In February 2021, CNN reported on various cases where individuals who had nno unemployment benefits requested were alerted that their requests had been approved. However, many of these people never seen a dime because the hackers had stolen their information, used it to claim benefits and had it sent to their personal bank accounts. At the time, the Ministry of Labor estimated that about 60 billion dollars had been stolen using this ploy. Today, some experts believe that number could be four times higher.
This week, Axes reported that individual criminals and some criminal networks could have stolen more than 400 billion dollars by hacking personal data needed to falsify unemployment claims. According to the report, these people may be supported by foreign governments like China, Nigeria and Russia.
NEW: Criminals may have stolen as much as half of the unemployment benefits the United States has paid out in the past year, most of it likely ending up in the hands of foreign crime syndicates. https://t.co/ciURI3ijny
– Axios (@axios) June 10, 2021
At the start of the pandemic, a top priority for lawmakers was to send money quickly to families who suddenly found themselves out of work. However, many of the systems used by states to claim and distribute benefits lack of modern security features, which makes it easy for bad actors to take advantage of weaknesses.
Federal government response
The White House is outraged by this news and has stated that âthis type of criminal syndicate activity is despicable and unacceptable. “To tackle the problem in the future, the US bailout has allocated $ 2 billion for the Department of Justice Anti-Fraud Task Force modernize unemployment insurance systems and attack the criminals who defraud the government.
The need for this money couldn’t come fast enough. On May 28, the Office of Inspector General Audit (IGA) of the United States Department of Labor issued a report detailing how individuals managed to steal $ 39 billion allocated under the CARES law adopted in March 2020. The report points out that this fraud may have occurred because state systems had not been updated and agencies did not have enough “to manage the growing number of new complaints, and according to state officials, ETA guidelines [Employment and Training Administration] was inconvenient and unclear. “
In addition, in an attempt to put money in the hands of workers who suddenly found themselves out of work, “40% of States did not perform the required cross-matches and 38% did not perform the required recovery activities. “These overlaps with other social and tax systems could have prevented fraud, as many of the people whose data was stolen were full time throughout the pandemic. Had state employment offices checked unemployment status against available databases, many of these claims could have been rejected and billions of public funds could have been saved.
Reports from various outlets and the federal government demonstrate the colossal failure to protect public revenues from abuse. In addition, the IGA report stresses that the objective of bypassing oversight responsibilities was made to ensure that money is sent to applicants more quickly. However, more than half of the states have still taken a “unreasonable“The time it takes to put in place systems to send federal unemployment benefits to”claimants experiencing financial hardship as they struggle to pay bills and meet basic needs, such as food and shelter. “
Prevent this unemployment fraud to move forward
The report makes five recommendations to prevent this type of fraud. The first and second relate to carrying out an assessment of all state unemployment systems. This assessment would identify where ssecurity features need to be modernized, the possible places where they could fail when the volume of complaints increases, and how to fill the gaps that leave room for fraud.
The third is to help states better identify cases of overpayments and other red flags that indicate that fraud could occur. The final proposal suggests that the government “develop standards to provide clear and reasonable time frames for implementing temporary programs,âTo ensure that in times of crisis, people and families in need receive their benefits in right time.
While these suggestions will help prevent abuse and criminal activity in the future, many believe that the The evil is already done. This week marked a milestone in the pandemic as, for the first time in over a year, less than 400,000 people have applied for unemployment benefits. While that number is still higher than pre-pandemic levels, the workload is more manageable in many states. In addition, more than half of the states will end additional federal unemployment benefits within the next month, limiting the possibility for criminals to steal the most generous benefits.