The Setup: How Bank of America Got 850,000 People’s Money

California outsourced the delivery of its most critical safety-net benefits to a private bank. Here is how that arrangement worked, and who it worked for.

• California’s Employment Development Department (EDD) designated Bank of America as its exclusive financial agent for electronic benefit delivery. The EDD Card, a prepaid Mastercard debit card issued and maintained entirely by Bank of America, was the primary vehicle for distributing unemployment, disability, and Paid Family Leave payments statewide.
• Recipients had a choice on paper: direct deposit to a personal bank account, or the EDD Card. For the hundreds of thousands of Californians who do not have bank accounts, the EDD Card was effectively the only option. There is no credit check, no minimum balance, and no banking relationship required to sign up.
• Once enrolled, recipients had their benefit payments automatically deposited to their EDD Card account on payment day. They could make purchases at Mastercard-accepting merchants, withdraw cash at ATMs, get cash back at point-of-sale, and pay bills online.
• As of December 2023, approximately 850,000 Californians were actively receiving benefits via the EDD Card. At the peak of the COVID-19 pandemic, the EDD received over 14 million unemployment claims between March and October 2020 alone.
• For the majority of EDD Card holders, these payments are their sole source of income. The money is not discretionary spending. It is rent, groceries, utilities, and medicine.
• The accounts were not held or issued by the state of California. The EDD Card and the accounts behind it were entirely Bank of America products. The state provided the depositors; Bank of America provided the infrastructure and controlled the money.

The Mechanics: How “Custodian” Became “Profiteer”

Bank of America’s own contracts drew the legal lines. Then the bank crossed them by treating government safety-net funds as its personal investment capital.

• California law distinguishes between two types of bank deposits. A general deposit creates a debtor-creditor relationship: the bank legally owns the deposited funds, can use them freely, and owes the depositor a debt. A special deposit is different: the depositor retains ownership of the funds, and the bank is merely a custodian with no property right in the money.
• The Terms and Conditions that Bank of America required EDD Card holders to accept explicitly state: “Your Account is an individually owned account.” The same agreement limits deposits to EDD-sourced funds and states that once funds are deposited, “the EDD has no rights to any funds in your Account.” The complaint argues these terms confirm the custodial, special-deposit nature of the accounts.
• Despite classifying the accounts as special deposits, Bank of America allegedly did not assign unique Bank Identification Numbers or unique routing numbers to EDD Card accounts. This is significant: a bank that genuinely treats accounts as separate special deposits keeps those funds segregated. Commingling them with general deposit assets is a key marker of treating them as general deposits while denying the interest obligations that come with that classification.
• Bank of America pooled the EDD Card funds with its broader deposit base and used the aggregate capital to fund commercial lending and generate investment returns. Banks earn money by lending out deposited funds at a higher interest rate than they pay. The more capital in the pool, the more they can lend, and the more they earn. The $200 billion in EDD payments since March 2020 was a massive, cost-free injection of capital.
• California common law holds that “interest follows principal.” Where a party acts as custodian of private funds, the interest earned on those funds belongs to the owner of the principal, not the custodian. The bank’s Terms and Conditions are silent on the disposition of earnings, which under California law means the common law rule governs, and the interest belongs to the benefit recipients.
• The complaint calculates that the earnings on these deposits exceed tens of millions of dollars per year. Bank of America retained all of it. The recipients received zero.

The Non-Financial Ledger: What This Looks Like From the Bottom

Let’s put down the legal citations for a moment and talk about what actually happened to real people.

Carneshia Moland was approved for EDD benefits in March 2019. For roughly four years, through May 2023, somewhere between $900 and $1,000 landed on her EDD Card every month. That money came from the state of California, money she was entitled to by law, money meant to cover the gap between losing income and finding a way forward. She had no say in where that money was held. Bank of America was California’s designated partner. That was the only option on the table.

What the lawsuit makes clear is that during every single month those funds sat in her account, even for the hours or days between deposit and her next swipe at the grocery store, Bank of America was making money on her money. Not a little money. The complaint estimates the bank earned tens of millions of dollars per year across the entire EDD Card account pool. And Carneshia Moland received exactly zero dollars of that in return.

