Legit Green Dot customers left in lurch: Fraud investigation freezes funds, lives of unemployed

BOSTON — For Elisha Hunt, it seemed the obvious thing to do. After losing her job at a medical supply company in Fall River, she elected to have unemployment checks directly deposited into an account she had with Green Dot.

“I’ve always had Green Dot,” she said. “I’ve never had issues with them before.”

Sold at major retailers such as Walmart, Green Dot is a prepaid debit card that can be turned into something with more depth -- such that it can act more like a regular bank card.

"Once you register the card, then you are given a checking account that's tied to that card and it can be used just like any other debit card out there," said Crane Hassold of Agari CyberSecurity. "And the big selling point for them is that they are geared towards receiving direct deposits."

In fact, this spring, Green Dot publicized that direct deposit feature as a way customers would get faster access to unemployment benefits.

But Elisha Hunt -- along with an unknown number of other Green Dot users -- now has NO access to unemployment or any other funds deposited in their accounts -- and that's thanks to the activities of an international fraud ring that targeted pandemic unemployment benefits in more than a dozen states, Hassold said.

The cyberthieves behind the massive fraud, he says, a West African group known as Scattered Canary, which began exploiting the system in April -- because it was easy to do.

"Prior to Covid-19, if someone submitted an unemployment claim, there would be a one to two week waiting period where that claim would be validated," Hassold said.

But in the rush to get funding to the millions of those unemployed by the pandemic, validation initially went out the window... and, with it, for several weeks, went millions of dollars.

"And this is, essentially, a complete magnet to these types of scammers," Hassold said. "Where they can go out and make as many of these fraudulent claims as possible."

[ Temporary panic as Green Dot cards go red ]

At some point, the scammers knew their activities would get spotted. So it was a matter of working the system hard and working it fast.

"One thousand, fifteen-hundred dollars every week for a couple of weeks, multiplied by hundreds, is a lot of money," Hassold said. "And it was very rampant until the end of May, when a lot of the states started putting validation procedures in place that will sort of identify this fraud before the payments actually go out."

Unfortunately for legitimate users, Green Dot was often associated with many of these fraudulent unemployment claims.

"Green Dot has been abused by at least this Scatter Canary group that we've been researching and probably a number of other active scammers that are out there," Hassold said. "Hundreds of millions of dollars could be going out from this unemployment fraud -- a lot of that is going to Green Dot."

Green Dot tells Boston 25 News it is "proactively" notifying states of suspicious activity and sometimes closing accounts down.

Hassold thinks that may be causing some unintended damage: residents legitimately filing unemployment claims who elected to have funds directly deposited into Green Dot accounts.

Elisha Hunt is one of many Green Dot customers who contacted Boston 25 News in recent days. Until last week, she had access to around $10,000 in unemployment funds.

"I went to go log in to my account and it said my account was closed," Hunt said. "I cried. I cried because that is every penny I have to my name on there because I'm not working.":

Thus began, for Hunt, day after day of calls between the state and Green Dot -- with no resolution.

"I thought I was doing the right thing by keeping it there, saving it," she said. "We don't know. There's a second wave on the other side of the world right now. You don't know. Times are tough. So I thought the right thing was 'don't touch the money.' Save it, save it, save it. They took everything I owned. My rent's due today, too. What do you tell the landlord?"

We contacted the state and Green Dot to see when legitimate unemployment funds tied to the cards might get released, but got no conclusive answers.

Similarly, when asked about Green Dot last week, Governor Charlie Baker did not address the company's business in Massachusetts specifically. But on the subject of unemployment fraud, he noted it was a federal investigation and there wasn't much he could say.

Late Wednesday, Green Dot did offer to personally reach out to some customers we identified as suffering particularly big losses.

One of them owned a barbershop in Fall River that was forced to temporarily close back in March because it wasn’t an essential business. The owner attempted to reopen under Phase Two, but found customers reluctant to follow the new Covid-19 rules. Then the landlord raised the rent. To top all that off, his Green Dot account containing nearly $9,000 in pandemic unemployment assistance suddenly closed.

Tuesday, after six years in business, that barbershop closed for good.

"He worked very, very hard to, you know, get his business started," his wife told Boston 25 News. "He put all his time into that. And having to turn in the keys... that was pretty difficult."

If the unemployment money hadn't gone away would the shop still be open?

“We would have tried to keep the barbershop going a little longer,” she said. “So we’re hoping this kind of sorts itself out and maybe in the future he can start over again.”