California Freezes Unemployment Debit Cards Over Purported Fraud 

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California officials have frozen about 350,000 unemployment debit cards over purported fraud, according to an AP report on Monday (Oct. 26).

The alleged deception was likely limited to federal Pandemic Unemployment Assistance (PUA) claims. Across one week in August, California processed over 400,000 PUA claims, more than 50 percent of the U.S. Experts believe that number includes a spike in fraudulent claims. California has the biggest population nationwide but not enough to account for that big of an increase.

Suspicion was first raised after it was discovered that numerous claims were filed from one address, according to California’s Employment Development Department. The agency said that since March, it handled 15 million claims totaling more than $105 billion in benefits to people affected by the coronavirus pandemic. 

“The numbers that we saw in August and September that were so high for Pandemic Unemployment Assistance now turn out to be riddled with fraudulent claims,” said attorney Michael Bernick, Duane Morris law firm. Bernick is also a former director of California’s Employment Development Department.

The suspected fraud is now causing a payments backlog for over 1.1 million people waiting for benefits. Agency officials have said the pile-up will take months to clear. 

Arrests have been made in connection with unemployment fraud in the state. Police in Beverly Hills nabbed 100 people for suspected fraud and confiscated more than 200 debit cards and in excess of $500,000 in cash.

And rapper Nuke Bizzle, who is legally known as Fontrell Antonio Baines, was arrested in Los Angeles. He is alleged to have stolen identities to apply for more than $1.2 million in unemployment benefits. He reportedly bragged about it in a YouTube video, according to the U.S. Attorney’s Office.  

An August security alert from Visa raised the alarm that trillions of dollars in aid processed through mobile channels could be at a high risk for fraud. In an interview with PYMNTS, Visa said that a “layered” approach makes it easier for fraudsters to cover their tracks. 

Fraud is a problem across all states, with an estimated $26-plus billion in unemployment benefits stolen from fraudsters or was a result of improper filing, the Department of Labor said in June. Insider fraud is a growing concern, with suspected collusion within the state’s unemployment offices.

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