Kansas unemployment system targeted by fraud scheme using stolen identities

photo by: Screenshot/Kansas Department of Labor

The Kansas Department of Labor unemployment benefits website is pictured Tuesday, Sept. 29, 2020.

WICHITA (AP) — Criminals have targeted Kansas’ unemployment system in a multibillion dollar fraud scheme that has delayed relief payments to thousands of people around the state who lost their jobs during the coronavirus pandemic, officials say.

Ryan Wright, the acting secretary of the Kansas Department of Labor, said the agency has blocked at least 45,000 fraudulent payments this year. The agency hasn’t said how much money the fraudsters are believed to have stolen, but the Legislature approved an audit of the program to determine how many payments slipped through to them, The Wichita Eagle reported.

“We will know eventually what the scale and scope of this is and what those costs are,” Wright said.

State unemployment systems throughout the U.S. have been targeted by criminal organizations and individuals who use stolen identities to exploit the massive expansion of benefits offered because of the coronavirus pandemic, authorities say. Wright said the U.S. Department of Labor’s inspector general estimates that $8 billion in fraudulent claims have been filed this year nationwide.

Victims often don’t find out they’ve been targeted until they run into problems filing legitimate claims or their employer approaches them.

Among them was Margaret Dawe, an associate professor in the creative writing program at Wichita State University, who was surprised to be notified by the school’s human research department that an unemployment claim had been filed in her name even though she has worked full-time throughout the pandemic.

“I was a little scared that these bad guys had my Social Security number,” she said. “And it’s scary not knowing their end game.”

The fraudulent claims have placed an additional burden on a state agency that was already struggling to make payments to Kansas workers and traditionally handles few fraud cases.

Wright said the fraudsters have primarily targeted the Pandemic Unemployment Assistance program, or PUA. The program was created by the CARES Act to expand unemployment benefits to a wide variety of affected workers who lack a sufficient enough work history to file a claim or have been disqualified for state benefits but who were affected by COVID-19. They include the self-employed, independent contractors, gig workers and people who work for religious organizations, among others.

Wright explained that in Kansas’ regular unemployment system, the state has a relationship with the employers and has access to their records and earnings reports.

“And in this particular program, that must all be furnished by the individual because they’re independent contractors. So that relationship is even different, and that’s what makes this so very different than everything else,” he said.


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