Fraudulent claims plague Colorado’s Pandemic Unemployment Assistance program

A relentless stream of fraudulent claims is swamping Colorado’s Pandemic Unemployment Assistance program, which provides federal unemployment benefits to self-employed and contractor workers who have lost income.

On a good day, the Colorado Department of Labor and Employment (CDLE) may only have to block 30% of initial claims for PUA, but on a bad day, as many as half of the claims coming in are flagged as suspicious and rejected, said Jeff Fitzgerald, director of the state’s unemployment insurance program, during a news conference on Thursday morning.

And as bad as that may sound, Colorado is actually doing better than others in catching bogus applications for benefits, Fitzgerald said, noting almost every state is wrestling with the problem.

PUA launched in late April to help self-employed workers, who were excluded from receiving benefits in the past because they don’t pay unemployment insurance premiums. The program, however, lacks the safeguards available in the traditional unemployment system, where the relationship between workers and employers serves a check on fraud. The state can see what wages an employee earned and when they were paid. Employers, who are on the hook for premiums, also contest claims they don’t agree with.

But the PUA is based on self-attestation. Some self-employed workers might puff their incomes, a form of fraud. But scammers take it to another level, spinning claims out of thin air in an effort to capture the extra $600 a week the CARES Act provided for income losses from February through the end of July.

Initially, a scammer could make one big claim for several weeks of backdated income, raking in thousands of dollars if successful. The state limited payouts to one week at a time and screened out-of-state claims more closely. In recent weeks, the fraud has shifted to using the stolen identities of Colorado residents.

A growing number of people who never filed an unemployment claim are now receiving multiple ReliaCards, the debit cards loaded with unemployment insurance benefits.

“We have seen a greater reporting of people who are not receiving one or two, but several ReliaCards in the mail,” said Cher Haavind, deputy director of the CDLE.

Someone who receives an unrequested ReliaCard has had their personal information compromised, likely in one of the multiple large security breaches in the past, and needs to take action immediately, Haavind said.

First, they should call the number on the back of the card to have it deactivated and report the fraud on a form available on the CDLE’s website.

They should then notify all three credit reporting agencies that their identity has been compromised, file a report with local law enforcement. and register with the Federal Trade Commissions website Haavind said it is important that everything gets documented.

Crime rings are filing claims in multiple states, looking for weak spots. Colorado this week will be able to put data directly into the Suspicious Actor Repository, a national database workforce agencies across the country use to catch fraud. Before, the state had to enter the information on suspicious applications manually.

“It will provide us real-time hits. That will help us to take action quickly or deny a claim from going through,” Fitzgerald said. That state has also hired more fraud investigators to deal with the problem, Haavind said.

Of the 310,912 continuing unemployment claims in the state in the week ending July 25, 74,905 involved PUA, according to the CDLE. That works out to a ratio of one PUA claim for every four traditional claims. But of the initial claims filed last week, 7,138 were regular unemployment claims, while 7,585 were PUA, not including the claims flagged as fraudulent and stopped.

Source: Read Full Article