Fraudulent payments by California could amount to more than $ 20 billion. New security measures to prevent fraud are causing delays in payments caused by a new hullabaloo.
By Wolf Richter for WOLFSTRAAT.
The unemployment crisis in California is still huge. The state is still lower with 1.4 million “paid jobs”, excluding work for performance workers, from December 2019. The amount that the state paid in unemployment benefits is also large: $ 114 billion between March 2020 and January 16, 2021. The state processed 19.5 million claims during that time, compared to 3.8 million claims in the whole of 2010, the unemployment peak of the Great Recession.
To top it all off, a new federal unemployment program for performance workers was thrown into chaos with little guidance and no preparation and no immediate way to verify even the identities of the plaintiffs – and fraud was also huge and has an envelope with received every report.
Of the ‘confirmed fraudulent payments’ in California, 95% were associated with the federal PUA (Pandemic Unemployment Assistance) program that covers concert workers. As in other countries, this program has been ‘hit hard by international and national crime syndicate fraud’, the Department of Employment (EDD) reported in its latest unemployment benefit fraud.
California, the first to implement the PUA program, and the largest state with a population of nearly 40 million, was hit hardest by PUA fraud.
In its new report, the EDD confirmed that 9.7% of all payments it made during that time – about $ 11 billion – were to ‘fraudulent claims’.
In addition, another 17% of all claims – about $ 19 billion – were made on ‘potentially fraudulent claims’. These payments are now being ‘investigated’, and according to officials, a large number of them are likely to be confirmed as fraudulent.
Just frolicking here: the heap of fraudulent payments made by California alone could exceed $ 20 billion after all is said and done.
By comparison, in 2019, prior to the arrival of the PUA program, approximately 6% of all payments under the ordinary state unemployment insurance claims were made to fraudulent claims.
But the EDD was able to stop up to $ 60 billion in fraudulent claims payments with its existing methods and its new methods implemented after the ‘two-week recovery period’ in September, when the EDD stopped processing new claims for new security protections to implement. As part of the measures, ID.me hired to verify the plaintiffs’ identities, which no one had previously confirmed.
Unemployment fraud is a ‘national problem’: across the US, 35% of all unemployment applications are fraudulent, most of them under the PUA program, according to ID.me, quoted by the EDD. Now 21 states have implemented or are implementing ID.me to prevent fraudulent PUA claims. Currently, across the states that ID.me has implemented, the system blocks $ 1 billion in fraudulent claims per week, according to ID.me.
“The PUA program was particularly susceptible to fraud, according to the U.S. Department of Labor, as it did not require prior income or job verification and allowed the plaintiffs to date their claim to February,” the EDD said.
“There is no sugar cover,” Labor Minister Julie Su told a news conference on Monday. “California has not taken adequate security measures to prevent this level of fraud, and criminals have taken advantage of the situation.”
“And we now know that millions of Californians have applied for help, that international and national criminal rings behind the scenes have been stealing unabated unemployment benefits using sophisticated methods of identity theft,” she said.
The result of these security measures is a backlog of claims that have been suspended and still need to be checked before they are paid. 1.2 million claims were suspended last week, up from 1.6 million in December. As old claims are resolved, either by being considered fraudulent and not being paid, or as being considered and paid OK, new claims to be resolved are added to the stack.
This delay in the payment of claims due to the verification procedures now in place to prevent unemployment fraud has led to another hullabaloo rising to the legislature, after the hullabaloo raised the issue of ballooning fraudulent payments in previous months , which includes astonishing stories of prisoners, some on the underworld, receiving unemployment benefits under the PUA program with organized outside help.
Corporate cost-cutting saliva about work everywhere. Oh well, the free gourmet cafeteria is gone. Companies have already said they would reduce salaries if people moved to cheaper places. Read … Referring to permanent relocation to work from home, Dropbox cuts 11% of its employees
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