Another expert says that more than 70 percent of the stolen money was taken by state-backed foreign criminal organizations. Some estimate the fraud could be as high as $400 billion.
Before the pandemic, unemployment claims were relatively rare and generally of short duration. But things changed dramatically in the spring of 2020.
While experts assumed that there would be some level of unemployment fraud when the increased benefits were implemented, the pandemic and lockdowns imposed in some states that caused unemployment to soar created a climate ripe for abuse. State governments were not prepared for the pandemic demand.
In April 2020, the U.S. unemployment rate hit 14.8% — the highest rate observed since data collection began in 1948.
This is something very different than just run-of-the-mill unemployment fraud. This is the exploitation of emergency relief by criminal organizations — many of whom are backed by foreign governments.
Up to $400 billion in COVID unemployment relief was stolen – and more than half that cash was funneled to criminals in Russia, China and Nigeria, it was claimed.
The United States lost as much as 50% of all unemployment relief, as much as $400 billion, through fraudulent claims, Blake Hall told Axios. Hall is the CEO of ID.me CEO, a company that provides fraud prevention services.
More than 70% of the $400 billion feared to have been stolen was pilfered by state-backed foreign criminal groups, Haywood Talcove told Axios.
‘These groups are definitely backed by the state,’ said Talcove, the CEO of LexisNexis Risk Solutions.
U.S. street gangs reportedly stole much of the rest of the money.
Source: Daily Mail
It’s a sophisticated system of fraud that funnels money through “mules” who pull out the cash at ATMs and transfer it abroad after converting it to Bitcoin.
How it works: Scammers often steal personal information and use it to impersonate claimants. Other groups trick individuals into voluntarily handing over their personal information.
“Mules” — low-level criminals — are given debit cards and asked to withdraw money from ATMs. That money then gets transferred abroad, often via bitcoin.
Bitcoin was often branded as “untraceable” but the FBI’s recent recovery of the cryptocurrency paid to hackers in the recent Colonial Pipeline ransomware attack is casting doubt on that. It might be too optimistic, however, to assume that some of this money might be traced and recovered.
This kind of scam isn’t just about stealing taxpayer money, it’s also exposing the very disturbing threat of identity fraud.
The U.S. Department of Labor website says that many people are “unaware that claims have been filed” in their name adding, “Many people only find out unemployment identity theft occurred when they receive something in the mail, such as a payment or state issued 1099-G tax form that’s incorrect or for benefits not received.”
The IRS website is warning about the surge in fraudulent unemployment claims “filed by organized crime rings using stolen identities” and how they are capturing personal information.
The Department of Justice recently warned that fraudsters are creating websites mimicking unemployment benefit websites, including state workforce agency (SWA) websites, for the purpose of unlawfully capturing consumers’ personal information.
To lure consumers to these fake websites, fraudsters send spam text messages and emails purporting to be from an SWA and containing a link. The fake websites are designed to trick consumers into thinking they are applying for unemployment benefits and disclosing personally identifiable information and other sensitive data. That information can then be used by fraudsters to commit identity theft.
Help stop these scams by reporting them and using the list of state contacts at DOL.gov/fraud.
Be careful — always double-check your sources before giving private information and if you see anything that looks questionable, report it.
KOLO News in Nevada has some tips to protect yourself from identity theft and unemployment scams.