PHOENIX (AP) – Scammers were able to pocket nearly 30% of the $ 16 billion in unemployment insurance payments Arizona sent since the start of the coronavirus pandemic, the agency director said on Thursday. State supervising the program.
Most of the fraud occurred in the first few months of the pandemic and primarily affected federally funded emergency unemployment insurance programs. These programs were designed to help people who would not normally be eligible for assistance because they had contract jobs or were so-called “stage workers” such as Uber drivers. Their employers generally do not contribute to the unemployment insurance system.
The amount lost to fraud is between $ 4.3 billion and $ 4.4 billion, said Michael Wisehart, director of the Department of Economic Security. Most of this money is probably lost forever as it was embezzled by foreign or foreign crooks who took advantage of the lack of identity verification at the start of the program.
The state was able to recover the $ 1.4 billion it paid out, Wisehart said. And the fraud prevention systems put in place by the state in the summer of 2020 have prevented more than $ 75 billion in additional fraudulent payments, he said.
The state was able to put more than $ 10 billion in the hands of workers and their families who were devastated by the massive job losses that occurred at the start of the pandemic, Wisehart said. This is a major achievement, as Arizona has seen a massive increase in jobless claims that has exceeded the capacity to process them.
“I feel horrible for the taxpayer, for myself as a taxpayer, for all taxpayers, that this has happened,” Wisehart said of the loss due to the fraud. “But I’ll tell you, I would be a lot angrier with myself and us if it was 2021 and it extended beyond the first two or three months of the pandemic where it was real chaos.”
Pandemic unemployment fraud isn’t just Arizona’s problem. The Office of the Inspector General of the US Department of Labor estimated in June states will have unduly paid more than $ 87 billion of the $ 873 billion in special COVID-19 unemployment benefits by the end of September 6.
Arizona’s 27% loss rate far exceeds the national estimate. And it’s way above that of California, the biggest target in part because it’s the most populous state in the country with nearly 40 million people.
California made around $ 11 billion in fraudulent payments and an additional $ 19 billion was sent to suspicious accounts. An Associated Press review of state losses for a March 1 article have shown that they range from several hundred thousand dollars in small states like Alaska and Wyoming to hundreds of millions in more populous states like Massachusetts and Ohio.
In addition to defrauding taxpayers, fraud has prevented legitimate payments and turned thousands of Americans into unwitting victims of identity theft. Many states have failed to adequately protect their systems, and the PA review found that some states would not publicly recognize the extent of the problem.
This was the case before Thursday in Arizona. Gov. Doug Ducey’s office and the State Department of Economic Security had refused to provide a figure for losses due to fraud, saying the figures were not available,
Yet Wisehart knew as early as last summer that hundreds of thousands of fraudulent claims were being made. He said last September that the agency was keeping up to 900,000 claims due to suspected fraud.
Wisehart said in an interview on Thursday that the agency was struggling after the pandemic to implement the new emergency unemployment program. In February 2020, less than 20,000 people were unemployed. As of July 2020, more than 200,000 were regularly unemployed and nearly 300,000 people were receiving the special wage for concert workers.
The state agency ended up hiring more than 2,500 workers for a new call center and processing jobs and creating a new filing portal for the Pandemic Unemployment Assistance Program .
Federal program rules stipulated that unemployed people only had to self-certify that they were eligible and that states were not able to delay payments to verify their identity and eligibility. When the additional $ 600 per week of federal benefits under a coronavirus relief program ended in late July, Arizona was for a time the only state approved to offer an additional $ 300 per week in the part of an interim Trump administration program.
This made Arizona a target, Wisehart said. Almost 3 million weekly unemployment certificates were filed per week, more than the size of the state’s workforce. Massive and continuous fraud was evident, he said.
Arizona then implemented new identity verification programs using an outside contractor and began using Google Analytics to target fraudulent claims. They also suspended the possibility of filing retroactive complaints.
It mostly worked, but the damage was done.
Wisehart said the state’s measures did not eliminate the crooks, but were a big improvement. They are now targeting people whose identity has been certified by the state for identity theft so that they can obtain benefits.
“Scammers are going to keep evolving, they’re going to keep getting smarter, and we’re going to have to keep working nationally to prevent this from continuing to be a pervasive problem,” Wisehart said.