Unemployment fraud spikes across US as states rush to process tidal wave of applications
More than 44M Americans have filed for unemployment benefits in the past three months
Unemployment-benefit fraud is soaring across the country as states scramble to process an influx of applications related to the coronavirus pandemic and the ensuing economic lockdown.
States, which administer unemployment benefits, are overwhelmed by the flood of applications.
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In the three months since the outbreak of the virus forced the economy to shut down, more than 44 million Americans have filed for benefits, a rate of job losses that is without precedent. But the outdated computer systems that states use, along with the rush to get cash in the hands of out-of-work Americans, may have left the benefits program susceptible to criminal activity.
There is evidence of attacks in at least seven states by a Nigerian fraud ring, according to a recent memo published by the Secret Service. The states are Washington, North Carolina, Massachusetts, Rhode Island, Oklahoma, Wyoming and Florida.
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“It is extremely likely every state is vulnerable to this scheme and will be targeted if they have not been already,” federal officials warned in mid-May.
Washington appears to have been one of the states hit hardest by fraud, losing hundreds of millions of dollars. The state may have paid out between $550 million and $650 million in fraudulent claims; so far, it’s recovered about $333 million, according to Employment Security Department Commissioner Suzi LeVine.
Last week, Michigan said it halted payments to 340,000 unemployment accounts, or about 20 percent of the state’s total, over concerns of potential imposters. Up to 58,000 people in Pennsylvania have been affected by fraudsters who steal people’s identities, file for unemployment programs and then route the money to their own bank accounts or steal paper checks, according to a local report.
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Montana has paid out more than $10 million in potentially fraudulent unemployment claims, the state’s Department of Labor and Industry said this week, but has stopped more than $220 million in fake payments. It told residents seeking jobless benefits that they may need to provide additional personal information to help verify the validity of their claims.
“While we have successfully prevented a large amount of fraud up to this point, we are continuing our efforts to stop fraud from occurring, while ensuring all eligible Montanans receive the benefits they deserve,” acting Commissioner Brenda Nordlund said in a statement.
Maine residents have also become victims of unemployment fraud. The Maine Department of Labor said it’s canceled about 6,500 initial claims and 11,500 weekly certifications that were suspected to be falsified. So far, the state said it’s received more than 17,000 reports of imposter fraud.
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Some Senate Democrats have called on the Trump administration to release more details about the suspected organized fraudulent activity. In a letter addressed to Labor Secretary Eugene Scalia last Friday, Sens. Patty Murray, D-Wash., and Ron Wyden, D-Ore., urged the government to dedicate additional resources to help states process legitimate applications in a timely manner and to combat the growing threat of fraud.
“We all share a common goal of ensuring the integrity of the unemployment insurance (UI) program, and supporting a strong UI program is a critical component of the economic safety net during times of economic downturn, including during the COVID-19 pandemic,” the lawmakers wrote. “Safeguarding state UI systems against unscrupulous actors who seek to exploit the current public health crisis for economic gain requires a holistic response by the federal government in partnership with states.”