KDOL pays $290 million in fraudulent unemployment claims

Published: Feb. 23, 2021 at 4:31 PM CST
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TOPEKA, Kan. (WIBW) - The State of Kansas has paid around $290 million in fraudulent unemployment claims since the beginning of the COVID-19 pandemic.

Governor Laura Kelly says the Kansas Department of Labor has issued new data regarding the number of unemployment fraud attempts, the estimated amount of fraudulent payments it has paid and law enforcement referrals.

According to Gov. Kelly, after an in-depth analysis and IRS Form 1099-G fixes, KDOL has found that from Jan. 1, 2020, through Dec. 31, 2020, about $140 million in fraudulent claim payments have been made from the state’s unemployment program. She also said over $150 million in fraudulent payments have been linked to the federal benefits program, for a grand total of $290 million.

Gov. Kelly said USDOL-OIG estimates that unemployment fraud has cost taxpayers around $36 billion nationally since the beginning of the COVID-19 pandemic. She said the total amount of potential fraud is about 11% of total unemployment payments since the beginning of the pandemic. She said other states that have shared their fraud numbers are as follows:

“Fraud is unacceptable and will not be tolerated. It’s stealing from taxpayers at the worst possible time and all attempts at fraud will be referred in the strongest possible manner to law enforcement,” Governor Kelly said. “All 50 states have been overrun with coordinated, sophisticated criminal fraud attempts, and that’s why I wrote a letter with fellow Governors, calling on Congress to provide funding to secure and modernize our systems.”

As part of an anti-fraud effort, Gov. Kelly said KDOL has referred over 50,300 cases of alleged fraud to federal law enforcement agencies for investigation and possible prosecution. She said KDOL is also actively working with the FBI, U.S. Secret Service, U.S. Department of Labor’s Office of Inspector General and the U.S. Attorney’s Office to bring the fraudsters to justice.

“Congress opened the door for this historic level of fraud when they created multiple new pandemic-related unemployment programs, and at the same time prohibited states from asking basic verification questions,” Department of Labor Acting Secretary Shultz said. “It was not until the Continued Assistance Act was signed into law on Dec. 27, 2020, that states were able to take more aggressive action to verify claimant information in the federal programs.”

Gov. Kelly said in early February, KDOL started using a new fraud mitigation software solution that has reduced the number of fraudulent claims that have been filed. She said since its launch, the system has stopped over 4. 8 million bot attacks and fraudulent login attempts. As a result, she said KDOL’s fraud team has been allowed to focus their efforts on more complicated cases and investigations.

Since the beginning of 2020, Gov. Kelly said KDOL stopped around 500,000 fraudulent claims that were the result of identity theft and other unemployment-related fraud that would have cost over $22 billion. She said these stopped claims are the result of countless hours of effort from the KDOL fraud team. She said the number also includes identity theft cases that have been reported by individuals and businesses.

Gov. Kelly said since March 15, 2020, KDOL has paid out over 4 million weekly claims totaling over $2.7 billion between regular unemployment and federal pandemic programs.

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