Now multiply that by 850,000 people. That is the number of Californians actively using the EDD Card as of December 2023. The complaint notes, matter-of-factly, that for many of these cardholders, their EDD benefits are “the sole source of income.” Many do not have bank accounts. The EDD Card was not a preference; it was a lifeline. These are people who could not meet the requirements of a standard checking account, people for whom the word “banking” often means fees, minimums, and rejection. California’s government sent them to Bank of America anyway, and Bank of America used their financial vulnerability as a low-cost funding source.

Think about what it means to earn $900 a month and be on unemployment. That is $900 to cover rent, food, transportation, utilities, any medications, any childcare, any unexpected expense. There is nothing left over. The idea that the bank was quietly making money off the float, off the few days or hours between when that deposit hit and when it got spent, might sound like a technical detail in a legal filing. It is not a technical detail. It is a structural predation dressed up in contractual language.

The COVID-19 pandemic made this worse by orders of magnitude. Between March and October 2020, California processed over 14 million unemployment claims. The EDD Card program became one of the largest flows of public money through a single private bank’s infrastructure in the state’s history. Bank of America was sitting at the center of a historic economic catastrophe, holding the benefit payments of millions of newly unemployed workers, and the allegation is that the bank treated that catastrophe as a capital windfall.

The people on the other end of those deposits were not abstractions. They were nurses who got laid off when elective procedures stopped. Restaurant workers whose entire industry collapsed in a week. Freelancers, retail clerks, hotel workers, people who had done everything right and still ended up in the EDD queue. While they waited for their next payment, Bank of America was already at work investing the last one.

There is a specific cruelty in the fine print here. The Terms and Conditions that every EDD Card holder was required to accept, the agreement you could not decline if you wanted access to your own benefits, explicitly stated that the account was “individually owned” and governed by California law. It did not say Bank of America would keep the earnings on those funds. It did not say the bank had any right to use the funds at all. The complaint argues the bank promised to follow California law, California law says the interest belongs to the depositor, and the bank then quietly kept the interest anyway. The agreement did not lie outright. It simply omitted the part where Bank of America planned to profit from your poverty.

For most class members, the individual amount stolen is modest. A few dollars here, a few dollars there, depending on how long the money sat and what interest rates were at the time. But the lawsuit is right that no individual class member could afford to sue Bank of America on their own over a few dollars. That is precisely why the bank could do this indefinitely. The amounts were too small to litigate, too diffuse to attract attention, and completely invisible to the people it was happening to. The scheme did not require secrecy. It required that the people being taken from had no practical way to fight back.

Legal Receipts: What the Documents Actually Say

Every quote below is taken verbatim from the class action complaint filed April 1, 2025, in the U.S. District Court for the Eastern District of California, or from the legal authorities cited therein.

“BOA receives billions of dollars of Benefit Payments each year (the ‘Funds’). While the Funds were at BOA and before they were withdrawn by Benefit Recipients, BOA earned interest and other investment income on the Funds, through its utilization of this additional capital (the ‘Earnings’). On information and belief, these Earnings exceed tens of millions of dollars per year.” — Complaint ¶5, Moland v. Bank of America, N.A., Case No. 1:25-cv-00380-JLT-SAB

• This paragraph establishes the core factual claim: Bank of America received billions in EDD benefit funds annually and actively used that capital to generate investment returns.
• The phrase “on information and belief” means the plaintiff does not yet have access to Bank of America’s internal financial data. The actual earnings figure could be substantially higher than tens of millions per year, which is why the lawsuit demands full accounting and disgorgement.
• The amount in controversy for the lawsuit is pleaded as exceeding $5 million, but that is the threshold for federal jurisdiction under the Class Action Fairness Act. The real claimed harm is the entire pool of earnings generated across all 850,000 accounts over the relevant period.

