LexisNexis: Michigan unemployment agency lost $ 11 billion in fraud | State
(The Center Square) – Michigan believes it is losing $ 8.5 billion unemployment fraud since the start of the COVID-19 pandemic, but the CEO of a fraud prevention firm says that number is closer to $ 11 billion.
Haywood Talcove, CEO of the government group of LexisNexis Risk Solutions, which provides fraud prevention tools to 26 state unemployment programs and America’s top 50 banks, told The Center Square in a Zoom interview that the profiles on the Telegram encrypted messaging app fraudulently sold Michigan. unemployment benefits.
Talcove said such cross-border profiles scammed Michigan’s agency for the unemployed with billions of dollars in less than two years by beating aging systems with thousands of fraudulent claims, bogging down real ones.
In the spring of 2020, fraudsters and real job seekers filed a spike of more than 388,000 claims in one week – 77 times more than an average week before the pandemic – crushing the system. Unemployment Insurance Agency (UIA) approved the majority of claims, including many fraudulent claims.
Criminals from four countries – China, Nigeria, Romania and Russia – used the same devices to make up 85% of federal unemployment fraud in Michigan, Talcove said.
“They are preventing workers at these agencies from doing their jobs,” Talcove said of criminals who abuse current UIA technology.
Talcove describes the unrest as “Cyber Fraud as a Service” sold on Telegram – and once the money is transferred, it’s gone forever. Criminals are attacking states with weak identity verification systems and are now targeting disability insurance and tax programs in California, Georgia, Michigan and New Jersey.
“We saw a device used in Michigan claiming 34,000 benefits and receiving them,” Talcove said.
In “one millisecond”, LexisNexis technology verifies identity by comparing the device to a global database of “bad computers” associated with fraud, uses email analysis to track previous usage, the creation date, longitude and latitude of the device, then tests the submitted information against public records to combat identity fraud.
Talcove said the technology can reduce a pool of hundreds of thousands of total claims to about 300 actual people, allowing it to pay benefits quickly.
“You cannot set up a system that actually denies legitimate individuals or tortures them to gain a benefit to which they are entitled,” Talcove said.
Governor Gretchen Whitmer established the Unemployment Insurance Fraud Response Team as part of a public-private partnership to end fraud and directed the agency to update IT.
the intervention force launched by Attorney General Dana Nessel has charged more than 50 Michiganders with stealing millions of dollars in unemployment insurance fraud and nine have pleaded guilty or have been sentenced, with 37 cases pending.
“It is extremely important that we continue to fend off bad actors who seek to enjoy a vital safety net for unemployed Michiganders,” Whitmer said in a statement.
A new Deloitte report discovered that the UIA prevented nearly $ 43.7 billion in impostor fraud and between October 3, 2020 and September 30, 2021, reduced the payment of fraudulent cases to 0.57%, an “unprecedented number “for unemployment insurance fraud,” said Talcove. He noted that the federal unemployment insurance inappropriate payment rate has climbed to 18.71% from July 2020 to June 2021, and the DOL valued Michigan’s UI rate for improper payment from July 2017 to June 2020 was 35%.
The Deloitte report found that less than 3% of total funds disbursed for fraud came from the state UI trust fund, with the majority of frauds coming from the federal UI fund.
“Our diligence in identifying fraudulent claims proves that we now have effective processes in place to identify criminals who steal benefits from the unemployed and Michigan taxpayers,” new UIA director Julia Dale said in a statement. communicated. “We will use all the sophisticated tools at our disposal – and seek new opportunities and partnerships – to continue to aggressively tackle unemployment insurance fraud.”
The order aims to end fraud, communicate in plain language with Michiganders, and work with DOL and the National Association of State Workforce Agencies to track multi-state fraud schemes, as well as:
- Use new software to identify questionable claims and mass-detect fraudulent claims
- Identify foreign IP addresses, suspicious email domains, multistate complaints and other clues of fraud
- Daily reviews of all complaints and establishment of procedures to resolve identity theft victims who need to file a new complaint
- Retain experts to counter UI system criminal attacks, analyze fraud and erase legitimate accounts
- Prioritize the application of fraud cases to the user interface and track goals and results
The UIA has paid more than $ 39 billion in benefits to more than 3.3 million workers since March 15, 2020, and more than 99% of eligible claimants are receiving benefits.
The UIA could install the technology in four days and it would cost around $ 1.5 million per year for a 99.59% efficient service, Talcove previously said.