State unsure how much fraudsters got in fake unemployment claims

Published: May. 3, 2021 at 5:04 PM EDT|Updated: May. 4, 2021 at 5:59 AM EDT
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MONTPELIER, Vt. (WCAX) - What are state leaders doing to crack down on the rash of phony unemployment claims in Vermont? Leaders say the surge in job losses during the pandemic has made it worse but it’s still unclear how much money has been lost to fake claims.

Nearly 90% of initial unemployment claims filed with the Vermont Department of Labor were flagged as being fraudulent.

Peg Doolin is the business manager at WCAX-TV.

Recently, she got a packet in the mail from the labor department outlining the next steps for applying for unemployment benefits. But Doolin never applied; it was someone filing using her personal information.

“I was surprised that I received it because I’ve been employed here for 40 years and didn’t think that I’ve been unemployed,” Doolin said.

Doolin is one of many Vermonters caught up in schemes aimed at defrauding the unemployment system. Vermont and other states have seen a rash of similar cases since the pandemic drove thousands into the unemployment line.

To work through the crush of claims, states have had to automate some identity checks, meaning the state loses “the intuitiveness, the insightfulness, the decision-making of a human being,” according to Vt. Labor Commissioner Michael Harrington.

The problem reached a tipping point last week when the state determined 90% of claims were fraudulent.

The state then took its initial UI application offline, meaning you’ll have to place a claim over the phone.

But it’s unclear how much money the state has paid out in fraudulent claims and has spent on mailers like the one Doolin received.

“I could also say that had we not done anything and not stopped this claim, it could have paid out tens of thousands or hundreds of thousands over multiple claims,” Harrington said.

Labor says the spike is not linked to internal issues, such as when the state sent out thousands of 1099-Gs to the wrong people.

Instead, it says it’s perpetrated by people across the globe cashing in on personal information bought on the dark web as far back as a decade ago.

“Right now, I hate to say it but it seems like it’s going to be a fact of life now,” said George Silowash, an IT and cybersecurity expert at Norwich University.

Silowash has been tracking the rash of fraud across states since the pandemic broke out.

With Vermonters more reliant on computers for banking, shopping and travel, Silowash said: “Right now we have to rely on all of these other databases to have records of us. Oftentimes, these organizations... rely on a third party that has collected data on us.”

But he says whether it’s fraud within the labor department or on your credit card, it boils down to the need for more ways to prove you are who you say you are.

If you suspect that you’re a victim of fraud, the state says you can submit an online fraud report or by contacting the UI Fraud Tip Line at 802-828-4104.

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