Cat and Mouse – Fraudsters Shift To Disability Fraud Now

Fraud is a game of cat and mouse and we’re watching it in real time in California right now.

It’s no secret that California got rocked with unemployment fraud in 2021. The state admitted that they paid out at least $20 billion in fraudulent claims, but many believe the number could actually be much higher.

The state has since cracked down on fraudsters targeting the unemployment program but now the fraudsters have changed their tactics – targeting disability claims now. And they’re making big money on it – up to $70,000 in cash per claim.

Telegram Activity Heats Up

If you want to find out what fraudsters are doing, just head over to Telegram and search for the term “wave” on fraud and scam channels. It’s something I do regularly.

This week, “SDI” began appearing on many channels. “SDI” is the term used for California State Disability Insurance.

Telegram users are selling fake doctors notes, methods, and stolen identities that can be used to file falsified disability claims with the state.

The appeal of SDI appears to be that they do not have the same fraud controls as EDD and the maximum payout for disability insurance could be as high as $70,000 by backdating claims many months in arrears.

Fraud As A Service – Fake Claims With Stolen Identities for $500

If you don’t want to file a fake disability claim with the state, don’t worry – there are friendly fraud helpers standing by to do the dirty work for you.

The cost? – Only $500. What a bargain. They will use stolen identities and file the fake claim for you and you can just stand by and collect your checks.

They Are Stealing Doctors Identities Too To Facilitate The Fraud

To enable the claims, the fraudsters are stealing doctors’ identities and creating doctors’ profiles to approve the disability claims.

To steal the doctor’s identities, they are merely searching Google for public records on doctors’ and dentists online information.

Here’s a video explaining how they do it.

The State Identified Organized Crime Activity

It appears that the state may be seeing an increase in fraudulent activity as well. This week, the department issued an alert about organized crime activity targeting the state.

The alert warned the state of a new scam. The new disability insurance identity theft scam involved suspected organized criminal elements filing false disability insurance claims by attempting to use stolen credentials of individuals and medical or health providers.

Medical and health providers certify the existence of a disability that an applicant reports when seeking disability insurance benefits from EDD. Evidence of the scam included a recent increase in new online medical or health provider account EDD registrations and a rise in disability insurance claims.

It’s Deja Vu All Over Again – The State Is Suspending Claims

And just like unemployment fraud, the state is taking countermeasures that could impact legitimate claimants.

The Department has suspended payments on certain claims until it can further verify information on that claim. EDD is also boosting its medical and health provider vetting process and halting payment on many new claims. These efforts help protect legitimate providers and claimants from further fraud. The filters will slow the process of registering new providers and may impact the time it takes for legitimate claimants to receive benefits. EDD will be contacting providers as soon as possible to complete the additional verification processes.

There is currently no evidence that California medical or health providers were knowingly involved in this latest scam attempt. EDD is expanding its fraud information sharing across state and federal agencies as well as impacted medical groups.

The Fraudsters Are Starting To Notice

It appears that the state’s countermeasures are not going unnoticed by serial fraudsters. There is so much fraudulent traffic to the site now that fraudsters are complaining it’s going to get much harder soon.

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.