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October
11, 2012
Christie
Administration Expands Anti-Fraud Measures to Protect
Unemployment Insurance Trust Fund
The Christie Administration recently
launched a new initiative to stop fraudsters from depleting
New Jersey's Unemployment Insurance Trust Fund, adding
another layer of protection to anti-fraud programs that
already have saved the fund $153 million within the past 18
months.
Using state of the art technology, the Department of Labor
and Workforce Development is adding a new tool to its
anti-fraud arsenal with a system that requires people who
file for Unemployment Insurance benefits to answer a series
of multiple choice questions that will allow the state to
confirm their identity before clearing payment on a claim.
The innovative, computer-based system is designed to prevent
identity thieves from filing phony unemployment claims using
the stolen identities of innocent and unsuspecting victims,
which is a common type of fraud used to raid Unemployment
Insurance funds around the nation.
"When I first came to this department, we uncovered a case
in which $2 million had been stolen from the Unemployment
Insurance Trust Fund by people who largely used the stolen
identities of innocent people to file false claims," said
Labor Commissioner Harold J. Wirths. "We took the problem
head on by initiating anti-fraud measures that have already
saved New Jersey $153 million and we believe this new
measure will add considerably to that savings."
The new program is called "Identity Proofing." When a person
files an Unemployment Insurance claim, providing the
Department of Labor with his or her name and other legally
required information, the new system conducts an instant
search. It matches the information provided by the claimant
against data the system electronically pulls from public
records related to the name and identifying information
provided by the claimant.
The system then devises questions using that background
data, such as what type of car the person first owned or
previous addresses where the claimant resided.
"Identity thieves who steal a person's name and social
security number to file a fraudulent Unemployment Insurance
claim are unlikely to know some innocuous, but key facts,
such as whether a person graduated a certain college or once
owned a motorcycle. They also are unlikely to simply guess
the correct answers to three or more questions," explained
Deputy Commissioner Aaron Fichtner.
Department staff are not informed of the questions posed to
the claimant or how a person responded, and the system does
not retain, store or share any of the background data the
system calls up to verify an identity. The system only
places a pass or fail designation on the claimant's account.
Claimants who pass the identity verification will have their
claim processed for benefit payments. Those who do not pass,
choose not to participate in the questioning or who quit
during the question session will not be cleared for
benefits. Instead, that person will need to confirm their
identity before any benefits will be paid.
"Those people will be mailed information requiring they
report to designated Department locations for in-person
verification and they are given a list of acceptable
identity verification documentation they need to produce. A
fraudster is not likely to show his face for an in-person
interview or have the additional identification papers,"
said Ronald Marino, Assistant Commissioner of Income
Security.
Details of the new system were outlined by Department of
Labor officials during a meeting of the bi-partisan
Unemployment Insurance Task Force, which was created under
legislation signed in 2010 by Governor Chris Christie to
review and make recommendations to improve the state's
Unemployment Insurance system and trust fund. The meeting
was held in the auditorium of the Department of Labor's
headquarters in Trenton.
Last year, the U.S. Department of Labor issued a report
contending the most common cause of fraud and improper
payments affecting state Unemployment Insurance funds
nationwide involves people continuing to file unemployment
claims and collecting benefits long after they find a new
job and return to work. In a March 2012 report, the U.S.
Department of Labor said more than $13.7 billion in improper
payments had been made from state trust funds in 2011.
But by then, New Jersey already had been issued two
recognition awards by the U.S. Department of Labor for
stopping that type of fraud. Beginning in March 2011, New
Jersey began cross-matching state Unemployment Insurance
lists against the National Directory of New Hires, to which
employers must report new employees.
An average of 2,000 claims has been flagged each week, and
as of last month, the state Department of Labor saved more
than $133 million through the cross-matching. Another $18
million has been saved since the state purchased $1,600 in
new software in April to identify cheats from foreign
nations who are trying to file Unemployment Insurance claims
through the Internet from abroad.
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