Reports are coming out that as much as half of the unemployment payments paid by the US government during this past year might have been stolen. The fraud might have ended with most of the money eventually going abroad – likely going to foreign criminal groups in Nigeria, China and Russia, according to news outlet Axios.
According to these estimates, unemployment fraud which took place during the covid pandemic could ‘easily go to $400 billion,’ as states were not prepared for the overwhelming wave of unemployment claims
States understood that fraud would happen and that it was inevitable, but chose to rush funds to people with minimal investigation, as opposed to carefully vetting every application.
According to Blake Hall, the current CEO of a fraud prevention company named ID.me, America has been heisted by over $400 billion by fraudulent unemployment claims, with up to 50% of unemployment payments potentially having been stolen.
Within that number, as much as 70% of the stolen money eventually left the country according to CEO of LexisNexis Risk Solutions, Haywood Talcove, who states that “These groups are certainly backed by the state.”
The rest of the money was possibly stolen by gangs domestically, who made up a larger share of the fraud in past months.
How it works:
Scammers steal someone’s personal information and use it to impersonate them. Other groups trick the person into giving their personal information.
Then, the money transfer works like this:
“Mules” are given debit cards and ordered to withdraw money at ATMs. That money then gets sent via bitcoin abroad.
Before Covid, unemployment claims were pretty rare, and usually lasted for only short times, so international crime groups did not see them as a good target.
And now, unemployment fraud is more easily obtained on the dark web as a software-as-a-service basis – somewhat like ransomware.
Naturally, states who do not have fraud-detection services are the top targets, and several states are starting to use more sophisticated means to stop fraud. But many experts say it is too late.
Author: Blake Ambrose