Audit finds unemployment fraud costs New York billions

Business

(NewsNation) — A state audit showed New York’s labor department paid more than $11 billion in unemployment fraud.

The state’s comptroller said the department was warned more than a decade ago that outdated systems made it vulnerable to fraud.

Now, an audit shows the state paid out billions in fraudulent unemployment claims that could have been avoided by updating its systems.

The alleged fraud occurred between March 2020 and April 2021, in the midst of the COVID-19 pandemic. The state was dealing with a 3,000 percent increase in unemployment claims at the time.

At least $78 billion was paid out in unemployment claims, and the comptroller said at least $11 billion of that was fraudulent.

In some cases, people were overpaid and in others money was sent to the wrong recipient.

The audit found the increase in claims overwhelmed the system, so workers used manual overrides to process claims faster, so potential cases of fraud went unflagged.

New York borrowed billions of dollars to pay out unemployment during the pandemic, and the state is now on the hook to repay that money to the federal government with interest.

Business owners in New York are concerned that they will be the ones picking up the tab for this costly mistake with increases in unemployment insurance premiums.

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