Up to half of US unemployment benefits over the past year may have gone to fraudsters, a theft that could top $400 billion, reports Axios’ Felix Salmon. Even if the real figure is a third of that, it’s a scandal for the ages and a sign that Congress didn’t think things through when it made jobless payments the central form of COVID relief.
The state agencies that handle applications for unemployment payments weren’t remotely ready: Filings had been under 300,000 a week for the whole country before the lockdowns started, but spiked above 6 million the first week of April 2020 and didn’t drop below 1 million until August.
That led to a drop in security for validating claims. Plus, since eligibility was widened to include the self-employed, and independent contracts and benefits were extended indefinitely, it suddenly became far more attractive for fraudsters to move in.
Salmon’s sources might be overestimating the fraud (the ones that went on the record are with companies that sell fraud-prevention services), but it’s certainly true that filings greatly exceeded Wall Street expectations early on. Plus, he reports that unemployment-fraud software is now for sale on the dark Web, while one expert suggests that two-thirds of the stolen cash went to overseas crime syndicates based in nations like China, Nigeria and Russia.
Question is: Can Washington and the states bolster ID-verification and eligibility checks going forward, to ensure nothing similar ever happens again?