Audit: R.I. unemployment fraud could top $500M

RHODE ISLAND COULD have paid out more than $500 million in fake unemployment claims in fiscal 2021, according to a report by the state auditor general. / PBN FILE PHOTO/CASSIUS SHUMAN

PROVIDENCE – The state is still probing the surge of fake unemployment insurance claims that accompanied the onset of the COVID-19 pandemic, with $480 million worth of benefits still under investigation, according to a new report by the R.I. Auditor General Dennis Hoyle.

Together with the $70 million in benefits already proven to have landed in the hands of fraudsters, these additional fake claims would mean the state doled out $550 million in fraudulent unemployment benefits during the fiscal year that ended June 2021, according to the report published Tuesday.

That would mean just less than a quarter of the $2.3 billion in unemployment insurance benefits the state paid out during the entire fiscal 2021 year went to fraudsters.

Unemployment fraud has plagued states nationwide, including Rhode Island, since the onset of the pandemic, with outdated technology unable to keep up with the flood of claims being filed from people suddenly out of work. While the R.I. Department of Labor and  Training says it has worked to rectify the problem, working with law enforcement to recoup the money paid out to undeserving recipients and updating its technology to prevent future fraud, the report said more work needs to be done.

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“DLT’s systems require further enhancements to timely identify fraudulent benefit claims prior to disbursement,” the report stated. It also recommended DLT put together a “strategic plan” to figure out how to modernize the unemployment benefit claims processing system.

The conclusions echo the findings of fraud-prevention group SEON, which in December labeled Rhode Island as a “business fraud hot spot” with the highest per-capita fraud rate nationwide in the first half of 2021, PBN has reported.

In an emailed response on Wednesday, DLT Director Matt Weldon said, “The Department of Labor and Training takes seriously our responsibility to protect unemployment funds from bad actors while at the same time ensuring that legitimate claimants receive the benefits they are owed in a timely manner. Over the past two years, we have made significant updates to our unemployment insurance system to prevent criminals from fraudulently obtaining benefits. Most recently, we launched a secure, cloud-based portal to improve the claimant experience while implementing additional security features. We continue to collaborate with our partners in law enforcement, the federal government, and other states to hone our processes and exchange best practices.”

Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.

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