A top Labor Department watchdog initially estimated pandemic unemployment fraud to be in the neighborhood of $87 billion dollars. Turns out, it’s not that bad.
According to a report from the Washington Post, more than $163 billion dollars in pandemic unemployment relief has been stolen. “It’s obviously substantial,” Roy Dotson, the national pandemic fraud recovery coordinator at the U.S. Secret Service, said in a recent interview. “I can’t really get into the number … we’re all trying to figure that out.”
In some states, fraudulent claims outnumbered actual claims —like in Maryland.
“Maryland Gov. Larry Hogan (R) first revealed in July 2020 that a criminal scheme had siphoned more than $500 million from the state’s unemployment program,” WaPo reports. “Since then, the attacks have only intensified. In March, for example, an unknown entity impersonating the Maryland Department of Labor sent emails asking existing unemployment beneficiaries to verify their identities. This time, the scam preyed on the state’s work to combat fraud — just to perpetuate more of it.”
“What’s astonishing is we continue to see these attacks on our customers every single day,” Maryland’s secretary of labor, Tiffany Robinson said.
According to Michele Evermore, a deputy director at the Office of Unemployment Modernization at the Labor Department, most states “weren’t well resourced in the first place” and “started the pandemic with a 50-year low in administrative funding.”
Bad actors recognized the vulnerabilities and administrative weaknesses as early as April 2020 —just one month after the pandemic dominated headlines. “In its April 2020 report, the inspector general for the Labor Department warned that the ‘substantial increase’ in federal benefits could place immense strain on the underfunded state operations, opening the door for expansive criminal activity,” WaPo reports.
“Those outdated systems are just a magnet for rip-off artists and the fraudsters,” said Sen. Ron Wyden (D-OR).
“We’ve seen states where literally as many as 3 out of 4 claims into [the program] were highly suspicious and likely fraudulent,” said Jon Coss, the vice president of risk, fraud and compliance at Thomson Reuters.
Criminals have gotten so brazen, they’ve even started sharing —and teaching—the grift on instant messaging platform Telegram. “With valuable personal data in hand, some fraudsters plotted openly on apps, including Telegram,” WaPo reports. “They swapped their credentials and tips for defrauding the federal government in a wide array of channels, including one dedicated to targeting the Utah unemployment system that alone attracted 16,000 subscribers.”
“The ability to engage in identity theft has grown exponentially and the federal government has not kept up,” warned Michael Horowitz, the inspector general for the Justice Department and leader of the Pandemic Response Accountability Committee.
To date, just over $4 billion —of an estimated $163 billion dollars— has been recovered.