COVID Jobless Programs See 'Frightening Levels of Fraud'

$63B paid out improperly
By Newser Editors and Wire Services
Posted Mar 1, 2021 2:00 AM CST
'Frightening Levels of Fraud' Overwhelm COVID Unemployment Programs
Web pages used to show information for collecting unemployment insurance in Virginia, right, and reporting fraud and identity theft in Pennsylvania, are displayed on the respective state web pages, Friday, Feb. 26, 2021, in Zelienople, Pa.   (AP Photo/Keith Srakocic)

With the floodgates set to open on another round of unemployment aid, states are being hammered with a new wave of fraud as they scramble to update security systems and block scammers who already have siphoned billions of dollars from pandemic-related jobless programs. The fraud is fleecing taxpayers, delaying legitimate payments, and turning thousands of Americans into unwitting identity theft victims. Many states have failed to adequately safeguard their systems, and a review by the AP finds that some will not even publicly acknowledge the extent of the problem. The massive sham springs from prior identity theft from banks, credit rating agencies, health care systems, and retailers. Fraud perpetrators, sometimes in China, Nigeria, or Russia, buy stolen personal identifying information on the dark web and use it to flood state unemployment systems with bogus claims.

The US Justice Department is investigating unemployment fraud by “transnational criminal organizations, sophisticated domestic actors, and individuals across the United States,” said Joshua Stueve, a spokesman for the department's criminal division. The Labor Department inspector general’s office estimates that more than $63 billion has been paid out improperly through fraud or errors—roughly 10% of the total amount paid under coronavirus pandemic-related unemployment programs since March. California has been the biggest target, with an estimated $11 billion in fraudulent payments and an additional $19 billion in suspect accounts. Colorado has paid out nearly as much to scammers—an estimated $6.5 billion—as it has to people who filed legitimate unemployment claims. (Click for more on the "frightening levels of fraud.")

Get the news faster.
Tap to install our app.
Install the Newser News app
in two easy steps:
1. Tap in your navigation bar.
2. Tap to Add to Home Screen.