Security & Fraud

Fraudsters May Pocket $26B In Jobless Benefits

U.S. Labor Department sees $26B of fraud from jobless benefits

As much as $26 billion in unemployment benefits in the United States is either being taken by fraudsters or improperly made for one reason or another, a top federal government watchdog estimates.

Scott Dahl, the inspector general (IG) of the U.S. Department of Labor, recently offered the sobering statistic at a hearing before the House of Representative’s Subcommittee on Government Operations.

The estimate is based on a 10 percent fraud and abuse rate applied to the $260 billion expansion in jobless benefits under the federal, multitrillion-dollar economic rescue package, also known as the CARES Act, the Labor Department IG noted.

And that number may even be higher, based on a 10 percent fraud and abuse rate typical even “during the best of times,” Dahl told members of the House Committee, adding pointedly, “and we are in the worst of times.”

In order to divert unemployment payments into their hands, cybercriminals and other fraudsters are stealing the identities of a range of taxpayers, including workers battling on the frontlines in the struggle to contain COVID-19, Dahl said.

Dahl said his department is currently probing the fraudulent use of the identities of more than 36 different frontline healthcare workers to apply for unemployment benefits.

But that case is just a drop in the bucket in an ocean of potential fraud, with Dahl noting, in his written remarks, that his department is now investigating over 300 cases of potential unemployment insurance fraud.

Key issues plaguing both the U.S. Department of Labor and its counterparts on the state level across the country are “inadequate state staffing and outdated IT systems,” Dahl told members of the House Subcommittee on Government Operations.

Self-certification by self-employed and gig workers, who are eligible for jobless benefits for the first time under the CARES Act, is another area of vulnerability, Dahl said, noting an alert had been sent out to state employment officials across the country.

“The enormous expansion of UI benefits by more than 260 billion dollars under the CARES Act also substantially increases fraud risk, with criminals easily exploiting system vulnerabilities,” Dahl said

The U.S. Cares Act also included the Paycheck Protection Program (PPP) to help businesses, along with stimulus payments for Americans — $1,200 for individuals, $2,400 for couples and $500 per child. The payments came by way of direct deposits, paper checks and debit cards.

——————————

PYMNTS STUDY: THE CROSS-BORDER MERCHANT FRICTION INDEX – JUNE 2020

The PYMNTS Cross-Border Merchant Friction Index analyzes the key friction points experienced by consumers browsing, shopping and paying for purchases on international eCommerce sites. PYMNTS examined the checkout processes of 266 B2B and B2C eCommerce sites across 12 industries and operating from locations across Europe and the United States to provide a comprehensive overview of their checkout offerings.

TRENDING RIGHT NOW