California: Criminal Rings Loot Billions In Unemployment Funds
LOS ANGELES (AP/CBS13) — California officials say hackers, identity thieves and overseas criminal rings stole an estimated $11.4 billion in unemployment benefits last year.
But the extent of the fraud might grow far larger: billions more in jobless payments are under investigation. The Employment Development Department said Monday that 17% of payments made between March 2020 and Jan. 16, 2021, have been flagged as potentially fraudulent.
California Labor Secretary Julie Su told reporters in a conference call Monday that of the $114 billion the state has paid in unemployment claims during that time, about 10% has been confirmed as fraudulent.
READ MORE: CBS13 Investigates: EDD Identity Theft Concerns
Su says the state did not have sufficient security measures in place and criminals took advantage of the gaps. Since the pandemic began, the EDD says it experienced more than five times more claims than in 2010, the worst full year of the Great Recession.
New security protections implemented last fall prevented nearly $60 billion in payments to fraudulent claims, EDD said. The agency began using ID.me to verify claimants' identities in an effort to make the process more efficient and decrease fraud.
Last month, ID.me's CEO Blake Hall told CBS13 more than one-third of the initial online claims they've processed in California have been fraudulent.
The ID.me system was supposed to decrease fraud and the EDD backlog by reducing manual identity verification and automatically verifying 90% of legitimate applicants. Instead, the backlog of initial unemployment claims nearly doubled in a month from a low of under 200,000 in mid-November to more than 400,000 by mid-December.
Hall estimated ID.me prevented more than 3.5 billion in fraudulent claims in just the past three months.
ID.me is currently processing claims in 12 states and Hall says California accounts for 75% of all unemployment fraud they've uncovered nationwide.
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