Michigan halts 340,000 unemployment payments over fraud issues

Michigan said Friday that it halted payments to 340,000 unemployment benefit accounts — 20% of the state’s total — over concerns about fraudulent impostors, though many are legitimate claimants who need the money during the coronavirus pandemic.

People’s “economic lifeline is now tied up due to this criminal scheme,” said Jeff Donofrio, director of the state Department of Labor and Economic Opportunity, which includes the Unemployment Insurance Agency. “Our priority continues to be identifying and paying legitimate claimants the benefits they need and deserve.”

In this photo illustration, a person files an application for unemployment benefits on April 16, 2020, in Arlington, Virginia.

In this photo illustration, a person files an application for unemployment benefits on April 16, 2020, in Arlington, Virginia. (Photo by OLIVIER DOULIERY/AFP via Getty Images)

Michigan has seen a staggering 2.2 million new jobless claims since the virus arrived in March and businesses were closed to curb the spread. While more than 1.7 million people have been paid $9 billion-plus in a state that had the second-highest unemployment rate in April, 22.7%, Gov. Gretchen Whitmer’s administration has faced criticism for delays in processing claims.

Legislators report being inundated with calls from out-of-work people having trouble getting benefits. The issue has been a focus of hours-long hearings held by a Republican-led committee investigating the Democratic governor’s handling of the public health crisis.

Donofrio said the 340,000 people with flagged accounts were sent instructions to verify their identities so that their cases can be “quickly resolved in a secure fashion.” But he said some are experiencing additional delays. It was not immediately clear how long, though a Republican lawmaker said on Twitter that it can take weeks for legitimate claimants’ benefits to be re-approved.

The state has 600 staff working full-time to verify identities, with 200 more set for training next week.

Donofrio said “there is a significant amount of fraud in new claims” — part of a national trend — saying impostors are using data from past third-party data breaches at Equifax, eBay and hundreds of other entities. A “large number” of people associated with the 340,000 accounts are eligible for benefits, he said, saying the state was working to determine exactly how many are fraudulent.

Michigan’s maximum weekly benefit is $362, but the unemployed currently get an additional $600 a week under a federal coronavirus relief law.

Also Friday, Michigan Attorney General Dana Nessel announced a task force to identify and prosecute fraudsters and to recover illegally obtained benefits. This week, Washington state said it had recovered $333 million paid to criminals who used stolen personal information to file fraudulent jobless claim benefits during the pandemic.