Billions of dollars have been stolen from California’s unemployment benefits. Criminals have targeted the state’s Employment Development Department, which was unprepared for the wave of applications it received because of the coronavirus pandemic.
“Those benefits have attracted the largest cyber attack in terms of fraud in American history,” said Blake Hall, CEO of the authentication company ID.me. “The fraud rates that we’re seeing are over 10 times what we usually see at federal agencies.”
ID.me is a company used to verify that people are who they say they are. Hall says they’ve worked to verify identities everywhere from the Social Security Administration to doctors writing prescriptions for medication.
“Identity verification is an enormously complex space,” said Hall.
Hall says if you had talked about increasing the security of California’s unemployment department’s computer systems a year and a half ago, no one would have taken you seriously.
“EDD, like many of the other state workforce agencies we work with, are on 1980s technology,” said Hall. “We have a duty to sound the alarm bell to say if you’re going to distribute $600, $700 billion in aid, you better make sure you have the right security measures in place.”
Part of the problem is many of our authentication systems are out of date.
“We have been focusing on where the bad guys were, not where they are,” said James Lee, COO of the Identity Theft Resource Center. “The whole unemployment fraud situation has been the biggest wakeup call in a decade.”
That fraud is hurting people who actually need the money. Hall says criminals are applying for the checks in California because it is a richer state. That means the fake applications are clogging up the system.
“We have always seen a fraud rate north of 50% every single time,” said Hall. “If a criminal files in the name of somebody who needs unemployment, if that person files second, they’re going to get locked out.”
That means if someone has your information, they could steal the money that you qualify for. Hall showed NBC 7 screenshots from chat rooms on the dark web listing drivers licenses and other identifying information for sale.