A wave of attempted fraud is hitting state unemployment aid programs after they struggled to process record-high claims from layoffs during the coronavirus pandemic, reports the Wall Street Journal. States including California, Louisiana, Illinois and Maryland have collectively received millions of unemployment insurance requests that officials believe to be tied to fraud, with losses in the billions of dollars. More than $500 billion in regular and pandemic-related unemployment aid has been distributed so far. More is coming, including a new round of enhanced benefits worth $300 a week included in a pandemic stimulus package passed by Congress. “The sheer generosity of the federal programs made them targets for criminal enterprises at a time that states lacked the resources, the computers,” said Labor Secretary Eugene Scalia.
Bank of America, which manages prepaid unemployment debit cards for most Californians, says the state asked it to freeze 345,000 accounts over fraud concerns. Unemployment insurance systems are run through a patchwork of state-run programs where fraud has “dramatically increased during the pandemic,” a U.S. Labor Department spokeswoman said. Criminals often use stolen Social Security numbers, birth dates and other personal information to apply for benefits. Illinois has detected and blocked 341,000 fraudulent claims during the pandemic. Michigan has fielded more than 190,000 reports since March. Victims in Maryland include Gov. Larry Hogan and several of his top deputies. In California, prosecutors say the state paid out tens of thousands of claims in the name of prison inmates, and expect losses from that scheme alone to total billions of dollars.