Even though it took almost a year after the coronavirus pandemic began before state unemployment officials took steps to reduce the hemorrhaging of hundreds of millions of dollars to fraudsters, Ohio did “remarkably well” compared to other states because it took “real quick” action, testified Haywood Talcove, CEO of LexisNexis Risk Solutions Government Group.
Unemployment fraud in Ohio has dropped significantly since March, when the Ohio Department of Job and Family Services agreed to multi-million-dollar contracts with LexisNexis and other companies to provide anti-fraud services. Gov. Mike DeWine also brought in private-sector executives to help ODJFS combat fraud and deal with the unprecedented number of jobless claims the state has received during the COVID-19 crisis.
Ohio unemployment officials have known since the summer of 2020 that they were being targeted by scammers on a massive scale, according to State Auditor Keith Faber’s office, which claims ODJFS hid the extent of the fraud from them at the time.
But other states have taken even longer to act, Talcove told cleveland.com after speaking before the Unemployment Compensation Modernization and Improvement Council, a legislative committee set up to examine the system’s woes. He pointed to Illinois’ unemployment program, which only last week put in place security features — such as multi-factor authentication — that Ohio has been using for months.
Talcove told the council that the roughly $500 million Ohio is estimated to have given to scammers via bogus jobless claims is only the 37th highest amount lost among the 50 states. By contrast, just by last January, California paid out as much as $31 billion in benefits to criminals, whom Talcove said mostly come from countries such as Nigeria, Romania, China and Russia.
“Getting to where you got in that much time was darn impressive relative to where you started from,” Talcove said, noting that Ohio’s unemployment system still uses a computer system that dates back to 2004.
However, he said, fraudsters — whom he said frequently work for “transnational criminal groups” — are constantly working to get around the new security features, including by emailing their elected officials posing as constituents seeking help with their unemployment claims.
State Rep. Derek Merrin, a Toledo-area Republican serving on the council, indicated skepticism about Talcove’s testimony. “You’re actually the first person that I’ve heard before this committee compliment [the Department of] Job and Family Services,” said Merrin, who asked how much money LexisNexis is getting from Ohio taxpayers (the initial contract was for $2 million).
“I almost have to think back what we’re even doing here [as a council] if they’re doing such a great job,” Merrin added.
Jeff Ficke, who’s leading a public-private partnership team set up by Gov. Mike DeWine to help the state’s unemployment system, said officials need to “continually work” to manage the fraud that Talcove described and keep improving security features to fend off criminals.
“What works today is not going to work 24 months from now, and we have to continually work in playing offense and defense to make sure we’re doing the right things,” Ficke said.
Ficke said as Ohio took measures to stop criminals from filing for benefits, including multi-factor authentication, scammers instead started to focus on hijacking legitimate unemployment accounts and rerouting Ohioans’ money to themselves.
There are “so many different ways” that Ohioans can unknowingly allow scammers to access their account login information, Ficke said, from clicking on a text message to downloading an infected application to their phone.
Starting Friday, ODJFS will start accepting Ohioans’ reimbursement applications for benefits lost to account hijackers.
The end of the federal Pandemic Unemployment Assistance benefits on Sept. 4 will also cut into the number of fraudulent applications Ohio receives, as the program required less documentation than traditional unemployment benefits and was available to self-employed workers who, by definition, had no employer available to verify their employment status.
However, when ODJFS sent out 2.7 million form letters informing every benefits applicants that the federal benefits were ending, the letters inadvertently notified many Ohioans for the first time that their personal information was exploited by scammers. ODJFS has set up a special form for people to report receiving such letters.
Ficke also touted improvements in two other major problems with Ohio’s unemployment system — delays in issuing people benefits, and lengthy wait times for people to talk to someone at the state’s unemployment call center.
The state has eliminated its backlog of unprocessed initial claims, Ficke said, allowing employees to focus instead on determining whether claims flagged for potential fraud are legitimate or not.
The average wait time to speak with a call-center representative about traditional jobless benefits fell from an average of 10 minutes and 54 seconds in May to 35 seconds in August, according to ODJFS data. However, it rose to more than 3 minutes in September, most likely due to questions related to the federal benefits and overpayment letters that went out, according to department spokesman Bill Teets.
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