Pandemic Hackers Swiped $36 Billion From Unemployment Coffers

Federal and state governments are cracking down on unemployment after an estimated $36 billion was swiped, most of it relating to Pandemic Unemployment Assistance (PUA), CNBC reported on Tuesday (Jan. 5).

The recently-passed $900 billion coronavirus package now requires people to prove they are eligible for benefits, with added steps which could slow payments, labor officials and worker advocates said.

“It’s a little bit of a high wire act because there’s so much pressure to get money out,” Bill McCamley, cabinet secretary of the New Mexico Department of Workforce Solutions, told CNBC.

States are required by month’s end to institute identity-verification processes and ask workers to certify their specific COVID-related reason for needing weekly benefits. Filers are also no longer allowed to back-date claims to the spring.

The temporary PUA program was launched as part of the federal CARES Act in March to extend unemployment to people who would not typically qualify, such as those who are self-employed as freelancers or sub-contractors.

A minimum of $36 billion of the $360 billion in CARES Act unemployment benefits was siphoned, mostly due to fraudulent payments, the Office of the Inspector General (OIG) for the Department of Labor (DOL) said, per CNBC.

Probes into unemployment benefits are 70 percent of OIG’s caseload, almost six times more than the level before the pandemic.

“This is the largest fraud attack on the U.S. ever. Period,” Blake Hall, CEO and founder of ID.me, told the news outlet.  

In some states, fraudulent claims account for about 35 to 40 percent of new applications, Hall said, adding that most hacks originate from organized crime rings in China, Ghana, Nigeria and Russia.

The most common hack is identity theft, with fraudsters swiping personal information and filing a claim in that person’s name, Hall said. In some instances, hackers were able to cajole victims into verifying their identity by offering a prize or other incentive.

Insider fraud is another threat to unemployment benefits, and state officials overseeing local jobless claims were told to watch for collusion in their own ranks, according to the Financial Crimes Enforcement Network.

In June, it was estimated that some $26 billion in unemployment benefits were swiped by fraudsters or improperly extended.