New York Stops More Than 42,000 Fraudulent Unemployment Claims Worth $1B During Pandemic

When the COVID-19 pandemic forced businesses to close around the country, millions filed for unemployment benefits. While the majority of these claims were necessary in order to pay bills, some people in New York State tried to take advantage of the system. The result was more than 42,000 fraudulent claims amid the pandemic.

According to the New York State Department of Labor, the 42,000 claims totaled more than $1 billion. The organization also announced that it had sent more fraud cases to federal prosecutors in the last five months than in the previous 10 years. Additionally, Gov. Andrew Cuomo's office announced that these claims have come since March. However, many fraudulent claims occurred as part of stolen identity cases.

"Unfortunately, we have to fight unemployment fraud every day — not just during pandemics — but attempting to defraud the government during a global public health emergency when millions are filing legitimate claims for benefits is particularly shameful," said New York State Labor Commissioner Roberta Reardon. "These scammers have been stealing hardworking New Yorkers' identities for years waiting to strike, but we will not let them succeed."

Officials explained that the cases occurred after previous data breaches. Criminals attempted to file for unemployment benefits using the names of people who are currently working. While the Department of Labor was able to shut down the claims, it did force the postponement of payments to those truly out of work.

According to WLWT, the state of Ohio faced similar issues amid the pandemic. A reported 270,000 fraudulent claims hit the system and targeted the federally funded Pandemic Unemployment Assistance Program. The result was as much as $200 million per week in payments to fraudulent accounts.

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The Ohio Department of Jobs and Family Services did not have a concrete date for when the fraudulent claims began. However, it noticed an increase in potential fraud in early July. The ODJFS then placed fraud holds on an estimated 270,000 cases after noticing several indicators of fraud. This included accounts connected to deceased individuals and invalid email addresses.

"There's an inherent vulnerability with the PUA system, because it's a catch-all, kind of a net system, and it does not have all of the checks and balances that our regular unemployment system does," ODJFS Director Kimberly Hall said. "We created a brand new system in 26 days. ... It will have vulnerabilities that you discover over time and that you just have to tweak and shore up over time."