As of three months ago, 82% of unemployment claims in the state of Idaho were fraudulent.
This fraud is not coming from individual, unsophisticated fraudsters trying to make an extra buck (though they are a part of the equation). This is the result of an unprecedented, highly coordinated attack on our nation’s entitlement programs by organized foreign criminal syndicates. Looking back, years from now, the great unemployment heist of COVID-19 will go down as the largest fraud in history. Current national estimates are between $150-250 billion — and this is not even close to being over.
While this may not have been predictable, it was definitely preventable, and it still is. Stopping this fraud in its tracks before our nation is robbed of 10% of the entire federal budget is of paramount importance. It can be done — and more importantly, it can be done without creating friction for legitimate claimants.
Unfortunately, in response to rampant fraud, the Idaho Department of Labor is now forcing all claimants into a process that treats them as fraudsters. One must now display their government documents like driver’s licenses, passports and ID cards, and visually confirm via video that they are the person in the photos . Often, they must virtually meet with an “ID referee.”
This framework is simply a digitization of how a bank might have verified identity several decades ago. Several states have opted for this approach over the past 18 months. Now, instead of waiting in line you wait on-line, and it requires a smartphone, a contract with a carrier and the same address for at least a year — some things that those in vulnerable populations may not have.
While this process may seem logical to those who don’t specialize in digital identity-verification, the reality is that this is an incredibly flawed and cumbersome process that is simply unnecessary. Banks deal with fraudsters every second of every day, and unlike unemployment insurance programs, they are not being defrauded of tens of billions of dollars right now by imposter fraudsters. They’re not shutting down their apps, suffering weeks-long delays for those looking to make withdrawals or treating every customer as a fraudster. Nor are they losing 30% to 50% of all deposits to fraud.
Banks have had years to construct systems that enable near-frictionless fraud prevention, and it’s time for Idaho’s UI program to adopt the same technologies relied upon by the private sector. It’s fast to implement and it costs comparatively little.
From my personal experience as an executive at a company that is the market leader in identity verification with each of the nation’s top 50 banks, I can tell you that LexisNexis Risk Solutions digitally verifies identity 2 billion times every day, while stopping $1 billion in fraud each week. We use data garnered from people’s digital and physical footprints, combined with device assessments, to digitally verify identity. This methodology has been proven through our experience powering identity-verification for a large segment of the US banking industry.
99.4% of Americans have a verifiable digital footprint. It’s almost impossible to go through life without leaving a track record of addresses, bank accounts, social media profiles, email addresses, phone numbers and jobs. Each of these things can be confirmed instantly. There are over 130 unique attributes that can be analyzed in real time with no friction or action required by a citizen. Device assessment is also a key factor here. How often do you change your phone number or primary email address? The answer is almost never. So, when you combine device assessment data with digital footprint data, you can verify identity for 99.4% of people in milliseconds.
At this point in time, Idaho has a backlog of claims, its identity-verification system is unable to respond in a timely manner to customer support requests (given that it relies upon human “ID referees”) and those in desperate need of financial assistance are left waiting for days, weeks and sometimes even months before navigating through Idaho’s unemployment matrix.
These two problems — 1) fraud, and 2) friction — are correctable using modern technology that at this point is almost off-the-shelf. Amazon isn’t crumbling due to fraud; banks aren’t crumbling due to fraud. In fact, almost no private sector entity has been brought to its knees recently due to endless waves of fraud. The private sector has found efficient and effective ways of stopping fraud without creating friction for customers because their livelihoods depend on it. It’s time for Idaho to look to the private sector for solutions.
It’s time for Gov. Brad Little and Jani Revier, director of the Idaho Department of Labor, to form a task force of stakeholders for the purpose of creating a pathway out of this zero-sum game in which fraud or friction for legitimate claimants are the only two choices. Every bank in the US has figured out how to do this effectively; every major e-commerce retailer does it, Apple does it, tech companies do it. There’s no reason why what works in the private sector can’t work for the state of Idaho.
I urge Idaho’s state leadership to revise its approach before many more millions of taxpayer dollars are lost and many more families are left waiting for benefits they are entitled to by virtue of being American citizens.
Haywood Talcove is the CEO of LexisNexis Risk Solutions, Government Division.