Unemployment Fraud Breaking Down the Repercussions

Unemployment Fraud Breaking Down the Repercussions
Unemployment Fraud Breaking Down the Repercussions
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Employment Development Department (EDD) fraud poses a powerful threat to those who depend on unemployment benefits while in-between jobs.

The state of California issued a massive amount of unemployment benefits between 2020 and 2021. In fact, a sudden influx of insurance claims tallied up to over $1 billion (more than any other state). Unfortunately, 10% of unemployment benefits were found to be fraudulent. These crimes not only put hundreds of thousands of people at risk of losing financial security but also threaten the state’s economy.

Overwhelming the State’s System

The existing system that controls the flow of benefits to insurance applicants has struggled to account for the sudden flood of applications.

Exacerbated by the rapid inclusion of the Pandemic Unemployment Assistance programs set in motion in 2020, attempts at unemployment fraud have risen to dizzying heights across the country leading the US Secret Service to get involved in over 500 investigations across 40 different states.

A recent investigative report in California found that “thousands of envelopes containing fraudulent California Employment Development Department claims that were sent to residents across the state are part of several fraud schemes.” These crimes are suspected of being produced through the dark web and are part of an international crime ring.

Due to the sudden onslaught of fraudulent behavior, placing funds in the hands of those who genuinely need it has morphed into a herculean task. Unfortunately, even when fraud cases are discovered, victims have little recourse but to report the incident to their state unemployment agency’s hotline in the hopes that the case will be picked up and addressed.

In many instances, those directly affected by fraud attempts have found it difficult to get through to anyone ‘on the other side’, with dedicated call centers and supporting processes overstretched to handle so many reports at once.

Fraud Rises

Antiquated systems tethered to human agents prevent many states’ from processing enough online transactions to keep up with demand. In California, the sheer volume of transactions these systems are dealing with has evidently exceeded their capabilities, costing many individuals the benefits they should have received. State ID verification procedures behind the scenes have yet to catch up to the incessant wave of benefits claims in the wake of the pandemic.

This growing backlog of unresolved claims threatens to undermine the entire unemployment insurance system, while victims of EDD fraud remain vulnerable to savvy criminals. Those who have already had their benefits robbed from them by fraudsters are 21% more likely to be targeted in the future.

For unknowing victims of EDD fraud, the situation is often brought to their attention by their employer or their state’s unemployment office. This form of fraud is often committed using pilfered personal details such as social security numbers and birth dates to pose as an unsuspecting victim. Stopping this from happening, however, involves protecting this information wherever it may be stored. The FTC recommends companies look into bolstering their own cyber defense efforts to keep employees’ personal information from falling into fraudsters’ laps.

Citizens Are Being Cut Off

Widespread EDD fraud has plagued California’s unemployment insurance system to such a degree that some states have resorted to more extreme measures, going so far as to cut off many applicants altogether after deeming their claims to be suspicious.

In addition to those who hold traditional jobs, systemic cut-offs could jeopardize gig workers and other untraditionally employed individuals struggling to make ends meet during the pandemic.

Under the Pandemic Unemployment Assistance program established by the CARES act, this previously vulnerable class of laborers is now eligible for state unemployment insurance. However, fraudsters looking to cash in on this sudden system-wide change may target such individuals more frequently. Protecting people from such threats should be a top priority for government officials and business leaders alike.

Protect Your State and the People Within It

At a high level, EDD fraud is already costing California billions in misdirected funds. However, the consequences of such fraud are far direr for individuals who cannot get assistance when they actually need it most. This can lead to lasting negative developments in the social fabric of not just California but the nation at large.

California’s Employment Development Department lists job loss, wage-cutting, and surging prices for goods as potential pitfalls of unchecked unemployment insurance fraud. Leveraging strong ID verification tools such as those offered by Intellicheck could help curb criminality in this space and ensure taxpayers’ funds are allocated to those in need.

Intellicheck offers a comprehensive identity verification solution that performs at speed with 99% accuracy. Government officials and major corporations have adopted Intellicheck’s platform for a good reason – it works.

Intellicheck provides a powerful identity verification solution that delivers the same accurate results in a retail setting and online. It catches details that the human eye cannot, helping correctly identity the validity of ID documents 99.9% of the time vs, <80% for competitive solutions. With Intellicheck, you can safely:

  • Verify the ID document
  • Match and verify the person presenting the document to the person on the ID document
  • Capture ID text to pre-populate a form

Intellicheck’s platform provides a flexible, hardware-agnostic alternative to manual ID verification fit for use in the most demanding situations.

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