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Law360 (June 8, 2020, 8:46 PM EDT ) Democratic senators have asked the U.S. Department of Labor what it's doing to address "organized fraud activity" against unemployment insurance programs that they said were left "vulnerable to online crime rings" amid the urgency to get workers benefits quickly during the coronavirus pandemic.
In their letter Friday, U.S. Sens. Patty Murray, D-Wash.; Ron Wyden, D-Ore.; and others said they were concerned about "recent reports of organized fraud against state unemployment insurance programs" that led to actual claimants having their benefits delayed.
The senators told the agency that they shared the common goal of "ensuring the integrity of the unemployment insurance program," noting that it was a "critical component" of the safety net needed for economic downturns like the one caused by COVID-19.
"Safeguarding state UI systems against unscrupulous actors who seek to exploit the current public health crisis for economic gain requires a holistic response by the federal government in partnership with states," the senators said.
The combination of the new unemployment insurance benefit provisions and the urgency in disbursing those benefits to workers who were affected by the coronavirus outbreak left state programs "vulnerable to online crime rings," the senators said.
According to the letter, there had been reports about a U.S. Secret Service memo describing a "fraudulent crime network" that used identity theft victims' personal identification information to file unemployment claims in several states.
During a May 21 press conference, Washington State Employment Security Department Commissioner Suzi LeVine disclosed that tens of thousands of individuals' stolen information was used to file claims, which officials believe translates into hundreds of millions of dollars.
LeVine said none of the personal identification information had been stolen from the state agency and noted at a later press conference that more than $300 million had been recovered. But the agency was hit with a lawsuit Friday from the Unemployment Law Project, which helps claimants in Washington, and two individuals over delayed benefits.
The senators in their letter Friday asked the DOL, among other things, when it became aware that a crime ring was filing false claims, what amount of fraudulent claims each state paid, and how would the agency help states get real claimants their benefits in a timely manner and prevent future fraud. The letter gave the agency a June 19 deadline for responding.
"For their part, when states became aware of the fraudulent activity, they took steps to mitigate the problem and weed out fraudulent claims, including by temporarily halting payments," the senators said. "However, any long-term solution will require additional guidance, resources, and support from the department to prevent fraud in the UI system."
--Editing by Abbie Sarfo.
For a reprint of this article, please contact reprints@law360.com.
