Shocker: Chicago fraudulent unemployment claims spike

As with most states, Illinois has seen a massive increase in unemployment claims since the lockdowns began and business were forced to close and send their workers home. This was particularly true in the densely populated city of Chicago. The system was quickly overwhelmed, with newly unemployed workers complaining that they couldn’t get through either the online system or by phone to submit a claim. Because of the massive backlog, the government essentially abandoned its normal verification process and began approving claims as soon as they were submitted in an effort to clear the backlog.


Can any of you guess what happened next? Incidents of unemployment fraud quickly shot through the roof. And that’s only the ones they’ve managed to identify so far. (CBS Chicago)

In its rush to get money into the hands of unemployed workers, the state of Illinois is skipping the verification process, resulting in an increase in unemployment fraud, according to officials at one company that verifies unemployment claims for businesses.

CBS 2 Investigator Dorothy Tucker reports employed workers like Reginald Fitzgerald and Kristen Jeske did not apply for unemployment, but received letters from the Illinois Department of Employment Security verifying unemployment claims.

“I’m still working,” Fitzgerald said.

Traci Weathers is another—she was approved for $1,084 a week after IDES OKd money she didn’t need.

This isn’t the first time this problem has shown up. There have already been reports of massive unemployment fraud in Washington State. Chicago and much of the rest of Illinois are repeating the same pattern. Most, though not all of the fraudulent claims are being filed via identity theft.

Under the old, traditional unemployment system where things were handled primarily via snail mail using paper checks for benefits, these sorts of schemes would have been nearly impossible. But today you can file online and request your payments to be made through PayPal and similar online transaction services. Anyone who has hacked the identity of a worker can file a claim and have payments begin showing up in their account rapidly and they will continue until the “error” is reported and the claim gets canceled. Meanwhile, PayPal assets can be quickly transferred into gift cards or offshore accounts. And since most of the hackers are coming from Asia, Africa, and eastern Europe, hopes for catching them and recovering the money are slim.


It’s easy to have some sympathy for the state government in this case, at least to a degree. They were faced with a choice of properly vetting each of the claims and having tens of thousands of unemployed workers raising the roof when they couldn’t pay their rent. The only other realistic option was to do what they did and pump the claims through as quickly as possible. One company that processes claims for the state (NSN Employer Services) said that the number of claims had increased by a factor of five over normal volumes in a matter of days. They also reported that they normally average one or two fraud claims per week. Now it’s between 30 and 40.

The Illinois unemployment system was obviously out of date and neither robust nor flexible enough to handle this sort of surge. What will be truly unforgivable is if we come out the other side of this crisis and they don’t quickly move to correct those issues. This isn’t going to be our last pandemic. And that means that it won’t be our last massive economic shutdown. Every state needs to be ready for this to happen again or those elected officials should stand ready to be held accountable.

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John Stossel 5:30 PM | July 13, 2024