Reports of fraudulent unemployment compensation claims continue to climb throughout the tri-county area with state police issuing numerous incident reports in Clarion, Forest and Venango counties.
With dozens of incident reports released by state police, the CLARION NEWS attempted to contact some of the victims of the scam, in which unknown individuals somehow obtain a person’s name, address and Social Security number and file for the expanded unemployment benefits offered by the state and federal benefits always handled by the state.
Already stung by the scam, most victims declined to talk about their experience. But one local victim did.
“I don’t even know how to do it because I’ve never applied for it,” said Eberhardt.
Whoever filed for unemployment had at the minimum Eberhardt’s name and the last four digits of her Social Security number.
Eberhardt said the situation had made her feel anxious. Using a scale of one to ten, she said her stress was now at a solid ten.
“I keep checking my credit score,” she said. “I worked so hard to get it where it’s at. Now to know someone stole my identity”
After receiving notice of the false claim, both Eberhardt and her employer reported the fraud to the state labor department.
Eberhardt also went to the state police to submit a police report.
“It’s becoming more of an issue,” said state police Cpl. Kevin Krick, a crime investigator at the Clarion barracks.
Krick said they work each of these cases as they are reported in conjunction with the Department of Labor and Industry.
However, because very little is known about the fraudsters who filed the false reports, Krick stated he did not have much information.
Clarion Borough Police Chief William H. Peck IV said his department also has recorded complaints about unemployment fraud.
Peck said false unemployment claims are prevalent and like state police, he reports them to the labor department for it to investigate.
“The people who do this have a goal in mind,” said Peck.
Employees at Clarion Borough and at Clarion Area School District have also fallen victim to the scams.
State agencies stymied by problem
As unemployment spiked when the COVID-19 emergency hit Pennsylvania, the state Department of Labor and Industry found its unemployment compensation claims system outdated and overwhelmed.
L&I introduced a new unemployment claims system in early June of 2021 to update its decades-old procedures. But that new system has attracted boundless criticism for glitches and bad design as detailed in a SpotlightPA report from June 8.
After the mistake became known within the labor department, the report’s sources said the department tried to make the problem quietly disappear.
What these things add up to is a picture of a department in big trouble. The unemployment fraud issue only compounds the department’s headaches.
Also, an investigation found L&I has charged many unemployment recipients too much interest on overpayments.
The COVID-19 pandemic gave rise to two major systems of unemployment benefits in Pennsylvania. The first is regular unemployment compensation (UC). UC is the system the state upgraded recently, and has a higher threshold for eligibility than the second system, Pandemic Unemployment Assistance (PUA).
State law enforcement has already arrested and charged multiple individuals involved in PUA fraud schemes, including scams originated with inmates in state prisons.
However, as PUA winds down and the new UC computer system is implemented, fraudsters have begun to target the vulnerable new system.
A July 14 article by WHYY, the Philadelphia-based NPR affiliate, states a surge in new UC claims since the new system was put into practice has caused fraud to spike.
State: Be vigilant
In an email communication to the CLARION NEWS from July 12, L&I Press Secretary Sarah DeSantis said, “L&I has implemented many layers of antifraud measures to prevent and stop fraudulent unemployment claims.”
DeSantis said employers must be vigilant in watching for false unemployment claims, advising “It is incumbent upon employers to report improper claims.”
DeSantis’ answer echoes what her boss, Secretary of Labor and Industry Jennifer Berrier has said.
In a Pennsylvania State Senate Committee Labor and Industry hearing June 22, Berrier said “implementing fraud measures,” is the main priority for the new UC system.
“So right now we’re trying to manage that situation and figure out how we can put fraud measures into the new system and combat the fraud that is happening across the nation,” said Berrier.
The Department of Labor and Industry has taken steps to address the fraud problem.
In September of last year, the department contracted with ID.me, a McLean, Va.-based identity verification company, in order to verify the identity of claimants to PUA benefits.
The department then expanded its partnership with ID.me to include the UC systems as well.
In a July 16 press release, Berrier said, “Through our partnership with ID.me for the Pandemic Unemployment Assistance program, we were able to prevent millions of dollars in taxpayer money from being stolen by fraudsters. By using ID.me for the Unemployment Compensation program, we can replicate this success.”
Who perpetrates it
That fraud is happening there is no question, but its extent and perpetrators remain unknown.
As to who does it, there is very little evidence to blame fraud on any specific group.
“The recent increase in fraud attempts are tied to prior leaks of personal and confidential data, like Social Security numbers, from sources outside of state government,” said DeSantis in her email.
She referred the CLARION NEWS to a USA Today article published Dec. 30, 2020, which states the onset of pandemic benefits made it a goldmine for overseas scammers to try and get a piece.
There has been no official declaration by the Department of Labor and Industry as to the total amount paid to fraudsters during the pandemic.
During the June 22 hearing, Berrier was pressed on this exact question but demurred in her answer. “That’s something we’re still looking into,” she said.
“Due to ongoing investigations, L&I does not currently have an estimate of the amount of fraudulent claims,” said DeSantis. “L&I also does not provide detailed information about its antifraud measures to avoid tipping its hand to fraudsters.”
Though labor department officials do not have clear answers, there are pieces of evidence that point towards unemployment fraud occurring on a massive scale.
In April of this year the state labor and treasury departments jointly announced the recapture of $800 million in unemployment benefits from fraudsters.