Colorado Frauds Climb to New Heights

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Unemployment claim form on an office table.

Unemployment claims have skyrocketed in recent months due to the pandemic. An increased likelihood of fraud corresponds with the rise in unemployment claims as fraudsters seek to take advantage of the national crisis.

The Colorado Department of Labor and Employment has reported a substantial increase in fraudulent unemployment claims. (Colorado has legalized many things, but fraud is not one of them.)  Approximately 6,500 payment requests were made through the state’s Pandemic Unemployment Assistant Program (PUA) between June 15 and June 17, 2020.

PUA is funded by money provided by the Cares Act to financially relieve those impacted by COVID-19.  Self-employed workers and independent contractors who don’t qualify for traditional unemployment benefits rely on PUA for compensation. About 5,600 claims received are suspected to be fraudulent. It is unclear how many claims were able to surpass the state’s identify verification safeguards. (It’s doubtful that this will be the peak of fraudulent claims.)

The flagged unemployment claims would have totaled $34 million in fraudulent compensation disbursements. Federal and state law enforcement agencies are working with international partners to detect fraud that originates domestically and abroad. (Foreign fraudsters are also looking to take advantage of the nation’s vulnerability.)

One of the main factors that led the claims to be flagged is that many of them requested payments going back to February. (February is the maximum allowed under federal rules and it seemed unusual that so many would not have previously requested financial assistance.) The timeline also seemed suspicious since the majority of closures did not happen until March or April. (Most Americans were still blissfully unaware of the Coronavirus back in February.)

Measures have been implemented to help stop the rise of fraudulent claims. This includes requiring anyone seeking more than a week’s worth of reimbursement to call in and verify information. Other precautions include giving priority to in-state unemployment claims and more thorough reviews of out-of-state claims. If successful, these precautions will prevent taxpayers from being scammed out of millions of dollars.

Cher Haavind, the deputy director of the Colorado Department of Labor and Employment, issued a statement asking for patience during this time. While she recognizes the additional measures may put strain on some businesses issuing legitimate claims, she urged the need to put these precautions in place.

Today’s Fraud of the Day comes from an article, “Colorado blocks thousands of bogus unemployment payment requests,” published by The Denver Post on June 19, 2020.

The Colorado Department of Labor and Employment said Friday morning it halted $34 million in unemployment compensation disbursements this week after flagging them as fraudulent.

The suspect payment requests were made through the state’s Pandemic Unemployment Assitance Program, (PUA) which disburses federal dollars provided under the Cares Act to independent contractors and self-employed workers who aren’t eligible for traditional unemployment coverage.

 

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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.