Despite the warnings, the federal government largely left it to states to detect which applications are fake. But state workforce agencies, stymied by decades-old IT systems and flooded with applications, have been ill-equipped to find and prevent the fraud, which appears to be far more extensive than the usual attempts to bilk government programs. Now states are asking for help.
“We’re fighting this fight with ’70s era technology with some modern Band-Aids put on top of it,” Ryan Wright, Kansas’ acting secretary of Labor, said in an interview. “I would like to have seen a more aggressive response from the federal government.”
Last year, Wright said, his agency had no cases of impostors using fake employers to apply for benefits; in recent months, it has stopped 55,000 such claims. The fraud “now is reaching a scope that is difficult for states to weed through,” he said.
Labor Department Communications Director Megan Sweeney told POLITICO in a statement that the agency “is actively working with all states to combat fraud in UI programs,” especially in Pandemic Unemployment Assistance, which expanded jobless benefits to the self-employed. “The Department requires states to work with the Department’s Office of the Inspector General and to work collaboratively with other federal, state, and local law enforcement to investigate and prosecute fraud and to work closely with financial institutions to recover fraudulent payments,” Sweeney added.
State officials are seeing big surges in unemployment applications indicating that criminals are trying to game the system. And while they have been successful at blocking some of the theft attempts, the sheer scale is making it difficult to stop entirely.
Colorado officials estimated that three-quarters of unemployment applications they received over the summer were fraudulent, and they reported averting as much as $1 billion in attempted thefts. But criminals still may