The most disappointing aspect of widespread fraud in Washington’s unemployment benefits is that it has contributed to delays in legitimate payments. Many residents who have been laid off or furloughed in the wake of the coronavirus pandemic have had to wait for needed assistance and have had difficulty getting in touch with an overwhelmed Employment Security Department.
But the second-most disappointing aspect is that experts say warnings went unheeded, resulting in “hundreds of millions of dollars” in fraudulent payments being doled out. The chaos created by the pandemic has been an invitation to fraudsters, exposing weaknesses in the state’s system for authenticating unemployment claims and the management of that system.
Officials last week revealed that the Employment Security Department has fallen victim to thousands of fraudulent claims in the wake of the pandemic. Criminals have used personal information — Social Security numbers and bank account numbers likely obtained in data breaches — to file phony claims.
Other states also have been targeted by criminals, specifically by an enterprise based in Nigeria. But with Washington being among the first to be hit by COVID-19 and among the first to begin widespread unemployment payments, it became an early — and easy — mark for coordinated fraud.
The desire of state officials to quickly get benefits to people is understandable; the pandemic has generated an unprecedented upheaval of the economy. But in expediting those payments and easing requirements for confirmation from employers, leaders made victims of all Washingtonians.
Notably, experts say, Washington’s unemployment system missed some signs that should have piqued interest. Those include the use of suspicious email accounts by people filing claims, and state payments to out-of-state bank accounts. If a Washington worker is unemployed, it is not unprecedented for them to request payments to an out-of-state account, but it is unlikely.
In 2017, the Employment Security Department overhauled an antiquated computer system and adjusted security provisions. “Once you’ve authenticated yourself, you’re free to update your contact information, your direct deposit information, you know, a lot of different things,” a department spokesperson told The Seattle Times. The result has been a more user-friendly system — for both residents and criminals.
Before officials acknowledged widespread fraud, many Washingtonians had reported that the email linked to their ESD accounts had been changed. Others who had never previously applied for benefits discovered there already was an account in their name.
Meanwhile, the U.S. Secret Service noted in a May 14 bulletin that Washington had sent payments to persons outside the state “all in different individuals’ names with no connection to the account holder.” The state halted unemployment payments for two days, but much of the damage had been done.
Washington officials understandably are reluctant to discuss their security measures; if bad actors know the details, the system isn’t very secure. But accountability — and a quick fix — is necessary. Caleb Heimlich, chairman of the Washington State Republican Party, said, “No other state was susceptible to this level of fraud. (Gov. Jay) Inslee and his hand-picked department heads continually mismanage our state.”
State leaders first must root out fraudulent claims and ensure that legitimate claims are filled. Then they must begin a thorough process for figuring out what went wrong and for demonstrating accountability to taxpayers.
