If you thought we left unemployment fraud in the rearview mirror with COVID. Think again.
A new surge in unemployment fraud claims in Massachusettes is so high that it is reportedly distorting national unemployment stats. The state has been battling against takeover fraudsters and identity thieves to the point where it is now having an impact nationally.
During the week of May 6th, claims spiked so high in the state that economists are now pulling them from the national reporting. In fact, claims were so high it showed that the unemployment rate in the US had jumped for the first time since 2021.
1 in 6 New Claims in The US Originated in Massachusetts
According to Reuters, “Initial claims increased by 22,000 nationally to a seasonally adjusted 264,000 during the week ending May 6.”
If you excluded Massachusetts, claims would only have been 224,000. That means about 1 in 6 of every new unemployment claims in the US originated from the state.
Bank of America also weighed in and warned people to avoid placing too much importance on the recent unemployment numbers. They advised against overinterpreting the recent surge in claims, highlighting the anomalies in Massachusetts.
The unadjusted claims in the week ending May 6 saw a significant contribution of 45.6% from Massachusetts.
When Massachusettes data is removed this week, Reuters indicated that it will likely overall claims fell, not rose.
Massachusettes Says Fraudsters Are Taking Over Accounts And Using Stolen Identities
Its unclear what loophole the fraudsters have discovered but they are hitting the state very hard.
According to a statement by the state, “they are experiencing an increase in fraudulent claim activities where people attempt to gain access to active UI (unemployment insurance) accounts or file new UI claims using stolen personal information so they can fraudulently obtain unemployment benefits.
It’s not the first time that the state has struggled with unemployment fraud. In fact, the state recently reported that it paid over $1.3 billion in improper payments during COVID.
In fact, the improper payment rate in the state was close to 23% during the pandemic, meaning that almost 1 in 4 payments were improper.
Thanks to Mary Ann Miller for the tip on this breaking story!