Criminals may have stolen as much as half of the unemployment benefits the United States has paid out in the past year, some experts say.
Why is this important: Unemployment fraud during the pandemic could easily reach $ 400 billion, by some estimates, and most of the money likely ended up in the hands of foreign crime syndicates – making it not only theft, but a matter of national security.
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Catch up quickly: When the pandemic hit, states were unprepared for the unprecedented wave of unemployment claims they were set to face.
In numbers : Blake Hall, CEO of ID.me, a service that tries to prevent this type of fraud, tells Axios that America has lost more than $ 400 billion to fraudulent claims. Up to 50% of all unemployment benefits could have been stolen, he says.
Haywood Talcove, the CEO of LexisNexis Risk Solutions, estimates that at least 70% of the money stolen by impostors eventually left the country, much of it ending up in the hands of criminal syndicates in China, Nigeria, Russia and elsewhere.
“These groups are definitely backed by the state,” Talcove told Axios.
Much of the rest of the money has been stolen by street gangs across the country, which have made up a larger share of fraudsters in recent months.
The Treasury Department declined to comment on these estimates.
How it works: Scammers often steal personal information and use it to impersonate applicants. Other groups encourage individuals to voluntarily provide their personal information.
The big picture: Before the pandemic, jobless claims were relatively rare and usually lasted so short that international criminal syndicates did not see them as a lucrative target.
After unemployment insurance became the primary vehicle through which the US government tried to keep the economy afloat, however, that all changed.
Unemployment became where the big bucks were – and was also run by bureaucrats who weren’t as quick to crack down on criminals as private companies normally are.
Unemployment fraud is now offered on the dark web on a software-as-a-service basis, much like ransomware. States without fraud detection services are naturally the most targeted.
The bottom line: Many states are now becoming more sophisticated in preventing this type of fraud. But it is much too late.
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