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Colorado has paid out $19.3 million in fraudulent unemployment claims during pandemic

State says it has prevented $437 million in fraud from going out
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Posted at 1:47 PM, Apr 16, 2021

DENVER – The Colorado Department of Labor and Employment has paid out $19.3 million in fraudulent unemployment benefits and prevented hundreds of millions more from going out the door, but the fraudsters remain persistent, department officials said Friday.

The department said Thursday it believed it had paid out around $20-30 million in fraudulent benefits during the pandemic, and the confirmed number of $19.37 million officials unveiled Friday will grow, they said.

That is because there are thousands more suspected fraudulent claims that the department and other investigators are still working through to see if the benefit payments went to legitimate claimants or to the fraud schemes.

CDLE Unemployment Insurance Division Acting Director Phil Spesshardt said the department had also prevented $437 million in fraudulent payments from going out, and potentially billions more.

The department had reported in March when an unemployment fraud task force was announced that they believed about $6.5 million in fraudulent claims had been paid out.

Spesshardt said the department continues to work with ID.me and other vendors to try to verify or reject claims that are tagged with integrity holds because of suspected fraud.

ID.me is also continuing to work through an influx of cases as more states have started to utilize the identity verification company for their unemployment insurance programs, said CDLE Deputy Executive Director Cher Haavind.

She said that about 85% of people have successfully completed the ID.me verification process and have not had to speak with the company’s “trusted referee” system for any issues with their identity verification. But some people who do need to use the trusted referee are still seeing long wait times because of the number of people across the country going through the process.

Haavind advised people to check their MyUI+ accounts regularly, saying that sometimes fraud holds are lifted in batches. She added that some people who have been able to verify their identity through ID.me but still have holds on their accounts could have other issues with their claims, though she and other officials said they could not go into specifics on some of the reasons so as to not tip off the fraudsters.

“We don’t want to help the criminals,” Spesshardt said.

Spesshardt said the bulk of the fraud is occurring within the federal Pandemic Unemployment Assistance program and that the department was still working to recover as much of the fraudulent money as it can. Officials said they have seen continued claims numbers drop since the implementation of ID.me, which they said was a signal the process was working as intended.

The CDLE officials said the department and ID.me are both working to onboard more people to help with fraud holds and identity verification, and said people who lack the technology needed to finish the ID.me process can call the CDLE call center for assistance.

And they acknowledged the struggle for people with legitimate unemployment claims and what can be a frustrating process for lifting fraud holds and verifying identities. Haavind said that “in a perfect world” those extra triggers would not have to be in place but that there was “no perfect solution” for the vast fraud schemes hitting unemployment systems nationwide.

Spesshardt explained that the fraud networks are even reaching out in Facebook groups and to journalists to try to add more pressure to the unemployment systems. He explained the tactics as trying to flood the system with fraudulent claims in an effort to make victims and states roll back some of their fraud detection mechanisms in order to obtain more money.

“If we go backwards, then the fraudsters win,” Spesshardt said.

CDLE Senior Economist Ryan Gedney also presented data about March’s unemployment situation. The seasonally-adjusted unemployment rate was unchanged from February’s revised rate of 6.4%.

The state’s labor force grew by 5,800 in March and the number of people employed increased by 5,100. About 64.1% of the state’s eligible population was employed in March, compared to 57% in April 2020 and 66.8% before the pandemic.

Gedney said that part of the reason the state’s unemployment rate has remained in the same vicinity for several months now is because Colorado had the fastest labor force growth in the nation over the past year, with only North Carolina adding more people to the labor force than Colorado.