Vermont stopped online unemployment claims after fraud spike

The Vermont Department of Labor stopped accepting new online applications for unemployment benefits last week after its system was receiving nearly 3,000 new claims a day, more than 90% of them fraudulent, Labor Commissioner Michael Harrington said Monday.

The department on Friday said it would no longer accept online first-time claims for unemployment benefits. Residents were told to file their claims over the phone. The change dropped the number of new claims by about 90%.

“The hardest part is that these fraudsters have a lot of data points on individuals’ identities,” Harrington said. “It looks like a real person, it feels like a real person, but in the end it’s not.”

Before the COVID-19 pandemic Vermont didn’t have a dedicated fraud unit and the department dealt with between five and 10 cases of identity fraud a year. That changed when the pandemic hit.

Harrington said unemployment insurance fraud has been a problem across the country that law enforcement has linked to national and international criminal organizations that could be using peoples’ personal information that was stolen many years ago.

He didn’t have an estimate of how much money has been paid out fraudulently in Vermont. He said it’s likely hundred of thousands, “if not millions of dollars.”

Despite the successes of the fraudsters, Harrington said the system has prevented millions of dollars in false claims from being paid.

“It has been certainly a completely new world and learning curve for our team as well as just (unemployment insurance) programs across the country who just never really had to deal with this type of coordinated effort,” Harrington said.

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