Updated: March 01, 2021 06:21 PM
Created: March 01, 2021 06:00 PM
ROCHESTER, N.Y. (WHEC) — Unemployment identity theft is a huge problem in New York State and across the country right now.
Scammers are using stolen personal information to collect billions of dollars in benefits. The U.S. Labor Department inspector general's office estimates that more than $63 billion has been paid out improperly through fraud or errors across the country during the pandemic.
As News10NBC Investigative Reporter Jennifer Lewke has been reporting, the New York State Department of Labor refuses to disclose how much money has made it out the door and into the hands of scammers calling into question whether the state’s system for catching this fraud, is putting up much of a fight.
Scammers are using stolen Social Security numbers, that were likely breached years ago, to file unemployment claims and often folks don’t even know they are a victim until the Department of Labor has paid the scammer thousands of dollars in benefits. News10NBC has spoken with dozens of people who learned months later that someone collected $10,000-$20,000 in benefits in their names.
The issue is starting to crush the HR departments at businesses and school districts across the state too.
“Right now, there’s at least $15,000-$20,000 in my company that has been paid out in fraudulent claims to date and I don't know when this is going to end,” said Becky, the Vice President of medium-sized electric company in Rochester.
Typically, when an employee files for traditional unemployment, the Department of Labor sends a notice to his/her previous employer giving them 10 days to respond or dispute a claim.
“Every single one that I've gotten that has been fraudulent, that has been filed by someone, not one of my employees but in the name of one of my employees, it's been three months before I get anything,” Becky told News10NBC.
By then, she couldn’t stop them because the Department of Labor had already paid the claims.
“If every company has that, every company my size has that and the bigger ones have God knows how many I mean the dollar amount is staggering,” Becky said.
The NYS Department of Labor will only say that it has stopped $6.4 billion in fraudulent claims, it will not tell News10NBC how much has been paid in claims that have later been flagged as fraud. The problem appears big enough though that the DOL Commissioner recently issued a memo to all businesses and organizations saying that the annual unemployment insurance rates they pay, will not be impacted by any claims made against them during the pandemic.
“The unemployment division realizes that they have a monster here no question about it and they did the right thing because as an employer I should not be on the hook for all these fraudulent claims and they realize that they haven't done a good job,” Becky said.
In the memo, Commissioner Roberta Reardon goes on to say that the “general account” will cover the losses, “I'm not sure what general fund they're paying this out of but you can bet that whatever fund it is we're all paying for it out of our taxpayer dollars,” Becky said.
Traditionally, the unemployment system in New York is funded by employers who pay into it. When asked whether the fund could sustain this massive amount of fraud, a spokeswoman for NYSDOL refused to answer. Taxpayers are also kicking in billions of dollars to fund Pandemic Unemployment Assistance programs that are rife with fraud.
In a statement to News10NBC, NYSDOL Spokeswoman Deanna Cohen said, "The New York State Department of Labor has a rigorous application and screening process to weed out fraudulent claims, including checks by multiple government agencies and multiple opportunities for business owners to dispute incorrect information. Unemployment benefits are a lifeline for New Yorkers who lose their jobs, and it is unacceptable that dishonest individuals would seek to defraud the system for their own gain. Make no mistake: attempting to cheat the unemployment system is a crime, and we investigate all reports of fraud to hold perpetrators accountable.”
When pushed further on the timeliness of those checks, Cohen would only say if it turns out to be fraud, the company is not liable. She also refused to answer a number of questions News10NBC followed-up with.
If you believe you have been the victim of Unemployment Identity Theft:
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