Auditor launches unemployment benefit fraud review after $500m falsely paid out

12 Jun 20

A wave of fraudulent unemployment-benefit claims has led the state audit office in Washington to launch a review into the US state government’s Employment Security Department.

 

More than $500m of public money has been wrongly paid out during the crisis, of which only $333m has been recovered, according to official estimates.

This represents around 10% of the $4.9bn in benefits the ESD has paid out since the week ending 7 March.

The department has cited ‘imposter fraud’, where an individual uses stolen personal information to apply for the benefits, as the main method of fraud – stressing the information was obtained outside the agency. Officials have repeatedly stressed there has been no data breach, and claim this type of fraud is a problem across the US.

They also say they began redeploying staff to the fraud hotline and hired fraud investigators to investigate claims as soon as the problem was uncovered in the mid-May, and also began delaying payments to allow for more time to validate claims.

Although the department believes further bogus claims have now been halted – claims fell by 77% in the two weeks following the measures’ introduction – around 35,000 claims are still to be adjudicated.

The audit will review two areas: a performance audit examining the factors that led to delayed and improper payments; and an IT audit to examine potential weaknesses in systems.

“We welcome this opportunity, both in the spirit of continuous improvement and, most importantly, in our primary charge to provide ever-better service to the people of Washington,” said Employment Security Department commissioner Suzi LeVine.

“We believe that the key learnings from this audit will help not just ESD but all of state government.”

State auditor Pat McCarthy said she recognises that these problems came at “the worst possible time”, during “unprecedented” demand on benefits.

“I know the Employment Security Department is working hard to deliver benefits to people who need them, help law enforcement track down the criminals who stole funds and recover lost funds,” she said.

“Beyond the immediate crisis, however, there are clearly lessons to be learned, and we intend to bring them to light.”

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