“Your Account is an individually owned account.” — Bank of America EDD Card Terms and Conditions, § 2, cited in Complaint ¶24

• This is the most damaging line in Bank of America’s own contract. The bank chose that language. It acknowledged in writing that the account belongs to the recipient, not to the bank.
• Under California law, if the account is individually owned by the recipient, then the interest and earnings generated on the funds in that account are also individually owned by the recipient. The bank’s own Terms dig the hole it is now standing in.

“Deposits to your Account may only be made by the EDD … Once funds are properly deposited and made available to you, the EDD has no rights to any funds in your Account, except as otherwise provided by law.” — Bank of America EDD Card Terms and Conditions, cited in Complaint ¶25

• This clause confirms that once EDD deposits hit the account, the only rightful owner of those funds is the cardholder. The state relinquishes its claim. The bank is not granted any claim either.
• The complaint uses this passage to demonstrate the “special deposit” character of the accounts: the funds exist for a specific purpose, are earmarked for a specific person, and no party other than the cardholder has rights to them once deposited.

“This Agreement will be governed by the laws and regulations of the U.S. and, to the extent not so covered, by the laws and regulations of the State of California.” — Bank of America EDD Card Terms and Conditions, § 21, cited in Complaint ¶26

• This is the contractual anchor for the entire lawsuit. Bank of America explicitly committed to California law governance. California law, via the “interest follows principal” doctrine confirmed in Schneider v. California Dept. of Corrections (9th Cir. 1998), requires the bank to remit interest earned on custodial funds to the account owner.
• The complaint notes there are no federal laws governing the payment of interest on demand deposits, so California law fills that gap. The bank chose California law. California law now requires disgorgement.

“It is true that interest is said always to be an accretion to or increment to the principal fund earning it, and unless lawfully separated therefrom becomes a part thereof.” — Est. of Sharp, 95 Cal. Rptr. 816, 832 (Cal. App. 4th Dist. 1971), cited in Complaint ¶38

• This is the foundational California common law rule on which the entire lawsuit rests. Interest is an accretion to the principal: it grows from the principal and belongs to whoever owns the principal, unless there is a legal act that separates the two.
• Bank of America never entered into an agreement with EDD Card holders that would “lawfully separate” the earnings from the principal. The Terms and Conditions are silent on earnings. Silence means the default rule applies. The default rule means the interest belongs to the recipients.

“In the case of general deposit, relationship of bank and depositor is that of debtor and creditor, and funds deposited become part of bank’s general assets which bank may use in conducting general banking business.” — Bank of Am. Nat. Tr. & Sav. Ass’n v. California Sav. & Com. Bank, 22 P.2d 704, 709 (Cal. 1933), cited in Complaint ¶35

• The complaint cites this case specifically to show what EDD Card accounts are NOT: they are not general deposit accounts, where a bank legitimately owns the deposited funds and can use them freely.
• Because EDD accounts are special deposits, the debtor-creditor logic does not apply. The bank is a custodian, the account holders retain ownership, and Bank of America had no legal right to profit from the funds it was holding on their behalf.

“BOA’s conduct constitutes common law conversion under California law … BOA has acted knowingly and without regard to the right of Plaintiff and the Class.” — Complaint ¶¶66–67, Count I: Conversion

• Conversion is a civil law equivalent of theft. The complaint alleges Bank of America took property belonging to the class members (the earnings on their deposits) and exercised dominion over it as if it were the bank’s own property.
• The “knowingly” language is critical: if proven, it supports a claim for punitive damages beyond simple restitution. The lawsuit asks for punitive or exemplary damages “in accordance with proof.”

Timeline: How Long This Went On Before Anyone Filed Suit

Societal Impact Mapping: The Damage Beyond the Dollar Amount

Public Health

When the financial infrastructure meant to support sick and unemployed people itself extracts value from them, the downstream effects are measurable in health outcomes, not just account balances.

