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Labor Dept. to Push Out $500M to Combat UI Fraud, Boost Equity

Yesterday, the U.S. Department of Labor announced it would send $500 million to states from three different pots of money to address unemployment insurance fraud and equity. Two of the funding streams involve grants.

Federal money will soon be on the way to state unemployment insurance offices that have gone through the ringer during the pandemic.

The U.S. Department of Labor (DOL) will distribute half a billion dollars to assist states with UI fraud and equity:

  • $260 million in first-of-their-kind grants will be given out to improve equity via outreach, enhanced processes, backlog reduction and more.
  • $140 million in grants will be awarded to reduce fraud through better identity verification, data analytics and cybersecurity strategies.
  • $100 million of “previously unobligated CARES Act funds” will be sent to states to fight fraud in the Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation programs, both of which were created by the federal government last year.

Not only do UI offices in states as diverse as Delaware, Illinois and Michigan continue to respond to attempts at fraud, but DOL “seeks to address potential racial and ethnic disparities in the administration and delivery of UI benefits in some states.”

“The pandemic underscored the need for modernization of the 53 different systems that administer unemployment insurance benefits in the United States, and it exposed significant vulnerabilities in state technology to criminals looking for an opportunity,” U.S. Secretary of Labor Marty Walsh stated in a release. “The Biden-Harris administration and Congress provided the means to reform this critical safety net for future crises, and our department is committed to executing that mission in a way that leaves no community behind.”

Throughout the pandemic, states have scrambled to make a variety of adjustments to their UI systems, including more utilization of cloud services.

In its announcement, DOL also said it would deploy “tiger teams” to states to help with matters concerning UI fraud and equity; connect states with three vendors — LexisNexis, TransUnion and V3Gate — to develop better identity verification tools for all communities; and work with the U.S. Digital Service to create “open, modular technology solutions that states may adopt as part of ongoing modernization and improvement efforts.”