Fraud could be to blame for unexpected spike in Indiana jobless claims

A surprising steep rise in unemployment claims in Indiana likely can be attributed to a major increase in fraudulent claims, according to the state Department of Workforce Development—possibly from an organized effort that has previously targeted other states.

While the United States issued a better-than-expected jobs report Thursday morning, Indiana reported a spike in initial jobless claims that defied reasonable expectations.

Statewide, 53,364 people filed initial unemployment claims in the week ended June 27. That was up 81% from an adjusted number of 29,331 the previous week. That increase came during a national decline in initial unemployment claims.

It was the second week in a row that Indiana experienced an unusual rise in claims. For the week ended June 20, initial claims totaled 31,885, a 28% increase from the previous week.

After peaking at more than 146,00 initial claims in late March, weekly claims had been steadily declining in Indiana during the pandemic until unexpectedly increasing in recent weeks. Authorities now believe the Indiana is the latest state to be targeted by sophisticated scammers who are taking advantage of a crisis.

Washington, North Carolina, Massachusetts, Rhode Island, Oklahoma, Wyoming and Florida were hit hard by fraud from organized scammers earlier in the pandemic. Now, Indiana and Michigan appear to be the latest victims.

Josh Richardson, chief of staff for the Indiana Department of Workforce Development, said it was difficult at this point to quantify the number of fraudulent claims Indiana is receiving, but he said it was “more than anyone could expect to happen.”

Richardson said scammers are targeting the new Pandemic Unemployment Assistance program for self-employed and gig workers. The program is more vulnerable to fraud, he said, because those filing claims don’t have to verify the claims are legitimate.

PUA claims can also be filed retroactively to early March, meaning some claims are seeking a minimum of $750 a week in benefits for up to 13 weeks. That helps make the PUA program a more inviting target for scammers.

Indiana reported 15,257 new recipients for the PUA program in the week ended June 27, down from 17,439 new PUA claims the previous week. However, 261,370 people were receiving continued PUA aid as of June 13, up from 209,080 the prior week.

The DWD said it was putting “holds” on, and investigating, many PUA claims before clearing them for payment.

The DWD said the increases in claims “are inconsistent with other employment indicators that initial claims should be decreasing, such as more individuals returning to work in Indiana, and fewer individuals filing for continuous weekly benefits.”

Federal authorities have blamed fraud in other states, in part, on a Nigerian-based crime operation called “Scattered Canary,” which uses stolen personal data to file thousands of false jobless claims.

The DWD said it is working with both federal and state authorities to investigate all suspected fraud.

The fraud not only is costing taxpayers millions of dollars, but it is delaying processing of legitimate claims while they are investigated.

Richardson said the situation is making what has already been a challenging time even more difficult. The DWD, he said, was overwhelmed in the initial part of the pandemic with implementing systems to deal with a huge number unemployment claims. Then it had to make more changes, such as hiring more staff, to speed up the process.

Now, staff has to spend additional time to deal with potential fraud.

“This is really the third full phase we’ve had to go through here (during the pandemic),” he said. “It has been intense.”