• California’s EDD Card program specifically covers State Disability Insurance (SDI) payments, meaning some of the 850,000 affected cardholders were disabled individuals receiving SDI as their primary income. The earnings seized came in part from people who were already medically vulnerable and dependent on the state safety net.
• Paid Family Leave (PFL) recipients are also covered by this lawsuit. These are workers who took time off to care for a seriously ill family member or a newborn. Their benefits, too, were pooled into Bank of America’s investment capital while the families caring for the sick or raising infants received nothing in return.
• The absence of interest income may appear trivial per person, but for recipients living on $900 to $1,000 per month, even a modest return on their own funds could have meant the difference between affording a prescription refill or going without. Poverty-level income leaves no margin. Every dollar extracted by the bank was a dollar not available for health-sustaining spending.
• The sheer scale of the COVID-19 unemployment wave, over 14 million claims in seven months, means that during the worst public health crisis in a century, Bank of America was positioned as the financial intermediary for the economic fallout. The allegation is that the bank profited from that positioning while the people it was supposed to serve received nothing.

Economic Inequality

This scheme transferred wealth systematically from some of the lowest-income people in California to one of the largest banks in the world. The mechanism was structural, not incidental.

• Bank of America earned its profits from this program precisely because the account holders were poor. Low-income benefit recipients spend their money quickly, meaning the float period per transaction is short. But across 850,000 accounts and billions of dollars in aggregate deposits, even very short float periods multiply into enormous earnings. The poverty of the depositors was the product.
• The complaint explicitly notes that many EDD Card holders have no bank accounts. These are people who exist outside the formal banking system, either because they cannot meet minimum balance requirements, have negative banking histories, or have been otherwise excluded. California’s government delivered them directly to Bank of America, giving the bank a captive pool of depositors who had no alternative and no leverage.
• The Terms and Conditions that EDD Card holders were required to sign to access their own benefits stripped them of the rights that standard bank customers hold. The agreement explicitly states that cardholders are “not entitled to any rights or benefits given to deposit account customers or debit card holders at Bank of America.” This is a two-tier system: regular customers get standard protections, low-income benefit recipients get fewer rights on their own money.
• Since just March 2020, EDD disbursed over $200 billion in benefits through this program. The complaint estimates the annual earnings on this capital exceeded tens of millions of dollars per year. That wealth transfer, from unemployed and disabled Californians to Bank of America’s balance sheet, was legal in the bank’s view because the Terms and Conditions did not explicitly prohibit it. The lawsuit argues the bank’s own contractual language and California law made it explicitly illegal.
• No individual EDD Card holder could afford to sue Bank of America over their share of the earnings. This is acknowledged in the complaint as a reason the class action mechanism is essential: the harm per person is small enough that it is practically unchallengeable at the individual level, which is exactly what allowed it to persist. The class action is the only legal mechanism that gives 850,000 low-income people the same weight as a major bank.

The “Cost of a Life” Metric: Putting the Numbers in Context

Four Charges: What the Lawsuit Is Actually Claiming

The lawsuit levels four distinct legal claims against Bank of America, each addressing a different dimension of the same underlying conduct.

Count I: Conversion

• Conversion is civil theft. The complaint alleges Bank of America took specific, identifiable property (the earnings on the plaintiffs’ special deposits) and exercised dominion and control over it as if it were the bank’s own property.
• Under California law, conversion of money requires the plaintiff to show ownership of a specific, identifiable sum; a wrongful act by the defendant toward that sum; and resulting damages. The complaint argues each element is met: the recipients owned the earnings, the bank took them, and the recipients were damaged.
• The complaint alleges the bank acted “knowingly and without regard” to the recipients’ rights. If proven, this supports exemplary damages beyond the raw amount of earnings seized.

Count II: Breach of Fiduciary Duty

• When a bank accepts a special deposit, California law imposes a fiduciary duty on the bank toward the depositor. A fiduciary must act in the beneficiary’s interest, not their own. Using the depositor’s funds to generate personal profit is a direct breach of that duty.
• The complaint cites Engleman v. Bank of Am. Nat. Tr. & Sav. Ass’n (1950), which established that a bank holding special deposits is “not entitled to hold it to secure another obligation.” The same principle bars the bank from generating investment income on those funds without remitting it to the owner.

