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Maine will put unemployment benefits on pause for two days and slow down processing times to address an apparent uptick in fraudulent applications over the last two months after struggling to process thousands of new unemployment claims related to coronavirus.
The slowdown is meant to help the state investigate and prevent “imposter fraud” that has plagued other states overloaded by the pandemic but it’s also likely to exacerbate some of the challenges that have prevented newly unemployed Mainers from accessing relief.
The Maine Department of Labor will place unemployment benefits on hold for 48 hours, according to agency spokesperson Jessica Picard. It is also reinstating a processing time of between 10 and 14 days for new unemployment claims after expediting that timeframe to seven days to handle the increased demand since March.
Maine has received “an increase in reports” of imposter fraud, Picard said, which generally occurs when criminals use stolen personal information leaked in previous data breaches of outside companies and organizations to to place unemployment claims under a worker’s name. On Tuesday, she said she could not provide the number of fraud reports so far.
There is no evidence that the labor department has had a breach of its own data as it processes a historic number of unemployment claims, according to Picard. In many cases, victims discover the fraud when they apply for unemployment or when their employer is notified of a claim.
Even some employed Mainers have recently noticed what seems to be the fraudulent use of their identity. As the operations officer of a Hermon-based courier company that transports medical supplies, Charles Richmond of Old Town has been busier than ever during the pandemic and has had no need to apply for unemployment relief.
But on Tuesday, he received letters from the labor department indicating that $445 in unemployment dollars had been issued to him by direct deposit and that he would be eligible to receive more than $11,000 in total claims this year. The money did not end up in Richmond’s own bank account and the letter did not give any indication of which account it had gone to.
Richmond tried to contact the labor department by phone, but was not able to get through to someone, so he reported the fraud on the agency’s website, he said. Now, he is concerned about how the apparent fraud could affect him personally, such as by hurting his credit score.
“It’s going on, and someone is obviously taking advantage of the whole system,” Richmond said.
U.S. Attorney Halsey Frank’s office is investigating the fraud with a group of other state and federal agencies. In a news release, Frank urged residents to report any cases in which someone used their identity to fraudulently seek unemployment benefits to the Maine Department of Labor.
Besides investigating the alleged fraud, the state is blocking web addresses linked to fraud, making other changes to help detect it and working with financial institutions to identify suspicious accounts, according to Picard.
The reports of fraud are yet another barrier to the state’s efforts to provide economic relief to workers who have been laid off during the pandemic. Many have struggled to apply for benefits, and the state has lagged in paying benefits to self-employed workers.
Similar reports have been made around the country, including in Washington State where the unemployment system has reportedly been bilked out of hundreds of millions of dollars, according to the Associated Press.
Watch: State labor commissioner speaks to unemployed Mainers