Half of the pandemic's unemployment money may have been stolen
S E E D E D C O N T E N T
Criminals may have stolen as much as half of the unemployment benefits the U.S. has been pumping out over the past year, some experts say.
Why it matters: Unemployment fraud during the pandemic could easily reach $400 billion, according to some estimates, and the bulk of the money likely ended in the hands of foreign crime syndicates — making this not just theft, but a matter of national security.
Catch up quick: When the pandemic hit, states weren't prepared for the unprecedented wave of unemployment claims they were about to face.
- They all knew fraud was inevitable, but decided getting the money out to people who desperately needed it was more important than laboriously making sure all of them were genuine.
By the numbers: Blake Hall, CEO of ID.me, a service that tries to prevent this kind of fraud, tells Axios that America has lost more than $400 billion to fraudulent claims. As much as 50% of all unemployment monies might have been stolen, he says.
- Haywood Talcove, the CEO of LexisNexis Risk Solutions, estimates that at least 70% of the money stolen by impostors ultimately left the country, much of it ending up in the hands of criminal syndicates in China, Nigeria, Russia and elsewhere.
- "These groups are definitely backed by the state," Talcove tells Axios.
- Much of the rest of the money was stolen by street gangs domestically, who have made up a greater share of the fraudsters in recent months.
What they're saying: "Widespread fraud at the state level in pandemic unemployment insurance during the previous Administration is one of the most serious challenges we inherited," said White House economist Gene Sperling.
- "President Biden has been clear that this type of activity from criminal syndicates is despicable and unacceptable. It is why we passed $2 billion for UI modernizations in the American Rescue Plan, instituted a Department of Justice Anti-Fraud Task Force and an all-of-government Identity Theft and Public Benefits Initiative."
How it works: Scammers often steal personal information and use it to impersonate claimants. Other groups trick individuals into voluntarily handing over their personal information.
- "Mules" — low-level criminals — are given debit cards and asked to withdraw money from ATMs. That money then gets transferred abroad, often via bitcoin.
The big picture: Before the pandemic, unemployment claims were relatively rare, and generally lasted for such short amounts of time that international criminal syndicates didn't view them as a lucrative target.
- After unemployment insurance became the primary vehicle by which the U.S. government tried to keep the economy afloat, however, all that changed.
- Unemployment became where the big money was — and was also being run by bureaucrats who weren't as quick to crack down on criminals as private companies normally are.
- Unemployment fraud is now offered on the dark web on a software-as-a-service basis, much like ransomware. States without fraud-detection services are naturally targeted the most.
The bottom line: Many states are now getting more sophisticated about preventing this kind of fraud. But it's far too late.
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Does anyone care?
Those that represent us should; but they expect this kind of fraud and criminal activity. It is the reason the bills passed are so damn large. Considering just in April they handed out 48 billion in unemployment benefits alone; guess they feel 400 billion over the course of what they handed out for the pandemic is acceptable.
Sad thing is, from what I heard in a news report on the way to work today, there was indications early and it was almost as Vic's question was the norm. They knew there was fraud but did they care? My guess would be hell no. They had an agenda to cushion the American people and if they had stopped in the middle, they wouldn't have had near the praises for their "thinking of the working class". Guess it didn't matter the cost.
How should we care?
I suppose we could outlaw bitcoin.
Yes John, we should care about waste, fraud, and theft of tax payer money.
Guess asking those that represent us to care is just too damn hard.
I assume the bulk of this fraud took place during the Trump administration. Trump was just as eager as the Democrats were to get the unemployment money out to the people. He thought it would help him in the election, just as the Democrats do now that they are in the White House.
I am sure the government enforcement was inept, but it is better to spend too much than not provide the unemployment payments at all.
The US government in general has always been too easy on white collar crime, which is what fraud is.
I do but our government doesn't seem to. Part of the problem is the online signups, then there's the direct deposits. Fraud will always happen but in person signups and mailed checks stop the large scale fraud, high tech criminal gangs need volume to make it worth while and online signups and direct deposits make that possible. We could stop much of this fraud. I'd rather spend a billion giving honest people jobs signing people up and verifying payments than give it to criminals. Our first line of defense should be our Mail Men/Women, my mailman could verify 98% of the people on his route right off the top of his head and he could red flag new addressees just as fast. Our postal service could verify 90% of Americans as living at an address more than three years and receiving other mail like gas/electric bills at that address. Even online applications for unemployment could be verified and secured if after applying online you got a code and had to go to a local location in person and submit your code, show your ID and have yourself and your ID photographed at a walk up window and swear the application is yours. It would take one minute and put foreign fraudsters out of business and would be less risky (Flu Wise) than going to the store and we could have made other accommodations for high risk and elderly folks.
