How Scammers Took $32 Billion in Unemployment Aid

alone and use mule networks to get it done. Many of the victims are also people who are employed but have had their identity stolen. Nick pens And Stadler, reporter at USA Today, joins us for how scammers are cashing in on unemployment. Thanks for joining us, Nick, They're happy to be here. We've been doing some stories recently about unemployment benefits and how you know it's taking months over a million people months and months to actually receive any

unemployment aid. Obviously, there's a bunch of backlogs they're working through to try to root out any fraud that's going on. And then I came across your ard goal talking about how scammers have siphoned off about thirty six billion dollars in fraudulent unemployment payments from the United States, and you know, it's kind of an all too familiar theme. I guess.

You know, it's people that are kind of imposters, posing as someone else, throwing out some of the information that they can buy some of these hacks databases pretty easy, it seems like for these scammers. And you actually got to speak to somebody who was involved in some of this, So Nick, tell us a little bit about what we're seeing and how you know people are just scamming the unemployment benefits. Sure, I think it's important to think about

that hacked information. You know, it's your data breaches. You hear about that in the news a lot, and I think a lot of people shrug it off when it happens because nothing immediately happens to you. There's and there aren't really the consequences until maybe down the line. And this is exactly that scenario where compromise information has been floating kind of on the dark web for years maybe, and now the bad guys are exploiting it through this

series of transactions to get this money. And the way it works is they're using a stolen social Security number and a day of birth and a name that I'll match to file for unemployment in that person's name. So it's not like synthetic fake person. It's a real person who's had their identity stolen with a bad guy using

it to file for the unemployment. Yeah, and sometimes you need a little bit of extra information, you know, the office is asking you for other stuff and in that way, you know, they'll go on some sites like family Tree now truth finder to get other information that they might need to be able to fill out these applications. And

you know, they're very successful. I think one of the people that you spoke to that has been partaking in some of this said that one in six attempts are successful for them, and a lot of these scammeras are coming out of Nigeria. That was the case for the person you spoke to. What was that like, Yeah, we had this pretty rare opportunity to talk to a scammera.

They're called threat actors by the cybersecurity folks who deal with them, and the firm we interviewed, you know, spends time with these people to try to learn how they're how they're running these scams, and they pay them for the information so the scammers are all too happy to share a little bit because they share it widely. There are these channels that share these scripts and these methods, and they're all in on it. So this guy came on an interview with us and walked us through each

step of the process. And you know, we're able to ask them, you know what happens when they're pressing for your identity and how much time do you spend on it? Do you do this all day? And this one gentleman told us he does. He does it all day long. He takes a break during the day and he's made about fifty dollars since the pandemic started, just on unemployment scams. So it's this full time job. One of the interesting questions you asked too if they felt any remorse for this,

and he said, no, not at all. We don't know these people, we don't know who or where they are, so to them, it doesn't bother me one bit, right, And that's the same case with some of these romance scams that are also tied in with this. So a lot of times to extract the money from the system, they're not actually getting paid from, you know, the state

unemployment system. To the scammer, it has to go through to a few different channels, so they often exploit people that they've been running as either a romance scam victim or maybe some other type of email based scam to receive the money in the United States before sending it overseas to them. You contacted all fifty states to see how much fraud money had been paid out. Not everybody

got back, obviously, we heard some stories. California said that they suspect as much as two billion dollars was paid out in improper payments. One of the states you focus on heavily, and this is Washington. For a time they had to stop sending out some money so that they can catch back up. I think in two weeks when everything started, when the Cares Act had been passed, they found about six hundred million dollars had been paid out already. So tell us a little bit of how these states

were handling it. If you remember, Washington was kind of first in the United States for getting hit so hard with the pandemic and shutting things down, so that led to that big surgeon unemployment claims. So fraudsters took notice of that. They tried to exploit and hammer the Washington system with all of these claims that were bogus, and it took a few weeks before Washington State realized, you know, one a ton of these are fraud and two we need to catch up with our systems to flag them

