How Arizona saved $40 billion in payouts on fraudulent unemployment claims

The COVID-19 pandemic caused an enormous spike in unemployment insurance claims across the country. But the complexity and financial enticement of these programs attracted a high volume of fraud attempts on state coffers. 

A new report, produced by ID.me, details how states partnered with private sector organizations to analyze millions of claims received and implement modern identity authentication tools to reduce fraud payouts. 

Read the full report.

“As early as May 2020, a Nigerian fraud ring dubbed ‘Scattered Canary’ reportedly siphoned hundreds of millions of dollars from the state of Washington before the coordinated attack was identified,” said the report.

“As fraudsters began to target new states, the Arizona Department of Economic Security (DES) saw a massive rise in claimants. There were 77,063 initial [pandemic unemployment assistance (PUA)] applications filed during the week ending May 16, 2020. That weekly number had risen to 266,674 by July 25. Initial applications for PUA peaked at 570,409 for the week ending October 10.”

By September 2020, a number of states partnered with ID.me — including Florida, Georgia and Nevada — to successfully verified tens of thousands of legitimate claimants and diminish fraud instances. About this time is when Arizona’s DES reached out to ID.me to initiate a pilot program that they hoped would help them determine fraud instances for the state.

“By October, the results of the pilot program in Arizona showed great success. ID.me contributed to a dramatic reduction in the number of claims, from a record high of nearly 570,400 claims filed in the week ending October 10, to just 6,700 the week ending November 14 — representing a 98.8% decrease in new claims filed,” shared the report.

By implementing ID.me’s identity verification tool, DES estimates savings from payouts on fraudulent PUA claims for the State of Arizona upwards of $40 billion.

Read more about how states are improving citizen benefits programs and reducing fraud through modern identity verification tools. 

This article was produced by Scoop News Group for, and sponsored by, ID.me.