Law Enforcement & Public Security

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States should employ tech tools to protect residents from rash of unemployment fraud now overwhelming them

Matthew Thompson
Senior Vice President, Civil Identity for North America at IDEMIA

Since the COVID-19 pandemic struck, states have been overwhelmed by a surge in unemployment claims. Cybercriminals have taken advantage of the crisis by filing fraudulent claims using stolen identities. This has caused billions of dollars of losses for states and millions of people who filed legitimate claims unable to get payments. On Oct. 14, the state of Maryland joined a long line of states in reporting that more than 82% of their unemployment claims are being investigated as fraudulent. That’s why it’s so critical that state governments invest in better identity verification technology. Thankfully, we have the tools today to solve this issue. 

In Maryland alone, criminals have already stolen more than $500 million. In addition to this lost money, states are having to spend millions to investigate the crimes. Washington state had to call in 54 National Guard troops to help with identity verification. The U.S. Department of Labor awarded the Maryland labor department $2.43 million in September to painstakingly investigate each claim. That is money they could be using on citizen services.  

Of course, investigating individual criminals does nothing to prevent the next criminal from doing the same thing. States have been aware of the problem for months, but due to the antiquated technology they work with, they have no way to stop it, so they are spinning their wheels as criminals continue to steal money unchecked. The government predicts that $26 billion in COVID relief alone eventually could be stolen. 

The only way to break this cycle is to improve the technology used to certify unemployment claims. Both New York and Connecticut’s unemployment systems are more than 40 years old. It’s this outdated technology that has caused delays in payments to people who need it the most during the pandemic. When you were walking around with your Walkman or excited to get your first VCR – that’s when these states first started using these programs. The federal government needs to act quickly by helping states upgrade their systems. 

Requirements vary by state, but today, the way many unemployment claims work online is people are asked to provide personal information such as name, social security number, address etc. The issue is that large troves of this personal data is readily available for purchase on the dark web, making it relatively easy to file a fraudulent claim on behalf of someone else, no sophisticated hacking required. 

To stop this fraud, we need greater safeguards to ensure that the person filing a claim matches the identity of the person on record. IDEMIA’s identity proofing and verification solution (ID&V), solves this need and is already being deployed by state unemployment agencies. States using ID&V require that a person use their smartphone to upload images of their ID (e.g. driver’s license or passport) and then take a selfie to ensure that the image on the ID matches both the selfie and also matches their photo on file at the DMV. The whole process only takes a couple of minutes for the consumer but can drastically reduce fraudulent claims while accelerating the processing of legitimate claims. 

State budgets are under siege as they struggle to address the challenges of COVID, and meanwhile, residents are going without their benefits – they need help now. This is a gap that is being overlooked. Congress should act quickly to fix the problem by funding the long-overdue upgrade to state systems.  

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