and then try to get the money back. So that particular state had been sending money through green Dot accounts, which is a mobile banking app, and those state folks say, the people who normally use those accounts are exactly who they're trying to help. It's usually the unbanked, the underbanked. They don't go to a normal brick and mortar bank

every day. But fraudster is again exploited that and use some of the flexibilities of those mobile banking accounts to get the money and get it quickly and then transfer it before the state could realize what was happening. What do we know about how much money some of these states might have recovered, because in the Washington example, they noticed about six hundred million that was stolen. They were able to recover about three d and fifty million of that,

maybe a little bit more. But are these states disclosing any of that or how do we find some of that out. Yeah, states are much more transparent about the money they have gotten back at the moment the suspected fraud they stopped. They're less transparent about what's gone out the door that they don't think they'll ever get back. So New York has publicized that they've gotten millions back. It really depends on what type of scam was being operated.

So if it was money sent directly to a bank, and the state can go right to that bank and say we know this is fraud. This is how we know. Here's proof, the bank will send it right back. The FBI is not involved, there isn't much law enforcement, no civil suits. It's just transferred right back. Things get a lot more complicated if that money has already been transferred or gone through a few different layers, and it's much less likely that they'll ever see that money back. There's

a lot of interesting aspects of this whole thing. You know. Part of it is is that the scammers need actual people to file some of these fictitious claims, which is kind of crazy, you know, who would subject to themselves to some of this. But they use kind of these mule networks and you mentioned, you know, mobile banking apps and cash apps and things, and they use these things to get around some of the traditional banking methods. Yeah, so these money mules are really a problem in the

United States. The FBI has key down this during the pandemic because they're either winning mules and automating unwitting mules that either they know what's going on and they don't know what's going on. And a lot of times they're elderly. They've been contacted for maybe years with someone and they think that it's you know, their friend online and then now the moment is right where the scammers saying I'm

in some trouble. I'm going to get some money transferred into your account, and I need you to transfer it to me, you know, via PayPal. That's how they get them, because they need it to be laundered from you know, and they elicit piece of cash to bitcoin, which can't be traced or a normal a t M. So we saw cases of unemployment money being paid out to regular bank accounts and then withdrawn and cash packaged up and mailed across the country to another mule before it was

sent overseas well. And as you mean too, a lot of these victims are people with stolen identities. You had an example in your article of a woman who was currently working. She had a job, but she kept getting, you know, notifications or messages saying that, oh, we sent you some unemployment money. It's been flagged as FROD you need to pay it back. And she's like, well, I never received any of this money. You know, I didn't go through this process. I have a job. And she

had to have her employer get involved to help stop that. Yeah, that's the most frustrating part of this for a lot of people is fully employed people finding out that someone had filed for unemployment in their name just creates a

huge headache for them. So that was one of the tips coming out of this is even if you are employed and you don't expect to lose your job or need unemployment, you can still go and set up your profile in a state unemployment site just to kind of lock it down and secure it so no one else can go put your Social Security number and birthdate in and to access it. So that's the one thing you

can do to try to protect yourself. We've heard tons of stories of this is like, this is how people are interacting with this where they don't file for unemployment they never have, they don't think they're a victim, but all of a sudden, someone's using their identity to pull off this scam. It's just a really unfortunate situation because we're hearing stories from these people that legitimately need unemployment aid and it's taking months and months to work through

the backlog to work through these fraudulent checks. You know, if somebody gets flagged, it takes months to resolve some of these things, and in the meantime, not always obviously, but sometimes these scammers are getting through and getting some of that money. So that's just so unfortunate to hear. But these are kind of the problems that these agencies are facing in the background. So we'll definitely keep a monitor on this to see what else comes of it.

Nick pens and Stadler, reporter at USA Today. Thank you very much for joining us. Yeah, you're welcome. I'm Oscar Ramirez and this has been reopening America. Don't forget effort Today's big news stories and check me out on the Daily Dive podcast every money the Fridays, So follow us on I Heart Radio or wherever you get your podcast.