored a public records request about ID.me.

The agency’s string of dubious recent claims may be part of an effort to re-write history to cover for their problematic response to the pandemic.

“Unfortunately, the EDD has been more interested in protecting their image than giving the rest of us accurate and timely information.,” said Assemblyman Jim Patterson, (R-Fresno).  “The best information we get comes from the constituents themselves. They are the ones who tell us what is actually going on at the EDD because they are living with the repercussions of this failed agency.”

How the EDD has stumbled so badly during the pandemic is clear to most observers; why, on the other hand, may be more complicated and tied to the internal culture of the agency.

Despite using an ancient computer system, risk experts say the fraud aspect of the agency’s problems could have been solved in less than a week and more than a year ago.

“The identity verification piece is a ‘bolt-on’ that could have been added to the current system in four days,” said cyber-security expert Haywood Talcove, CEO of LexisNexis Risk Solutions Government.  “They just don’t seem to care.”

Talcove points out that the agency has never had actual “imposter fraud” security system even before the pandemic.  The company that once handled EDD’s security (before being let go last summer for “lack of funding”) was tasked with performing only “post determination” security checks which only investigates possible case of fraud of cases already in the system.  This system did not, however, do anything on the “front end” of the process, allowing practically anyone to gain entry to the system (the task ID.me is performing now).

“They have a mind set that there was no fraud and that they were doing a great job, but they could not have even known it was a problem before because they had no way to detect it,” Talcove said.  He added that even now there does not seem to be a sense of urgency about the issue as more than 11,000 real and verifiable identities that could be used to defraud the EDD were still available on the dark web for purchase for $15 each.

The mis-information, poor communication, miserable claimant services, and fraud issues associated with the EDD have earned the ire of legislators on both sides of the aisle.

“Throughout the pandemic, EDD has incorrectly frozen thousands of Californian’s accounts while allowing prisoners to incorrectly access benefits,” said Assemblyman Rudy Salas, (D-Bakersfield).

Salas authored bill AB 56, instituting fraud protection and prevention measures, that, like numerous other agency reform-related bills, received bipartisan support.  “We are sending a clear message to EDD that serious reforms are needed so these problems never occur again,”  Salas said.

Nielsen also cites broad-based support for a number of bills and hopes his Senate Bill 232, which looks to implement the recommendations of the State Auditor, will begin the process of implementing a “top to bottom statutory change” to the agency.

Both Nielsen and Talcove say that a lack of leadership on addressing the EDD’s myriad troubles is part of the problem and slowing the pace of reform.

‘It’s not a priority of the governor,” said Nielsen.  ‘He’s only given it lip service, if even that.”

Governor Newsom’s office did not respond to a request for comment.