Fraud, backlogs disrupt U.S. unemployment benefit payments

WASHINGTON

Many American workers applying for unemployment benefits after being thrown out of a job by the coronavirus face a new complication: States’ efforts to prevent fraud have delayed or disrupted their payments.

California has said it will stop processing new applications for two weeks as it seeks to reduce backlogs and stop phony claims. Pennsylvania has found that up to 10,000 inmates improperly applied for aid.

The biggest threat is posed by sophisticated international fraud rings that often use stolen identities to apply for benefits, filling out the forms with a wealth of accurate information that enables their applications to “sail through the system,” said Michele Evermore, an expert on jobless aid at the National Employment Law Project.

The bogus applications have combined with large backlogs and miscounts to make unemployment benefit data, a key economic indicator, a less-reliable measure of the nation’s job market.

On Thursday, the Labor Department said the number of people applying for unemployment rose slightly last week to 870,000, a historically high figure that shows the outbreak is still forcing many companies to cut jobs, six months into the crisis that has killed more than 200,000 people in the U.S.

The overall number of people collecting jobless aid in the U.S. fell slightly to 12.6 million. About

105,000 people who have used up their regular aid were added to an extended jobless benefit program, created in the economic relief package approved by Congress this spring. That program is now paying benefits to 1.6 million people.

Sharon Hilliard, director of California’s Employment Development Department, said her agency has stopped accepting applications for aid for two weeks while it adopts reforms.

Other state unemployment agencies have been bedeviled by fraud during the crisis.

Washington was the first state to be hit as an international fraud ring based in Nigeria managed to steal up to $650 million in benefit payments, though at least half that money has been recovered. Texas, Florida and Oklahoma have also been affected.