Bank of America Sued: Is It Pocketing Your Benefits Interest?

Case Overview: Bank of America is facing a class action lawsuit alleging that it illegally retained investment income earned from federal benefits funds it managed through the EDD debit card program, profits that rightfully belong to recipients.

Consumers Affected: Individuals in California who had an EDD Card account with Bank of America within the relevant time period.

Court: U.S. District Court for the Eastern District of California

Bank of America is facing a proposed class action lawsuit that accuses the banking giant of quietly profiting off unemployment and disability benefits meant for struggling Californians. 

The lawsuit, filed in California, claims that BofA unlawfully retained interest and investment earnings on public assistance funds held in “special deposit” accounts, in violation of state law and its own terms with benefit recipients.

At the center of the complaint is the allegation that the interest earned on government benefits—unemployment, disability, and paid family leave—belongs to the people who received them, not the bank holding the money. But for years, Bank of America allegedly kept those earnings for itself, potentially collecting tens of millions of dollars annually.

Bank of America Accused of Illegally Keeping Interest from Benefits

Carneshia Moland, who filed the proposed class action lawsuit, is a California resident who began receiving unemployment benefits in 2019 via a prepaid Bank of America debit card tied to the California Employment Development Department (EDD). Each month, between $900 and $1,000 was deposited into her BofA-managed account.

Though Moland withdrew and spent her benefits as needed, the funds sat in her account for periods of time—periods during which BofA was allegedly using that money to earn interest. The lawsuit says she never received any portion of those earnings, despite being the legal owner of the funds and, under California law, entitled to any profits made from them.

Moland’s experience, according to the lawsuit, mirrors that of hundreds of thousands of other Californians who relied on the EDD debit cards to access crucial support during hard times.

Lawsuit Claims "Special Deposit" Accounts Should Benefit Recipients

From 2010 through early 2024, Bank of America was the exclusive financial agent for California’s EDD debit card program. Instead of issuing paper checks, the state loaded benefits onto prepaid debit cards, making it easier for recipients—many of whom didn’t have bank accounts—to access their funds.

But according to the lawsuit, BofA wasn’t just holding those deposits—it was actively investing them. By pooling billions of dollars in public assistance funds, the bank was able to earn interest and other returns, which it then kept, without notifying cardholders or sharing any portion with them.

Under California law, these accounts are considered “special deposits,” meaning the funds remain the property of the recipients. Because of this, the lawsuit alleges, Bank of America acted not as a lender but as a custodian, and therefore had no right to profit from the deposits.

Bank of America Faces Mounting Legal Challenges Over Consumer Practices

This isn’t the only legal trouble Bank of America has on its hands. In Pennsylvania, the bank is facing another proposed class action that claims it misled customers into using its Bill Pay system, only to cancel it unless users held active BofA accounts—leading to missed payments, damaged credit scores, and financial penalties.

Earlier this year, a Massachusetts man sued the bank for allegedly downgrading the promised rewards on a promotional credit card offer after he met the spending requirement. And other lawsuits have taken aim at BofA’s credit card interest practices, wire transfer fees, and mishandling of fraud claims.

In her lawsuit, Moland wants to represent anyone in California who had an EDD Card account with BOA within the relevant time period. 

Case Details

• Lawsuit: Swift v. Bank of America, N.A.
• Case Number: 1:25-cv-00380-JLT-SAB 
• Court: U.S. District Court for the Eastern District of California 

Plaintiffs' Attorney:

• Scott Edelsberg (Edelsberg Law, P.A.)

Did you receive unemployment or disability benefits via a Bank of America EDD card? Share your thoughts on this lawsuit below.