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State says it has recovered $242 million in fraudulent jobless claims

The number of Americans applying for unemployment benefits fell last week to a still-high 712,000, the latest sign that the US economy and job market remain under stress from the intensified viral outbreak.Nam Y. Huh/Associated Press

The Baker administration said Friday that it has recovered more than $242 million in fraudulently issued unemployment benefits, in part the result of crime schemes first revealed last May.

The figures released in a statement are the latest tally of how many phony claims were filed and how much money the state has recovered.

Of the more than 2.3 million claims received since March, the administration said it has identified almost 172,000 fraudulent claims — or about 7.5 percent. The state has recovered about $1,400 per fraudulent claim.

The administration blamed an international criminal fraud ring targeting the state Department of Unemployment Assistance at a time when it was besieged with an unprecedented number of claims made by people laid off during the COVID-19 pandemic.

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The scam that has hit Massachusetts is national in scope, the statement said. The Secret Service first issued a warning last spring of a Nigerian-based group trying to exploit the COVID-19 crisis by committing “large-scale fraud against state unemployment insurance programs.” It estimated “potential losses” in the range of “hundreds of millions of dollars.”

The statement released late Friday afternoon suggests that fraudsters are still trying to file claims. And Baker acknowledged as much at a press conference last week.

Baker surprised many when he revealed at a press conference that a very high percentage of claims filed the previous week for unemployment benefits failed to pass an initial screening, due to possible fraud.

Of 31,000 new claims, he said, only about 1,000 — a little over 3 percent — had cleared the state’s screening. Baker made the remarks at a regularly scheduled news conference to discuss the coronavirus pandemic after being asked by a reporter about delays in processing claims.

“There is a tremendous amount of bot-based fraud going on,” he said, referring to autonomous software programs that are able to interact online with systems and users.

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In an e-mail, a DUA spokesman later clarified that the 31,000 claims Baker made reference to were filed over the weekend of Nov. 14-15, not for a full week.

In the days after the press conference, the DUA declined to respond to follow up questions from the Globe.

The four-paragraph press release Friday reiterated earlier warnings of delays in processing some legitimate claims due to extra steps that have been added in the vetting process to catch fraudulent claims.

“DUA is continuing to apply enhanced identity verification measures that may temporarily delay the payment timeframe for some unemployment claims in Massachusetts,” according to the statement.

The DUA has hired a forensic accounting firm to help it investigate fraud and cautioned that the figures released on Friday “may be subject to change based upon that analysis.”

DUA is also working with state and federal law enforcement agencies, the statement said.

A spokesman for the unemployment agency did not respond to a request for more information on Friday.

The Baker administration last spring acknowledged fraud as a major problem, though it has provided scant details. In July, the unemployment agency said it had verified that more than 58,000 claims were phony and that it had recovered $158 million.

The scam prompted the DUA at that time to interrupt weekly payments to some claimants and to block the initial filings of others as it investigated. As a result, the agency implemented time-consuming measures to verify users’ identities.

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At last week’s press conference, Baker blamed the preponderance of phony claims for diverting some attention from the processing of legitimate claims.

“It creates a time . . . issue for people who are appropriately and legally entitled to those benefits with respect to when they actually move the system forward on their behalf,” he said.

Anyone who believe a false unemployment claim has been filed in their name are urged to utilize the Department of Unemployment Assistance fraud contact form at mass.gov/unemployment-fraud or to call the DUA customer service department at 877-626-6800.


Got a problem? Send your consumer issue to sean.murphy@globe.com. Follow him @spmurphyboston.