Legitimate And Fraudulent Claims Drain State's Unemployment Fund

CHICAGO (CBS) -- More than one million people in Illinois have filed unemployment claims.

We've heard from many who are still waiting for their money, and others have been paid – even some who are still working.

CBS 2 Investigator Dorothy Tucker discovered that legitimate and fraudulent claims are draining the state's payment piggy bank.

Traci Weathers showed us the KeyBank debit card she received, courtesy of the Illinois Department of Employment Security. Days later, she also got a confirmation of unemployment benefits in the mail.

"For each week, it was $1,084," she said. That included state funds plus the federal $600 per week payment.

There's only one problem.

Weathers didn't ask for the money, because, "I'm a full time employee," she said. "This is fraud."

Weathers is a victim of an identity thief. The Federal Trade Commission just issued a warning about this kind of scam: "Imposters are filing claims for unemployment benefits, using the names and personal information of people who have not filed claims." That is exactly what happened to Weathers. Scammers used her personal information to file for unemployment.

"I just feel violated. I have a level of uncertainty, like what's going on," she said.

So, how do the scammers get the money? The FTC cautions that sometimes "…payments get sent to the real person's account, instead. If this happens to you, the imposters may call, text, or email to try to get you to send some or all of the money to them. They may pretend to be your state unemployment agency and say the money was sent by mistake."

It is unknown how many fraudulent unemployment claims have been filed during the pandemic. But, more than 1.1 million people in Illinois have lost their jobs and legitimately tried to get benefits. We have heard from hundreds who are still waiting for their money.

However, many more have been paid. And those dollars come out of the state's Unemployment Insurance Trust Fund. At the end of April, the Fund balance was $1.4 billion. About a month later, it plummeted by more than half to $691 million.

"Clearly, this pandemic and the shutting of the economy has had an enormous impact on not just Illinois but every state," said Laurence Msall – the President of the Civic Federation, an independent government watchdog.

We analyzed the trust fund data and discovered four other states used up more of their money in May than Illinois.

New York's balance tumbled over 90 percent, Texas and Ohio dropped around 70 percent and West Virginia lost close to 60 percent. Illinois and California used up just over half of their unemployment claim funds.

"We're seeing record levels of demand for unemployment benefits. Of course , these states' unemployment funds are starting to be withdrawn at an excessive rate," said Msall.

Shutting the economy meant employees got laid off, so businesses no longer collected payroll taxes – which goes directly to the trust fund.

Msall says opening the economy, that is, reopening businesses, will help some – but not much.
"If restaurants are operating at 25% capacity and people are not able to gather for concerts and conventions and large gatherings, it's not going to be a full recovery until that occurs," Msall warned.

So it's going to take time to replenish the trust fund, but since unemployment benefits still have to be paid, Msall says at some point the state will run out of money.

"I think they're getting close," he said.

There are some lifelines available. The state can get reimbursed for a portion of benefits paid through federal legislation. Or the state can borrow money – which eventually taxpayers will have to repay.

CBS 2 is committing to Working For Chicago, connecting you every day with the information you or a loved one might need about the jobs market, and helping you remove roadblocks to getting back to work.

We'll keep uncovering information every day to help this community get back to work, until the job crisis passes. CBS 2 has several helpful items right here on our website, including a look at specific companies that are hiring, and information from the state about the best way to get through to file for unemployment benefits in the meantime.