ALBANY — State Comptroller Thomas DiNapoli’s office is delving into how scammers managed to garner unemployment payments by using Social Security numbers and other identifying information stolen from New Yorkers.
The wave of identity thefts tapping the state unemployment insurance fund is also prompting lawmakers to insist the state Labor Department provide a full accounting of how much money has been looted by swindlers posing as people laid off during the pandemic.
‘THIS IS IDENTITY THEFT’
Both the brisk pace of the fraudulent filings and the financial hit to the unemployment system are “outrageous,” said state Sen. Dan Stec, R-Queensbury.
He said his office has received a raft of complaints from constituents who found out after the fact that strangers had used their names to make fraudulent claims for jobless benefits.
“These people are understandably concerned because this is identity theft,” said Stec.
Stec and other Senate Republicans are calling for a forensic audit of the state’s information technology systems, with an eye towards updating it so it can better deal with surges in unemployment filings and bogus claims.
“The system, from the start of the pandemic, has been riddled with problems and my concern is that, similar to the nursing home cover-up, there’s a political motivation to withhold information,” Stec said.
Matthew Ryan, a spokesman for DiNapoli’s office, said auditors are examining the controls and security at the unemployment insurance system. “It was initiated based on our assessment of the risk which includes complaints, large increases in payments, new programs and criteria and changes to the IT (information technology),” he said.
CAN’T TALK SPECIFICS
At the Department of Labor, the agency which issues jobless benefits, staffers are using artificial intelligence and other “advanced resources” to counter fraudulent claims for payments, according to Roberta Reardon, the state labor commissioner.
The agency has already homed in on 1.1 million fraudulent claims, preventing thieves from pocketing $12.3 billion in benefits, said agency spokeswoman Deanna Cohen.
“We aren’t able to talk about the specifics of the investigation process or give details about cases, as it may provide a roadmap to fraudsters,” Cohen said.
But she noted the labor agency “has a rigorous application and screening process to weed out ineligible or fraudulent claims, including checks by multiple state agencies.”
Stec noted some upstate businesses are getting socked with hefty increases in their unemployment insurance tax obligations, with those bills doubling in some cases.
Cohen said employers will face no harm from payments stemming from fraudulent claims. Fraud has no impact on the employers’ unemployment experience rating, she noted.
Unemployment fraud has been a nettlesome problem for state governments throughout the nation, with scammers seeking to take advantage of an infusion of funding by way of the Pandemic Unemployment Assistance program.
In some cases, claims were made in the names of people who never filed for benefits, and in other cases the filings were sent in using identities of people who have been laid off.
In March, the U.S. Labor Department’s Office of Inspector General reported that at least $89 billion of $896 billion in unemployment funds “could be paid improperly, with a significant portion attributable to fraud.”
ID.me, a company that works with the New York labor agency and 21 other state governments to verify unemployment claims, estimates the total amount of fraud nationally could be as much as $300 billion.
State Labor Department officials are urging the public to report suspicious activity regarding unemployment claims.
The scam artists are suspected of having breached the computer systems of the victims’ financial institutions or employers rather than having hacked into the state agency’s system, they said.
Joe Mahoney covers the New York Statehouse for CNHI’s newspapers and websites. Reach him at firstname.lastname@example.org