State sees rash of fraudulent unemployment claims

It was April Fool’s Day at the U.S. Department of Labor, where weekly initial claims for unemployment assistance by Connecticut residents reached more than 9,700 in a single week — including roughly 330 from those identifying themselves as independent workers.

Whether or not a handful of those claimants actually reside in Lagos or Moscow, rather than Lyme or Monroe, remains to be seen, as fraudulent claims over the past year were fairly common.

The state Department of Labor disclosed last month that roughly 100,000 of the 1.1 million unemployment applications received since the start of the pandemic were deemed fraudulent, without making any estimate as to how many more it may have missed. Until DOL brings a new unemployment system online in 2022, unemployment fraud remains a weekly threat.

In upgrading its system over the past year, the DOL has developed new ways of flagging cases, it said, but would not reveal those systems to avoid giving con artists a leg up. The Department did state that staff members review each one individually, and that no part of the process is automated.

Over a three-year period ending in June 2020, Connecticut was among the 10 worst states in the country for fraudulent payouts, with an “improper payment” rate hovering around 15 percent, as estimated in January by the Employment and Training Administration.

Rhode Island and Massachusetts had slightly elevated levels. At 35 percent of unemployment claims deemed fraudulent, Michigan sank to the bottom.

Connecticut received $1.8 million last September from the Trump administration to improve DOL’s defenses, as part of $100 million distributed nationally.

“The scope of this problem is at least $200 billion nationally,” said Haywood Talcove, CEO of LexisNexis Risk Solutions Group, which sells software safeguards to help labor departments defeat fraud. “It’s not a Connecticut problem, it’s not a Massachusetts problem, it is a problem that has infected the entire system.”

‘A serious challenge’

In addition to run-of-the-mill identity theft, DOL indicated there was a new variety of unemployment fraud in the past year: individuals identifying themselves as independent entrepreneurs, a back

Getty Images Gov. Ned Lamont greets Vice President Kamala Harris in New Haven on March 26. Connecticut trails many states nationally for improper payments through its antiquated unemployment insurance system which is due for a big upgrade next year, with the state for now eyeballing cases to spot any red flags suggesting fraud.