Rush To Pay Unemployment Claims Brings Spike In Fraudulent Cases

CHICAGO (CBS) -- In its rush to get money into the hands of unemployed workers, the state of Illinois is skipping the verification process, resulting in an increase in unemployment fraud, according to officials at one company that verifies unemployment claims for businesses.

CBS 2 Investigator Dorothy Tucker reports employed workers like Reginald Fitzgerald and Kristen Jeske did not apply for unemployment, but received letters from the Illinois Department of Employment Security verifying unemployment claims.

"I'm still working," Fitzgerald said.

Traci Weathers is another—she was approved for $1,084 a week after IDES OKd money she didn't need.

They are all victims of identity fraud. Someone used their personal information and filed a claim without their knowledge. Unemployment fraud is an issue around the country and across the state. IDES won't provide data on how many working adults in Illinois were approved for unemployment benefits, but private companies that work with employers say the numbers are alarming.

"It's unbelievable," said Jennifer Castellanos, the manager for NSN Employer Services.

The company works with more than 2,000 businesses in Illinois, among them the Chicago Archdiocese, the Chicago Cubs, the White Sox, Tootsie Roll, World's Finest Chocolate. NSN acts as the middleman and handles unemployment claims, communicating with the state on behalf of the company.

"I was expecting the influx of claims to rise, but nowhere near expecting the amount of fraud claims to rise," Castellanos said.

Unemployment claims at NSN jumped from 1,000 a week to 5,000. Before the pandemic, fraud cases, on a weekly basis, were rare. Castellanos said there were maybe one or two a week. Now with the pandemic, it's up to 30 or 40 a week.

NSN is not alone. Personnel Planners represents 1,200 Illinois businesses. Since April they've logged 271 fraud cases. Unemployment Consultants works with 450 businesses and has seen an estimated 65 fraud cases since the pandemic.

The reason for the increase: IDES is trying to get as many people as possible paid as quickly as possible. That's a move supported by federal legislation, but Castellanos says speeding up payments delays verifying claims, which leaves a big loophole for scammers.

Every time NSN catches a mistake--where a person is still working--it sends a notice to IDES, asking the agency not to pay the claim. NSN has alerted the state in about 300 cases, and IDES has responded to 11, Castellanos said.

Castellanos is still waiting on the state to respond to the others.