Unemployment claims in Maryland have increased greatly since the start of the pandemic, and more than half filed since January were found to be fraudulent.
The Maryland Department of Labor has flagged 65% of all unemployment claims since January 2021 alone for fraud, and of that percentage, 87% were actually fraudulent.
“We did not have the luxury of planning and preparing for a global pandemic that resulted in an 800% increase in our claim volume essentially overnight,” Maryland Secretary of Labor Tiffany Robinson said at a Board of Public Works meeting Capital News Service attended Feb. 24.
The state’s Department of Labor was unprepared for the exponential increase in claims due to the pandemic, as they became understaffed and also had to deal with hundreds of millions of dollars in fraudulent claims, according to Robinson.
Identity theft and unemployment fraud are happening country-wide, and the Office of the Inspector General for the U.S. Department of Labor estimated that over $36 billion — 10% of the total payments as of early November — of the payouts from the CARES Act could have been paid fraudulently.
“Some states have been really hit harder in terms of not discovering these scams as quickly and fortunately as we were,” Lt. Gov. Boyd Rutherford, R, said at the meeting.
Rutherford also said that he, as well as Gov. Larry Hogan, R, and Robinson herself all had unemployment claims filed under their names fraudulently, which were flagged and immediately blocked.
Rutherford, who worked for the federal government prior to becoming lieutenant governor, said that many who also worked for the federal government are at risk because of data breaches.
“The data is out there. Our personal information is out there, and it is marketed by these different groups,” Rutherford said. “And when you have this crisis, scamsters and organized crime step in and say ‘We’re going to use these lists or buy this information and see what we can get out of it’.”
“And just for the record, the lieutenant governor is not unemployed,” Comptroller Peter Franchot, D, joked and then said to Robinson, “We are the paymaster, but we are going to rely on you to confirm that there is as little fraud as possible.”
Hogan announced at a press conference on July 15 that the state had uncovered more than 47,500 fraudulent unemployment insurance claims in Maryland, which totaled more than $501 million.
The labor department has found 384,651 fraudulent claims since the beginning of the pandemic out of the 447,817 flagged, according to data on the department’s website.
The data also shows about 90% of the 176,561 out-of-state and about 83% of the 271, 256 in-state claims that have been identified as potentially fraudulent did not upload verification or were reviewed and denied.
These numbers can be expected to change as more fraudulent claims are flagged and an investigation with the U.S. Department of Labor’s Office of the Inspector General and the U.S. Attorney’s Office continues, according to an announcement on the department’s website.
The FBI said in December that from 2015 until 2019, Maryland was ranked 5th in the country for the amount of “money mules,” or people “who trade illegally obtained money between different payment accounts”, in the state.
In order to further combat the fraud, the Maryland Department of Labor is planning to contract with a vendor that will help to prevent and detect fraud, according to Maryland Department of Labor Director of Communications, Fallon Pearre.
If a scammer has the correct date of birth and Social Security number and the claim gets validated without being detected by the department’s “triggers”, then a notice is sent to the claimant’s employer, which Robinson said is the department’s “plan B” to catch fraud.
“It shows that it can’t be just a mechanical process to just roll checks out to everyone who’s asking for them,” Rutherford said.
The labor department has also launched a new, modernized unemployment insurance system, which Robinson said has allowed for more efficient fraud detection.
The Office of the Maryland Attorney General has recently released a webpage with resources to help people report the fraud and protect their identity.
If a person believes their identity was used to fraudulently file an unemployment claim, they can report it by visiting MDunemployment.com, calling the UI Fraud Hotline at 1-800-492-6804 (Press 1), where you can leave a voice message or emailing email@example.com. No one is liable for any benefits paid out in their name if they are fraudulent, Robinson said.