Count III: California Unfair Competition Law (Cal. Bus. & Prof. Code § 17200)

• California’s UCL is a broad consumer protection statute that prohibits any business practice that is “unlawful, unfair, or fraudulent.” The statute imposes strict liability: the plaintiff does not need to prove the bank intended to act unfairly, only that the unfair practice occurred.
• The complaint argues Bank of America’s conduct is unfair because it “violates public policy and is immoral, unethical, oppressive, unscrupulous, and/or substantially injurious to consumers” and because any business utility of the practice is “outweighed by the harm caused.” Restitution and disgorgement are the remedy sought under this count.

Count IV: Unjust Enrichment

• Even if no other legal theory holds, the complaint argues equity demands disgorgement. Bank of America received a concrete financial benefit (free use of hundreds of millions or billions in capital) that it was not entitled to. The recipients conferred that benefit involuntarily, by law, with no alternative.
• The lawsuit asks the court to compel Bank of America to disgorge the earnings into a common fund for the benefit of all class members. The amount owed to each recipient is calculable from the bank’s own records: the bank knows how much was deposited, for how long, and what it earned.

What Now: The Watchlist and What You Can Do

The lawsuit is filed; discovery and certification battles are ahead. Here is who to watch and how to act if this affects you or someone you know.

Leadership on Record

• Bank of America, N.A. is the named defendant. The bank is headquartered in Charlotte, North Carolina, but conducts extensive business in California, which establishes personal jurisdiction in the Eastern District.
• Class counsel is Scott Edelsberg, Edelsberg Law, P.A. (SBN 330990), 1925 Century Park East #1700, Los Angeles, California 90067. Contact: scott@edelsberglaw.com, (305) 975-3320.
• The case is assigned to the U.S. District Court for the Eastern District of California. Case No. 1:25-cv-00380-JLT-SAB. Filed April 1, 2025.

Watchlist: Regulatory Bodies With Jurisdiction

• Consumer Financial Protection Bureau (CFPB): The CFPB has direct supervisory authority over Bank of America and covers prepaid account products under Regulation E and the Prepaid Accounts Rule. File a complaint at consumerfinance.gov/complaint if you believe your EDD Card account was mishandled.
• California Department of Financial Protection and Innovation (DFPI): The state-level regulator with authority over consumer financial products and unfair business practices in California. This case implicates California UCL directly; the DFPI can act on systemic UCL violations.
• Office of the Comptroller of the Currency (OCC): Bank of America is a nationally chartered bank (N.A. designation), placing it under OCC supervision. The OCC has authority to examine and sanction national banks for unsafe or unsound practices and consumer harm.
• California Attorney General’s Office: The California AG can bring UCL enforcement actions independently of private litigation. If the class action surfaces broad systemic harm, a parallel AG investigation is possible. Contact: oag.ca.gov.
• Federal Deposit Insurance Corporation (FDIC): As a federally insured institution, Bank of America falls under FDIC oversight on consumer protection matters.

Direct Action and Mutual Aid

• If you held an EDD Card account with Bank of America at any point, you are a potential class member. Monitor the case docket at ClassAction.org and via PACER (Case No. 1:25-cv-00380-JLT-SAB). Class members will be notified if and when the class is certified; do not take action to exclude yourself without consulting an attorney.
• Share this story with every person you know who used an EDD Card during the pandemic. Most affected people have no idea this lawsuit exists. Awareness is the prerequisite for accountability. Texts, social posts, group chats, and community boards all matter.
• Contact your California state legislators and demand they investigate why the EDD contracted with a single private bank for the delivery of public benefits with no transparency requirements around how the bank profited from those funds. The contract arrangement itself, sole-source financial agent with no interest accountability, is the structural problem.
• Support local mutual aid funds and community banking alternatives, including credit unions and community development financial institutions (CDFIs), which do not operate on the same profit-extraction model as Bank of America. Many credit unions offer accounts with no minimum balance or credit requirements, the same accessibility the EDD Card offered without the profit capture.
• Demand that future public benefit delivery contracts include explicit provisions requiring the financial agent to either pay interest to benefit recipients or remit all earnings on benefit deposits to the state for reinvestment in the program. The silence in the Terms and Conditions about earnings was not an accident; it was a drafting choice. Future contracts should close that gap by law.