California – Up To $31 Billion in Unemployment Fraud

According to ABC7 , California unemployment fraud could be even higher than anyone could have ever imagined.

In an EDD conference call, Julie Su, secretary for the California Labor and Workforce Development Agency said, “Of the 114 billion dollars in unemployment paid by California since March, approximately 10% has been confirmed as fraudulent. An additional 17% of the paid claims have been identified as potentially fraudulent.”

That means close to 1 in 3 claims for California unemployment could be fraudulent bringing the total to a whopping $31 billion in all.

Initial estimates have climbed from $2 billion last year, to $8 billion in early January, to the $31 billion estimate that some are claiming now. The actual losses to taxpayers may not be known for quite some time.

“There is no sugar coating the reality, California did not have sufficient security measures in place to prevent this level of fraud,” Su said.

But EDD Did Put in Fraud Controls Recently

California EDD has put in significant safeguards which could help to curtail future fraud attempts, but for now they will be left with trying to sift through the millions of suspect claims to determine which ones are legitimate and which ones are fraud.

  • They implemented the ID.me identity system which enables drivers’ license and document verification to validated identities. Since October of 2020, 30% of claims have been stopped.
  • They implemented a new data-sharing system with the state prison system to halt payments to incarcerated individuals.
  • A Thomson Reuters’ fraud screen identified 3.5 million claims as potentially fraudulent. About 1.9 million of these had been disqualified by EDD and on Dec. 26 EDD stopped payment on the remaining 1.4 million.
  • They expanded the contract between EDD and Thomson Reuters to apply additional industry-standard fraud detection-criteria and act on claims deemed highly suspect or fraudulent.
  • They allocated $5 million in state funding to support and enhance the investigative efforts of regional District Attorney Task Forces.
  • They established a new data-sharing agreement that allows the CDCR to more broadly share information with EDD investigators to accelerate cross-matching of inmate data to more rapidly identify fraudulent claims being made by or on behalf incarcerated individuals. It will also help to identify and eradicate any potential fraud within both the state prison system as well as local jail facilities.

I am Frank McKenna, a fraud expert from San Diego. The views and opinions expressed here are entirely my own and do not reflect those of Point Predictive.