In R.I., 43 percent of unemployment insurance claims were suspected or confirmed fraud

Rhode Island Department of Labor and Training building in Cranston, R.I.RI DLT

CRANSTON, R.I. — About 43 percent of the unemployment insurance claims filed in Rhode Island over the past year turned out to be suspected or confirmed fraud, the state Department of Labor said Friday.

Since the COVID-19 pandemic began last March, the state has received 899,505 unemployment insurance claims, and 382,683 of those turned out to be suspected or confirmed fraud, the agency said in releasing that fraud data for the first time.

The DLT said the fraudsters could have stolen up to $3.2 billion if it hadn’t stopped most of the phony claims. But $247 million did get paid out on 117,435 claims that were either suspected or confirmed fraud, officials said. That represents about 9 percent of the $2.8 billion that DLT has paid out in total unemployment benefits since the beginning of the pandemic, officials said.

“Across the country, fraudsters have been taking advantage of the financial lifelines provided through state unemployment insurance programs,” DLT acting director Matthew Weldon said. “Rhode Island has not been spared. We take the issue of unemployment fraud very seriously and are committed to doing everything we can to combat it.”

Weldon said the victims of the fraud include residents who have had a more difficult time getting benefits they deserve because the fraudulent claims are slowing down the system, and the victims include employers pay into the unemployment insurance fund.

“It makes me mad, quite frankly,” he said.

The DLT had been refusing to say how many state residents and state employees have been victims of unemployment insurance fraud, prompting a state union official to file a complaint with the attorney general’s office.

State officials are still not releasing the number of state employees who have had fraudulent unemployment claims filed in their name. And a spokeswoman the decision to release the data Friday was not in response to the public records complaint.

Of the 426,643 suspected fraudulent claims that DLT stopped, 56,365 have been confirmed to be fraudulent, DLT said. Another 326,319 are considered likely fraudulent, and those claims remain stopped and under investigation. Plus, 43,959 suspected fraudulent claims have been confirmed to be legitimate and are now unfrozen.

To date, $37.6 million has been paid out on the confirmed fraudulent claims, and another $209.6 million has been paid out to suspected fraudulent claims, DLT said.

Of the total amount paid in suspected and confirmed fraud, more than 75 percent came from federal funds, and less than 25 percent came from the state trust fund, DLT said. So far, $3.5 million in fraudulent payments have been recovered, and authorities are trying to recover additional funds.

Fraudsters use information that was previously stolen from outside sources to illegally file for unemployment benefits under someone else’s identity. DLT has been working with the State Police and federal law enforcement to share information on fraudulent claims to support their criminal investigations.

Also, DLT has been working with cybersecurity experts, state and federal law enforcement agencies, the US Department of Labor, and other states to develop and refine anti-fraud techniques.

All unemployment insurance claims are screened for a variety of indicators that are common marks of fraudulent claims, the agency said. When a claim comes in that is likely to be fraudulent, it is immediately stopped. If a legitimate claim is inadvertently frozen, the claimant is provided an online platform and direct phone line to use to verify their identity and reinstate their benefits.

In May, the Rhode Island chapter of the American Civil Liberties Union filed a class-action lawsuit, challenging DLT’s decision to freeze unemployment payments to hundreds of Rhode Islanders. The suit claimed the failure to provide recipients with notice violated their constitutional right to due process.

But DLT agreed to take a series of interim steps to begin rectifying the situation. And Weldon said, “We have taken great care to ensure that our anti-fraud efforts pose minimal hindrance to legitimate claimants who are reliant on unemployment benefits to provide for themselves and their families during this economic crisis.”

Anyone who receives a letter or email from DLT about unemployment benefits that they did not apply for should report it to the State Police on their website. Also, they should file an identity theft report with the Federal Trade Commission at identitytheft.gov, and periodically review their credit report to ensure no new fraudulent activity has occurred. For more guidance, go to dlt.ri.gov/fraud.

In recent weeks, some Rhode Islanders have begun receiving 1099-G tax forms asking them to pay taxes on unemployment benefits that they never received. Weldon said DLT is making every effort to ensure that fraud victims don’t get those forms, but if they do, they should fill out a form at dlt.ri.gov/1099 so they can receive a corrected tax form.