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State Auditor details spike in unemployment fraud due to pandemic

Unemployment benefit payments skyrocketed by 3000% in the midst of the pandemic, and a recent audit performed by the State Auditor’s Office revealed that $117 million in improper payments were made by the Mississippi Department of Employment Security. 

While some of these improper payments went to those who may have mistaken their eligibility or incorrectly filled out a form, State Auditor Shad White explained that a majority of the improper payments went to individuals trying to defraud the system. This included people who never lost their job, incarcerated individuals and criminals using stolen identities. 

According to the report, “MDES did not have proper internal controls in place due to overriding or waiving existing controls. This caused MDES the inability to verify that unemployment claims were paid to proper claimants.”

In an effort to expedite the process of paying out unemployment benefits, certain requirements and policies were suspended as the economy began to shut down in early 2020. 

“When you hand out a lot more money, the incentive to defraud the system is also very high too. So what we saw was a huge uptick in fraud,” White said during an appearance on SuperTalk Mississippi while also clarifying that the audit performed only captures mid-2019 through mid-2020. 

All unemployment overpayments made by MDES after June 30, 2020, will appear in next year’s audit report. As for getting the money back, White says it will be difficult for MDES to do so as some fraudsters may even be outside of the United States. 

This issue is not unique to Mississippi as White pointed out that Washington identified $570 million in improper unemployment payments in the first few months of the pandemic while California’s figure is up to $11 billion. 

So what can be learned from this situation? White offered his opinion. 

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