State official warns KeyBank further payment delays may result in cut ties

KeyBank, a payment processing vendor for the state, has been "read the riot act" after the bank experienced an error that led to delays in getting federal unemployment dollars to jobless New Yorkers Friday.

Melissa DeRosa, secretary to the governor, said during a Monday news call that the state has had many conversations with the Cleveland-based bank over delays that resulted in some qualified unemployment recipients receiving their first installment of Lost Wages Assistance funds — up to $900 — a day late.

"They’ve been read the riot act," DeRosa said. "We have been assured that this is not going to happen again. Should this happen again we would consider no longer working with KeyBank," DeRosa said.

LWA gives eligible New Yorkers receiving unemployment insurance or Pandemic Unemployment Assistance an additional $300 in weekly aid for up to six weeks. The FEMA-backed program was created through presidential memo in early August and has had every state but South Dakota apply for the boost in jobless benefits.

Friday’s delayed disbursement of funds accounted for the first three weeks of the program, covering the weeks ended Aug. 2, 9 and 16.

KeyBank, which processes unemployment payments for jobless New Yorkers who receive their funds through state-issued debit cards and direct deposit transactions, said an error Friday morning led to "approximately a three-hour delay" in processing extra unemployment aid from the LWA program.

"A processing issue that caused a delay in Lost Wage Assistance[s] payments specifically to Key2Benefits cardholders was resolved and all claimants received their funds by 3:30 a.m., Saturday morning," KeyBank said in a statement issued Monday afternoon.

"We are reviewing our processes and procedures to make sure there are no issues for future LWA payments," the company said.

The bank said Friday that the issue was being resolved and New Yorkers would receive their money by 4:30 p.m. that day. But following that deadline, jobless New Yorkers, many of them users of KeyBank’s Key2Benefits prepaid cards, took to social media to complain that they had not received their funds well into Friday night.

The state is expected to begin sending out the second round of LWA funds, covering the three weeks ended Aug. 23, 30 and Sept. 6, later this week.