Unemployment Scams: surely they can figure this one out

The tech sector being the tech sector, I was laid off a few times during my career. Each time I collected unemployment benefits.

Massachusetts being Massachusetts - vax registration snafu aside, a first-rate place to live - the benefits were pretty good. The benefit in Massachusetts is, in fact, the highest in the country. (You can collect 50% of your weekly salary, capping out at over $800 per week. Massachusetts also has the longest duration of collectability. You can collect for 30 weeks. Other states have ridiculously skimpy benefits. Like Mississippi, which maxes out at $235/week. And Georgia, where you can only collect for 12 weeks.)

Anyway, while it's never all that great to be unemployed and in need of work, even if you were waving your arms begging to get the boot, to be able to have some income in coming is a big relief. And it's actually gravy if you're also collecting severance. (Not sure about all states, but in Massachusetts if your severance is set up a certain way, you can simultaneously collect unemployment benefits.)

I don't remember much about the sign up process. I think that one time, I had to register in person. Obviously, they didn't take your word for it when it came to employment status. They checked the list your now-former company had provided. And that was about it. 

It was easy to register for benefits. And as long as you did a couple of things a week that qualified as job-search, you just had to check in via phone or, later (I think), online to keep re-upping. Massachusetts also had a nifty little thing where, if you had a short term freelance gig, you could suspend benefits for any week you were working, without having to reapply and without losing out on the number of weeks you were qualified for.

Not that I necessarily recommend being unemployed (actually, I do, but that's another story), but if you have to be unemployed, being unemployed in Massachusetts is as good as it gets.

Which, of course, makes us a target for fraudsters. But in this, we're not alone. A lots of states have been paying bad actors - no, not Hollywood bad actors: bad people - who are taking advantage of everything being automated to collect in someone else's name. 

The U.S. Justice Department is investigating unemployment fraud by “transnational criminal organizations [that would be China, Russia and Nigeria], sophisticated domestic actors, and individuals across the United States,” said Joshua Stueve, a spokesman for the department's criminal division.

The Labor Department inspector general’s office estimates that more than $63 billion has been paid out improperly through fraud or errors — roughly 10% of the total amount paid under coronavirus pandemic-related unemployment programs since March...

California has been the biggest target, with an estimated $11 billion in fraudulent payments and an additional $19 billion in suspect accounts. Colorado has paid out nearly as much to scammers — an estimated $6.5 billion — as it has to people who filed legitimate unemployment claims.

Other estimates, according to AP reporting across the states, range from several hundred thousand dollars in smaller states such as Alaska and Wyoming to hundreds of millions in more populous states such as Massachusetts and Ohio. (Source: Boston Globe)

Bad enough these fraudsters are stealing from the states (and us taxpayers, which includes those collecting unemployment benefits, since those benefits are taxable), they're screwing up the claims of those in need. And they're screwing up those whose identities were used, who're getting hit with tax bills and, in some cases, bills for the entire amount that someone stole in their name. 

The bad guys are taking advantage of the huge increase in applications for unemployment benefits since the pandemic struck, and the "antiquated benefit systems that are easy prey for crafty and persistent criminals."

The magnitude of the fraud is staggering. In some states, it's estimated that two-thirds of claims some weeks have been suspicious. The problem is exacerbated in some states by their having allowed freelancers and gig workers to apply for benefits. Traditionally, you had to have been employed by an organization that paid into the unemployment system in order to qualify. Harder to verify freelance gigs. But not impossible, at least if they've been paying their taxes. 

The Department of Labor has a data exchange that helps sift through and figure out if people are applying in multiple states, or applying while dead. (One Social Security number was used in 40 states, 29 of which paid out a combined total of $220K. Not bad for a day's non-work.) But fewer than half of the states are using it. Not clear whether Massachusetts takes part in the exchange. Maybe if we were, we wouldn't have been mentioned in the article as a state that has been hard hit. If Massachusetts isn't part of this group, they probably should be. Maybe the incoming Secretary of Labor, Boston boy Marty Walsh, can put in a word. (Are you listening, Mahty?)

In its own survey of state governments, the AP found that many are not publicly disclosing the level of fraud. Some officials expressed concern that providing any information, no matter how general, could provide criminals an opening to exploit their systems further.

President Joe Biden's administration is pledging to cut down on unemployment fraud even as it tries to extend benefits through September. As part of previous legislation, the administration is sending states $200 million to fight it.

There are a ton of folks out there who could use some help. The billions being scammed on unemployment should be going to them, not to the scam artists. 

It looks like a better way of verifying information - as in through the Department of Labor system - would be a good place to start. And hiring more people to evaluate applications, as opposed to having everything go through "the system." That would both help provide at least temporary employment AND help stop fraud. And then there's this: maybe the initial signup for unemployment should require a human being to show up in person. Admittedly, this would be difficult during a pandemic when we want everyone to stay put. 

Still, it's probably worth looking at reinstituting a face-to-face, or mask-to-mask through plexiglass, sign up process. Let's face it, it would be difficult for someone from China, Russia, or Nigeria to stand in line at the Hurley Building to sign up for unemployment.