COVID Feature: Falling Through the Cracks

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Unemployment claim form on an office table.

New York’s Department of Labor has been busy since the coronavirus stuck the state, making it one of the hardest hit areas in the country as indicated by the number of residents applying for unemployment benefits. In the past few months New York has paid nearly $40 billion dollars in unemployment benefits. They have also stopped $1 billion in fraudulent unemployment claims from being processed. These claims are a reflection of the worst of humanity seeking to take advantage of the crisis for their own gain. (To some people money matters more than anything else, including their own integrity.)

According to the U.S. Department of Labor (DOL), there have been more than 42,200 fraudulent unemployment benefit claims since March. The DOL has referred more unemployment fraud cases to federal prosecutors in the past five months than it did in the last 10 years combined. (This is what the media means when they keep referring to “unprecedented” times.)

New York paid a total of $2.1 billion in unemployment benefits, meaning they have paid over 18 years of benefits in just over five months. (Yes, you read that right.) While the majority of the payments have come from federal aid, approximately 25 percent has been paid using the state’s unemployment fund.

While there are those in dire need of financial assistance due to the coronavirus pandemic, fraudsters have used this as an opportunity to exploit the state’s newfound financial crises. (Fraudsters are definitely opportunists. They will take every opportunity to take what is not theirs.)

Fraudsters have been actively stealing the identities of New Yorkers, using the identities of residents who have had information stolen through previous data breaches, or using the identities of those who have recently passed away. Fraudsters use the stolen identities to file fraudulent unemployment claims and illegally collect benefits. The Department of Financial Services issued a statement empowering all New Yorkers to be vigilant and take precautions to protect themselves against identity theft. (I think those fraudsters have some karma coming their way for not letting those poor souls rest in peace.)

The Empire State’s Department of Labor was receiving an average of 50,000 calls a week prior to the pandemic. Starting in late March the agency began to receive millions of calls a week, including 8.2 million calls during the pandemic’s peak. The agency was inundated with unemployment claims and became focused on providing benefits as quickly as possible. (Unfortunately, that means that those undeserving of unemployment benefits also received their unfair share quickly too.)

Despite the overwhelming amount of unemployment claims, the state’s Department of Labor is still doing its best to maintain due process and ensure that the claims being granted are not fraudulent. This includes checking to make sure the claims would not be going to someone who is still employed and that the applicant is not using a stolen identity. (With millions of applicants a week, it’s nearly impossible to make sure no cases fall through the cracks.)

Fraudulent behavior takes away from the agency’s ability to serve and help those who are in legitimate financial need. If you believe that someone is fraudulently using your identity to collect unemployment benefits during the national crisis, you can contact the National Center for Disaster Fraud by calling (866) 720- 5721 or through their website’s complaint form.

Today’s Fraud of the Day comes from an article, “NY Department of Labor stopped over $1B in unemployment fraud amid COVID-19,” published by The New York Post on August 13, 2020.

New York thwarted more than $1 billion in unemployment fraud during the coronavirus pandemic — as it paid out nearly $40 billion in benefits, the Cuomo administration said Thursday.

The state Department of Labor said it identified and stopped more than 42,200 fraudulent unemployment benefit claims since COVID-19 hit the Empire State in March.

 

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.