Scamming The Stimulus

Attempts to filter out illicit unemployment claims are contributing to already huge backlogs

- Olivia Rockeman and Reade Pickert

President Biden’s $1.9 trillion economic stimulus package will send billions of dollars to America’s jobless. It’s also a potential bonanza for scammers.

Throughout the Covid-19 crisis, unemployment programs have served as a lifeline, channeling more than $650 billion over the past year to millions of struggling households. But the state-run agencies that distribute the funds have been overwhelmed, making their harried staff as well as their glitchy computer systems easy prey for criminals.

At least $63 billion in improper payments has been doled out since last year, much of it fraud, according to February estimates from the inspector general for the U.S. Department of Labor. Now states are bracing for an additional surge in fraudulent claims after Congress and the White House extended some unemployment benefits into September.

“We’re in a tug of war,” says Kristin Richards, acting director of the Illinois Department of Employment Security, which in the year through January has stopped about 1.1 million claims involving identity theft. “We have this public pressure to move quickly with benefits, while at the same time having to really fight fraudsters and make sure that we are being good stewards of benefit programs.”

The fraud comes on top of widespread system failures resulting from outdated technology, understaffed government offices, and an unprecedented surge in jobless claims, so that in many instances legitimate claims have been incorrectly flagged as suspicious. As a result, untold numbers of unemployed Americans have faced weekslong delays in getting their checks. And more than 11 million say they haven’t been able to access any benefits, according to census data.