New York Warns of Major Unemployment Compensation Fraud

The New York State Department of Financial Services (DFS) has issued a fraud alert to businesses and organizations across the state as the state grapples with fraud for various reliefs.

The DFS has warned that hackers have begun to target unemployment and pandemic benefits. These hackers are using fake names and even names of prisoners to essentially defraud the various government agencies. They can get away with this because of the number of people filing for these claims while there are less people actually confirming whether or not these are legitimate.[1]

New York is not the only one suffering from this. California recently suffered a scam involving their programing with Bank of America. Their Employment Development Department (EDD) has struggled to keep up with the demand, facing intense pressure to work through a backlog that at one time numbered more than 1.6 million people.[2] The demand however has allowed many criminal actors to slip and take some of the money for themselves. Using prisoner’s names such as Drew Peterson and even fraudulently using Senator Diane Feinstein’s name, criminal actors were able to trick the system into giving them Bank of America bankcards with said funds and funnel it to various criminal enterprises including some in China and Russia. The current lost estimates are a staggering $9.8 Billion dollars.

According to Mike Smith, President and CEO of Axis Insurance Services, LLC, “We are seeing a growing number of these fraudulent unemployment compensation claims for our clients as the state agents just can’t keep up with the audit of unemployment compensation filings.”

In the light of these frauds occurring, its more imperative than ever that people be mindful of their information online. Malicious actors are always searching for low hanging fruit such as relief money.

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[1] https://www.dfs.ny.gov/reports_and_publications/press_releases/pr202102161

[2] https://www.ktvu.com/news/california-unemployment-fraud-could-top-9-8-billion

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