Fraudulent payments of unemployment benefits topped $24 million during the initial pandemic year of 2020, according to a new report by the Oregon Employment Department.
The amount is about one-third of 1% of a total $7.4 billion paid out from federal funds and the state unemployment trust fund, which comes from payroll taxes on employers. It's also far less than the estimated $20 billion lost in California — which estimates that fraud cost 11% of the total paid out — and at least $640 million in Washington state.
"The good news is that Oregon has not seen losses on the scale of some other states," said Lindsi Leahy, director of the agency's unemployment insurance division.
According to the report, 4,692 individual fraud cases accounted for $21.1 million in losses, and 4,543 identity-theft cases accounted for $3.1 million.
The figures are still preliminary. The agency is still investigating fraudulent claims for 2020, and later this year, it expects to have data for 2021. Leahy said the 2020 figures are expected to increase as investigations proceed.
Leahy is on the steering committee for the integrity center of the National Association of State Workforce Agencies, and the center's top priority is combating fraud.
During the pandemic, the number of Oregon Employment Department employees focused on overpayments, identity theft and fraud rose from 49 to around 200.
The Employment Department report concludes:
"Oregon's low rate of pandemic era unemployment insurance (UI) fraud compared to some other states speaks volumes to the dedication of employees who diligently worked to keep up on ever-changing trends in UI fraud and prevent it along with their vigilant efforts to protect Oregon's UI trust fund.
"During the time of skyrocketing pandemic related workloads, preventing fraud became an even greater challenge for the UI system nationally and in Oregon. As we move beyond the pandemic, a constant remains: We are committed to detecting and preventing fraud."
States pay benefits from trust funds drawn from employer payroll taxes. Congress also approved several infusions of federal funds, including a program (Pandemic Unemployment Assistance) that paid benefits to self-employed and gig workers for the first time in the history of unemployment benefits, which go back to the Great Depression in 1935. These workers did not qualify for benefits in the past because they did not pay the relevant taxes.
State programs are overseen by the U.S. Department of Labor, which sets standards.
Though 385 cases were related to $4.4 million in fraudulent benefits intended for self-employed and gig workers, the vast majority (3,366) involved $11.2 million in benefits from the regular unemployment program.
During the past 18 months, Acting Director David Gerstenfeld said he chose to be vague about specifics of fraud to guard against people learning details that could enable them to commit further frauds.
However, all of the federally funded benefit programs during the pandemic ended on Sept. 3 — and Oregon's unemployment rate has dropped below the triggers required under federal law for added unemployment benefits.
"Now that the Pandemic Unemployment Assistance program has ended and work in the program is winding down, we can publicly share some information about fraud that occurred in calendar year 2020 without creating undue further risk," Leahy said.
Link to report by Oregon Employment Department:
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