This is why important things should be done in person
Like voting.....................................yep
If they could steal money and hack pipelines then they can steal votes
You are the 3rd person to seed this article, can we get a 4th?
No, not the ones who need to care. Politicians. The left only cared about being seen as being benevolent and caring. They didn't care beyond that. The right wants to use things like this to beat the left over the head with and don't care beyond that.
It isn't about doing what's right any more. It's about how can they get the cattle to stampede in the desired direction.
it's not their first rodeo, nor mine, as i've never been to a rodeo, but when or if i ever do, it will be my first rodeo. Very accurate post in my humble opine box of cars
A private company would not let this happen. Why is our government so inept?
Medicare and Medicaid fraud costs are extremely excessive also.
Because a private company cares about the bottom line; making money. A loss like that and they would have investors, board members, stock holders, and not to mention the US government after them.
Politicians don't give a damn about the loss because it doesn't affect the directly. They can always raise taxes, redirect (read steal) funds from somewhere else, or just print more damn money. So long as the money keeps flowing they think no one will give a damn.
What??!!????
Would you care to show that fraud has never happened to private companies?
Didn't 2 private companies just get hacked for multi-millions of dollars! Yeah sure private companies can do so much better - profits over people are always preferred...
Compared to $400 billion...who the hell loses $400 billion?
Under Bush the Pentagon lost a trillion dollars .
So Bush is a private company? Thanks for cementing my point that our government is inept.
But if you read your link, it was the Pentagon that had the problem. Bush was out to fix it.
"the House and Senate are expected to begin floor debate on a Bush administration proposal to make sweeping changes in how the Pentagon spends money, manages contracts and treats civilian employees.
Figures don't lie but liars figure. There were some big liars in that 5 sided building. And it was in 2003 two years into his term. I don't care who you are you can't blow $1T unnoticed in two years so it had to have been going on in the previous administration.
The problem with the government is this type of fraud has been going on for more than a decade. The false online tax returns and direct deposit fraud has cost the IRS billions over the last decade so none of this was unforeseeable in fact it was quite predictable. A private company wouldn't let it happen year after year, they would find a way to stop it even if that meant changing the way they did business.
Did I say that? Nope.
Did your quote, that I included say that? Nope.
So why are you bringing it up now, when it is not part of my comment???
Never denied that.
Agreed, tax fraud committed by wealthy corporations (private business) and individuals.
Ever hear of Bernie Madoff?
Since fraud in government and private companies was brought up it's interesting to know how much fraud in corporations goes on. The FBI has a whole section devoted to Corporate fraud. There is a list of some of the biggest corporate frauds.
The corporations give the government a good run for everyone else's money.
These are internal frauds committed by the employees. I don't think the yahoos in government stole the $400 billion themselves.
Wannacry and all the other ransomware attacks would be by crooks outside the corporation.
Of course, the government money could have been outsiders or a combo of outside and insiders.
I don't see a great difference if the crook is inside or outside the corporation or government. The money is gone.
Well for inside it is planned over many years and not due to incompetence within a few months. Yes the money is gone.
There are many types of fraud being committed but this is a specific type and it's always done a specific way. Criminal Groups file false claims online whether that be a false tax return claiming a refund, unemployment benefits claim, or registering for stimulus checks under fake or assumed names and request the checks be direct deposited into their account. They then transfer the money through online banking out of the country. These criminals never enter the USA and they're filing hundreds of thousands of fraudulent claims and funneling the cash through hundreds of accounts before they cash out. It's almost impossible to catch them or get the money back once it leaves the USA but it's not that hard to stop them from getting their false claims approved in the first place but it will make filing for benefits a little less convenient for honest people.
No surprise a Trump administered program is corrupt!
No surprise that some progressive liberals don't know who administers unemployment payments to individuals.
Also, no surprise whatsoever that TDS has reared its very ugly head once again.