D.C.'s employment services agency has received an unprecedented number of reports of fraudulent unemployment claims over the course of the pandemic, Department of Employment Services Director Unique Morris-Hughes said Friday — but some workers in the city who have experienced fraud say the agency’s response has been insufficient.
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DOES has processed 270,000 unemployment claims since March 2020, and last year saw a 372 percent increase in new claims compared to an average year, Morris-Hughes said. But the substantial rise in claims has also brought about 13,000 reports of fraud from workers who say unemployment claims were filed in their names using false or stolen information.
The issues with fraud highlight the latest complication for DOES, which has been repeatedly criticized by workers and lawmakers over the past year for failing to issue timely unemployment payments. And while Morris-Hughes said preventing and deterring fraud is a top priority for the agency, many workers say they have received little support from DOES after attempting to report a bogus claim.
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Claudia Trapp, 48, received a letter from DOES last month confirming she was eligible for unemployment benefits that started in mid-September and would end next year. The problem: she’s been employed throughout the pandemic and did not apply for unemployment insurance.
After calling and emailing DOES to no avail, Trapp broke through Sept. 30, when a representative said there was a claim in her name and flagged her account, but did not offer more information.
She said she still doesn’t know whether the issue has been resolved or if someone else is receiving payments in her name. She turned to online message boards for clues and tried to mitigate the issue herself: she’s put in a fraud notice with her bank, filed a police report and contacted the IRS.
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“The communication has not been sufficient. My calls weren’t returned,” Trapp said. “It’s unclear how to handle this situation — none of us are experts.”
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Trapp is among scores of residents who have taken to social media for answers about how to combat the fraudulent claim. An Oct. 8 post on Nextdoor from a concerned D.C. worker about how to address the fraud has garnered hundreds of replies, with many expressing mixed results about dealing with DOES and its representatives.
Stalled payments, conflicting answers: D.C. unemployment woes trigger investigation
Scott Wallace, a 36-year-old D.C. resident, found himself equally frustrated. He was deemed ineligible for unemployment benefits in June 2020 because he made too much money as a part-time worker and has worked as a financial adviser since March. But two weeks ago, Wallace and his wife each received unexpected letters from DOES stating they had been issued their first unemployment payments.
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After repeated attempts to call DOES, Wallace said a representative from the agency eventually confirmed someone was using his information to receive benefits. When he pressed for more information, Wallace said the representative hung up because he could not pass a security check that involved confirming the email address and phone number associated with the account — information that was probably being used fraudulently.
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“There’s been no communication, no follow-up, nothing,” said Wallace, who has also been in touch with the U.S. Department of Labor. “Stuff happens, I get it, but we need some assurances. The alarm bell for me was being hung up on.”
Morris-Hughes said less than 5 percent of claims processed by DOES since March 2020 have been determined to be fraudulent, and that of the $2.75 billion the agency has paid out in unemployment during the pandemic, less than 0.15 percent was paid out to deceitful claimants.
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She cast the fraud as a nationwide problem. The Department of Labor awarded nearly $200 million in grants to 58 states and territories in September to strengthen fraud detection, of which D.C. received about $2.2 million. Morris-Hughes said that funding is supporting additional technology to help combat and detect unscrupulous claims.
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DOES has seen a spike in newly reported fraud cases since the end of the summer, which she said probably corresponds with the expiration of enhanced federal unemployment benefits.
“It was really the last chance for bad actors to try to infiltrate the UI program and get fraudulent claims through,” she added.
Maryland says it has detected more than a half million ‘potentially fraudulent’ jobless claims since May
In a statement announcing the new funding to deter fraud, Secretary of Labor Marty Walsh decried international and domestic crime rings that “attacked states’ antiquated claims systems to commit massive identity fraud at rates never seen before.”
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The Department of Labor said in a statement that the scope of fraud is “enormous” and that starting in May 2020, crime rings began targeting state systems using information largely obtained through data breaches outside the unemployment systems. New federal unemployment programs with differing eligibility criteria exacerbated the problem and made them a particular target.
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“The victims of fraud come in many forms: whether it is someone being impersonated who cannot apply for benefits when they need them, or someone getting a surprise tax bill, or an innocent person waiting weeks for initial claims because fraud has locked up a UI system,” the statement said. “Real people are getting hurt.”
Oftentimes, Morris-Hughes said, false claims are filed using an email address that does not belong to the person who is being impersonated or misspells a person’s name, email or phone number by a single letter or digit. She encouraged those experiencing fraud to follow instructions at unemployment.dc.gov. Morris-Hughes asserted the stolen information is usually obtained from publicly available information, in addition to personal details revealed in credit reports or data breaches external to D.C. government.
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Asked about those who had issues contacting the agency or receiving follow-up after reporting a fraudulent claim, Morris-Hughes said DOES does not tolerate bad customer service and that some employees have been dismissed for failing to abide by guidelines on conduct.
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“None of us could have ever planned we’d be where we’re at today … the federal unemployment insurance program has evolved a lot more in the last two years than it did in the 38 years previously,” she said. “With a lot of significant rapid change and outdated infrastructure, which is something that’s prevalent across the country, I think it’s natural for folks to be frustrated.”
D.C. Council member Elissa Silverman (I-At Large), who chairs the committee that oversees DOES, said she has been concerned about unemployment fraud and the process for reporting it. She observed an uptick in people coming to her office for help with fraud in June and July — including one of her own staffers. Many of them complained that going to the agency for help spurred inconsistent results.
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“The situation is already distressing enough. We want to instill confidence that we are actually dealing with fraud,” said Silverman, who urged Morris-Hughes over the summer to feature information about fraud more prominently and concisely on the agency’s website. “I think it gets to a confidence in our government systems’ integrity.”
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For John Riley, 52, reporting fraud with DOES was a straightforward process. Though he recently switched jobs, he was an essential employee at MedStar Hospital in Georgetown earlier in the pandemic and was never unemployed. Despite that, he got a letter in the mail in July saying DOES had received his application for unemployment.
He called DOES immediately. Someone picked up, identified the claim as fraudulent and instructed him clearly on what to do next.
“I was really dreading calling the UI office; my experience with D.C. bureaucracy has often been one of frustration. I was sort of surprised it was efficient,” he said. “There’s not been any follow-up or anything, though. As far as I know, it’s still an ongoing investigation.”