Businesses Report Fraudulent Claims With New CT Unemployment System – InsuranceNewsNet | Business Insurance

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Business complaints of fraud are plaguing Connecticut’s new unemployment insurance benefits system.

Employers say they are receiving misinformation about workers who are still on the job but are applying for unemployment benefits. The complaints continue for weeks after businesses initially reported fraudulent unemployment insurance claims.

A spokeswoman for the state Department of Labor says the system is working fine and the problem is identity theft.

The Connecticut Business and Industry Association, which raised concerns about fraud last month after receiving questions and complaints from member businesses, said Wednesday that it has received another half-dozen reports of fraudulent claims in the past 10 days.

David Durkee, co-owner of Radcor LLC, a Salem consulting firm, said he received notice from the Department of Labor that he had applied for unemployment insurance. He said he unsuccessfully tried to reach someone at the agency by phone and instead received a written response acknowledging a mistake.

The week before, Durkee said he received information that an employee at his company who employed only two other people, himself and his wife, had applied for unemployment benefits. Concerned that personal information was at risk, he said he froze his credit.

“The software system is sending warnings or the system is compromised,” Durkee said.

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Juliet Manalan, a spokeswoman for the Department of Labor, said the system has not been breached. The problem is “100% identity theft,” she said.

Breaches at other sources — credit card issuers, health insurers and other companies that routinely handle millions of Social Security numbers and other personal information — have led to a trove of data on the dark web, a deliberately hidden part of the Internet. and extracted by thieves, she said.

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“Actually, we are the people who tell you that there is a problem,” Manalan said. “There is an identity theft issue and we are the first to let you know.”

Manalan said the new system is working exactly as it should, giving employers information that was previously only available to the state.

“They’re seeing claims of fraud that they haven’t seen in the past because the Department of Labor took care of that,” he said.

In the last two years, the Department of Labor has withheld $3 billion in payments for fraud claims related to identity theft, Manalan said. An increase in federal unemployment programs during the pandemic triggered a spike in identity theft, she said.

State Rep. Holly Cheeseman, R-East Lyme, is skeptical of the Labor Department’s insistence that the new system is working well. “It costs credulity,” she said.

She demanded that the agency respond immediately to all commercial communications. “Shouldn’t you want a quick answer? Isn’t that a concern?” she asked.

A third-party company hired by employers to handle unemployment claims said last month that criminal firms are committing fraud, buying names, Social Security numbers and other private data. Fraudulent claims are not considered “one-off” cases of employees lying about why they left their jobs or filing claims in multiple states.

Governor Ned Lamont and Labor Commissioner Danté Bartolomeo launched the revamped $60 million unemployment benefits system on July 6 to replace a 40-year-old program that was stretched to the limit during the pandemic when up to 390,000 weekly insurance claims were processed. for unemployment.

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Stephen Singer can be contacted at [email protected].

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