The beleaguered Vermont Department of Labor, which is still struggling to process some of the tens of thousands of unemployment claims generated by the Covid-19 crisis, is facing a new setback: a rash of fraudulent claims that Vermonters started reporting about three weeks ago.
The department has seen 40 to 50 fraudulent claims since mid-May, said Interim Commissioner Michael Harrington on June 1. The fraud – which is also occurring in other states – uses detailed information about Vermonters, he said.
“What we are seeing and hearing across the country is this data is very complete,” Harrington said. “The people who are using someone’s identity aren’t just using one component; they actually have 90 percent of their identity, everything from name, social security number, date of birth, mailing address, work history … a very complete package.”
That makes it difficult for the department, which saw claims peak in mid-May at about 80,000, to identify claims that are fraudulent. Harrington first said he was confident that all of the fraudulent claims had been intercepted, and that the state hasn’t paid benefits to the thieves behind the fraud.
The DOL learns of some of the fraudulent claims when a Vermonter who didn’t file for unemployment insurance gets a claim determination letter, and contacts the DOL to say they didn’t apply. Claims can be direct-deposited.
“To my knowledge, everyone we have looked into, we’ve been able to stop payment before it was issued,” Harrington said. But he also said there’s a possibility some of the fraud had been successful. “We have a group going through this list to determine how much, if anything, has been paid out,” he said.
DOL officials from several states have been sharing information about the fraud, said Dirk Anderson, the Vermont DOL’s general counsel. “Criminal networks may already have this information and this is just a golden opportunity for them to use it because it’s been pretty widely reported that all state employment administrations are completely overwhelmed,” he said.
“The good thing is because we are getting to a point where we have got most people that ought to be in the system, in the system, and we’re paying benefits, we’re now able to devote some more resources to things like beefing up fraud detection and following up on erroneous claims or fraudulent claims,” Anderson said.
One of those measures is the creation of a task force designed to combat the fraud. It includes a representative each from the Department of Public Safety, the Agency of Administration, the Agency of Digital Services, the Department of Financial Regulation, and the Attorney General’s office. Meanwhile, the DOL is checking with other states to identify fraudulent claims that have been filed in more than one state, said Harrington.
“There are a number of different security measures we can put into place,” said Harrington.
Since March, when many thousands of Vermonters suddenly lost their jobs, the DOL has struggled to process the extraordinarily high number of unemployment claims and create new programs for claimants – such as the self-employed – who had never been eligible for unemployment insurance before. With Vermonters reporting days of waiting on hold to get through to the DOL, the department expanded its relationship with a contractor, Maximus, to add and train hundreds of people who could answer phone calls about claims. Only in late May did the department finish setting up a new program to extend unemployment insurance for another 13 weeks for people who were already receiving unemployment benefits when the Covid-19 crisis hit the state.
Meanwhile, in late March the DOL accidentally mailed about 5,500 claimants’ Social Security numbers to Vermont employers who weren’t connected to their cases. The department waited until May 14 to notify those affected. At least two people reported to VTDigger that someone had attempted to use their SSNs for fraudulent purposes, though Harrington said the DOL hadn’t received any reports.
Harrington said June 1 that the fraud claims he had heard about were likely unconnected to the mailing misfire. Instead, he said, it appears the thieves are using personal information stolen in large, well-publicized hacks such as the 2017 Equifax breach, which affected as many as 45 million U.S. consumers.
“What we are seeing across the country right now is that information is now being sold on the market to various groups and those groups are now using that data to file fraudulent claims in the respective states of the peoples’ identity that they have,” Harrington said.
He added that it’s now possible for people who receive mail about a claim they didn’t file to reach someone at the DOL without spending hours on hold.
“Wait times are less than 2 minutes,” he said. The department also has a fraud tip phone line that takes messages and a fraud tip email address.
“I can tell you that prior to Covid-19, Vermont ranked high among states that had good protective measures in place and had the least amount of improper payments,” he said. “Covid-19 brought about very different circumstances.” Harrington has said since March that where the department used to check for fraud before processing a claim, in the height of the crisis that step was omitted until the claim had been paid.
“We’re doing a lot of the quality checks at the back end,” he said. “That was done intentionally because we felt the priority at the time was payments, and not holding up payments in order to meet the quality cross-checks.”
Meanwhile, the department is still working on getting a first check to people whose claims have been held up for months. Alyssa Gagne of St. Albans, who lost her job at Four Seasons Dermatology on March 22, estimates the DOL owes her more than $6,000. She hasn’t received payments on claims she started filing in March, and has since returned to work. Gagne said she has spent hours on the phone with DOL discussing her claim.
“It’s not a matter of me not qualifying,” she said. “They are overwhelmed. I don’t fault any of the people I have spoken with; they have all been so nice.”
Harrington said he doesn’t know how many people still haven’t received a first payment. He acknowledged that the department, too, hears complaints from claimants like Gagne who have been told they qualify and will receive payment, and haven’t.
“We’re continually addressing these quality issues with our vendor,” he said.
