States Crack Down on Fraudulent Unemployment Benefits Claims

The Unemployment Services Trust (UST), the nation’s largest unemployment trust, has discovered that many states are making it a priority to catch citizens filing fraudulent unemployment claims.  The U.S. Department of Labor reports that fraudulent claims of this type reached almost $17 billion in 2011 alone while each state experiences a fraudulent claims rate of about 12 percent. And while it is the states that pay out benefits, it’s the employers who take the financial hit when the taxes go to paying out claims filed in error.

For example, consider Louisiana where 44 percent of unemployment claims are filed either fraudulently or in error. The lack of state-wide fraud prevention has led to a loss of $517 million over three years for state employers. While Louisiana is an extreme case, the rising awareness of the prevalence of claims errors has lead to states such as Georgia, Maine, Connecticut, and North Carolina to examine their state-run benefits processes in response to the outcry from local businesses who suffer dearly for the oversights. But for many companies the response has not been sufficient:

“For years Connecticut, like many states, gave the benefit of the doubt to employees
and had little focus on preventing fraud,” said Karen Maciorowski, chief operating officer of the Connecticut Association of Nonprofits. “But years of high unemployment have brought the issue to the forefront, and it has resulted in the identification of millions of dollars of fraudulent benefits that were being paid out.”