Twenty-four states are facing potential audits and penalties after the U.S. Department of Labor revealed that millions of dollars in unemployment benefits have been paid to people who never actually applied.
Why it matters
The Department of Labor is warning states that they’ll be held accountable for letting unemployment scammers get away with tens of millions of dollars in benefits.
The warning comes after an investigation found that 24 states – including California, Florida, and Texas – were particularly vulnerable to scams that used stolen identities to claim benefits.
According to the investigation, these states were often plagued by inadequate controls and a lack of coordination between different government agencies.
What’s behind the surge in unemployment scams
Pandemic-era unemployment programs, expanded to support millions of workers who lost their jobs, have created a fertile ground for scammers to exploit.
Scammers are using stolen identities and fake Social Security numbers to file claims for benefits, often through online portals or by phone.
Once a claim is approved, the scammers can then collect the benefits and deposit them into their own bank accounts, often using prepaid debit cards or bank accounts that have been compromised.
The Department of Labor estimates that at least $3 billion in unemployment benefits have been lost to scams since the start of the pandemic.
Action needed
The Department of Labor is telling states that they need to take immediate action to combat these scams, including implementing stronger controls and sharing information with other agencies to prevent scammers from exploiting vulnerabilities.
States that fail to take action could face penalties, including loss of federal funding and even lawsuits.
What this means for you: if you’re a state employee responsible for overseeing unemployment benefits, this is a wake-up call to take action to prevent fraud and protect taxpayer dollars.
And if you’re an unemployed worker, this is a reminder to be vigilant about protecting your identity and reporting any suspicious activity related to your benefits claims.
