Colorado to Implement New Tech to ID Unemployment Fraud

As the number of fraudulent unemployment applications continues to rise, the state has partnered with an online identity network to filter through fraudulent claims and help those struggling to verify their identity.

Hands typing on a laptop with a lock symbol hanging in the air above them.
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From widespread fraud to individuals not being able to receive their unemployment benefits, the state of Colorado has partnered with ID.me to implement an identity verification tool to weed out fraudulent unemployment claims.

The way the tool works, according to company CEO and Founder Blake Hall, is through a four-step process. The first step involves remote documentation verification, which involves screening applicants’ driver’s licenses, state IDs and passports, and verifying these documents’ authenticity.

The second step uses facial recognition technology to match the applicant’s selfie to their uploaded documents, followed by mobile phone verification, which includes verifying the SIM associated with the applicant’s cellphone in order to verify their identity and screen for potential fraud indicators.

Lastly, the fourth and final step in this process utilizes multifactor authentication to securely verify that all information provided by the applicant is accurate and not fraudulent. 

As for how this tool is being used in Colorado, Hall said, “we sift through hundreds of unemployment applications sent to us by the state that have been flagged by fraud detection systems and verify those applicants’ identities so their benefits can be unfrozen.”

In terms of implementing this technology, Cher Roybal Haavind, deputy executive director of Colorado’s labor department, said the process would be a gradual one.

“We will start with a small batch of roughly 1,000, prioritizing those who have contacted the division and have been waiting for the longest,” Haavind said in an email to Colorado Public Radio News earlier this month.

“Within a matter of days, we will increase the load, eventually sending emails to all claimants on fraud holds, with the exception of those deemed legitimately fraudulent,” she said. 

As for the amounts of fraud currently being seen in unemployment applications, Hall said, “the number is astounding.”

“The baseline of fraud for new claims is around 30 percent,” according to Hall. “Attackers using individuals’ information to commit fraud succeed around 2 percent of the time.” 

These numbers, he said, add up quickly. 

As for the future of using this technology, the state will eventually require all new claimants for unemployment to use the technology. According to CPR News, the state contract will pay ID.me $3.50 per use over the course of the next two years.

Katya Maruri is a staff writer for Government Technology. She has a bachelor’s degree in journalism and a master’s degree in global strategic communications from Florida International University, and more than five years of experience in the print and digital news industry.
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