The California Middle-Class Tax Rebate stimulus checks payments are moving into their third year but many residents of the Golden State are yet to receive their tax rebates that are being given out of a considerable surplus budget enjoyed by the state.
Also called the inflation relief stimulus checks, the tax refunds were initially proposed as a relief debit card to counter the rise in gasoline prices that was proposed by Governor Gavin Newson that was to be handled by the Dept. of Motor Vehicles of the Golden State.
Then the Democratic Party legislators prevailed upon Gov. Newsom, and they agreed upon a compromise for the third round of payments to be issued by the state’s tax board, the FTB. Under the Franchise Tax Board system, some Californians would receive the stimulus check as direct bank deposits.
While the initial payments were through direct bank deposits, around 10-13M stimulus checks will be issued through debit cards. The tax board has revealed that the contract for dispensing the debit cards to beneficiaries of the tax rebate has gone to a bank, Money Network, based in New York, to control the whole process linked to the debit card payments.
By the second week of November, over 2.5M debit cards were issued as debit cards. But there have been apprehensions about the issue and use of debit cards before the maximum number of the cards has even reached the residents of the state.
There has been an instance of how organized gangs have resorted to skimmers to filch data of the rebate debit cards. The same rings have also targeted Cal Fresh and Cal Works cards, the relief debit cards that were used to get welfare benefits to such workers.
The one factor common to such debit cards is that there remains an acute shortage of anti-fraud chips and their associated technology on cards. This makes it convenient for skimming devices to use cameras to steal both the PIN and the secure data contained in the cards. This enables these criminals to drain the amount contained in such cards.
Lack Of Security Measures In The Stimulus Check Cards A Cause Of Apprehension For Many Beneficiaries
CalWorks reported that they were at one stage in time losing close to $3M every month. But the cards continue to be operated without a security chip.
The same problem prevails with the Middle-Class Tax Refund. While the tax board has revealed that the state will mandate the issue of a chip-enable card to offer the all-out maximum security possible and also avail of customer and client support services.
The FTB has displayed images of the debit cards on the tax board site that detail the way to activate such cards and shows chips implanted on the card. But multiple viewers have mailed pictures of the tax rebate debit cards that reveal that the fraud-deterrent chips are absent from the cards.
When contacted about the absence of this basic anti-fraud mechanism, the Franchise Tax Board authorities have revealed that they are conscious of the voids in the program.
The FTB revealed that they remain in regular contact with Money Network, the New York-based bank handling the debit card payments. They promised to ensure that the residents of the Golden State are protected from any form of card fraud.
The Franchise Tax Board official further said that due to the pressure to complete the delivery of the debit cards according to schedule and deal with supply-chain constraints and bank fraud, the FTB has stepped up the use of cards that have both chips on them and without them.
This dual use has enabled faster delivery of the cards, something that would not have been possible if they had relied upon sending the stimulus checks through only chipped cards.
FTB Reveals A Shortage Of Chips Preventing The Use Of Secure Cards
The Franchise Tax Board has also informed that there remains a nationwide shortage of chips used in debit cards, a shortage that has been continuing since the pandemic disrupted supply chains worldwide.
Many interested vendors were unable to provide chips or did not add chips as part of their bids. The tax board further said that the chip in a debit card is merely one of the anti-fraud barriers in place for preventing fraud. Both the tax board and Money Network, the bank handling the debit cards, have other processes to prevent fraud and provide an extra layer of security against card scams.
The tax authorities have also said that the part of their contract with Money Network that deals with the use of non-chip and chip cards has been redrawn to strengthen security measures. They further informed that Money Network has agreed to perform within the boundaries drawn up by the Franchise Tax Board under the fresh contract.
When asked for clarification over the need to redraw the contract to enable Money Control to bypass the need to have a chip on every card, the FTB has stated that the bank has strong fraud control in place over the activation, issuance, mailing and also the use of the tax rebate cards. This will ensure the highest level of fraud protection for the stimulus check beneficiaries.
The tax board said that they came to know during the bidding process that the supply chain issues will prevent the providers from honoring the part about chips in every card. Money Network was chosen for its capacity to provide at least a basic number of chip-inserted cards and they expected more chips to be provided subsequently as the supply issue eased at a later period.
But in the past cards issued by CalWorks and EDD that did not have chips and stringent fraud protection in place were easily cloned or skimmed. But both Money Network and Franchise Tax Board have stated that they have received no indication that the tax rebate debit cards were compromised at any stage or there has been any fraud detected at any stage of the tax rebate debit cards.
Regarding our concerns over personal information privacy, the New York bank has said that it will not use the personal information of users for marketing purposes. California’s agreement with the bank also does not permit it to use personal information for marketing or for letting other parties get hold of such information.