Combat Unemployment Fraud and Speed Claims Processing

Millions of Americans have suffered job losses as a consequence of the COVID-19 pandemic, resulting in the biggest spike in unemployment claims in U.S. history. Adding to the fray, fraudsters are manipulating overwhelmed and outdated unemployment processing systems which are not equipped to verify applicants’ identities in a digital-first environment.

To date, it’s difficult to put a dollar value on the damage. In a statement made in mid-September, the U.S. Secret Service said that $1 billion in unemployment aid is being threatened by fraud in various schemes. Meanwhile, legitimate claimants are put on hold and made to wait as states research and validate claims manually.

NPR reported on a San Jose, California man who lost his job as a hotel food and beverage manager in March. He filed online for unemployment benefits. After waiting a month for a response, he received a request to mail photocopies of government and employment documents to prove his identity, including his driver’s license, passport, and a W-2.

Still no word. Each subsequent response from the state’s unemployment office requested yet another document to verify his identity. Seven months later, this man has received no benefits, depleted $17,000 in savings, and hasn’t found another job.

How long can unemployment claims be delayed by manual document reviews?

Using California as an example, the state flagged 1.6 million unemployment claims for further review. By their own calculation in a recently released report on the issue, it takes an experienced claims processor 20 minutes to manually review a single claim. At the current rate, it would take 100 people around 22 months to clear the outstanding 1.6 million claims, and that’s assuming they work seven days a week! Furthermore, the labor cost of these manual reviews to California taxpayers are expected to exceed an astonishing $6.6 million.

Without recourse, it’s clear that legitimate claimants will simply have to wait exceptionally long periods for their cases to be resolved, and that is likely what’s happening with the man from San Jose.

Deploying an automated identity and document verification solution

The San Jose gentleman lamented to NPR that the 7-month delay in processing his unemployment claim seemed so avoidable. And it turns out, he’s right.

The problem exists because most state unemployment processing systems are operating with outdated or nonexistent identity verification and fraud protection technology. It’s time for government leaders to respond by integrating scalable identity verification and fraud prevention tools to address the current backlog and prepare in advance of the next crisis.

State unemployment agencies should borrow from the experience of the financial services sector to implement time-tested, Day Zero identity verification tools. “Day Zero” refers to the first day an end-user creates a digital account where the defending party authenticates that user or identifies vulnerabilities where either the user is declined or a mitigation process begins. This results in being able to assign a trusted identity to any legitimate user from the outset.

Employing machine learning techniques during the onboarding process, Socure utilizes algorithms to study a consumer’s digital trail, such as their mobile carrier history, IP address, utilities data, credit lines, public records and other databases including Socure’s proprietary DB of >210M known good US identities to ensure the person behind the keyboard is who they say they are. Furthermore, Socure leverages intelligence from industry consortium data to match user input with millions of historical known-outcomes to determine whether certain PII is linked to a prior breach or identity theft event. Socure also applies AI solutions to address third-party and synthetic identity fraud, the two types of fraud that occur most frequently with unemployment claims.

After churning the data, Socure delivers in real-time clear actionable risk and reason codes, generated in milliseconds, to optimize the agency’s decision to approve, deny or look further at a claim. Socure also supports fuzzy-name matching to reconcile nicknames with given names and other similar mismatches that are creating havoc in the unemployment ecosystem. Socure’s solution results in over 92% auto-approval rates on average which eliminates that backlog of claims in seconds or minutes, not years, and at a cost that is a fraction of the expense of manual reviews and the pain it’s causing to the average American.

For those applications where a step-up layer of verification is warranted, Socure provides DocV, a fully-automated omnichannel document verification service. It applies advanced analytics to quickly confirm the authenticity of any identity document in circulation, including more than 3,500 identification types. It authenticates a user with minimal friction by guiding them through an error-proof verification via mobile or web browser. Furthermore, an additional layer of accuracy enables matching a photo of the applicant’s ID with a selfie in under 10 seconds. Finally, it does this using secure best practices that don’t open the applicant to potential identity theft, like mailing photocopies of IDs might. Wouldn’t that man in San Jose be elated?

DocV is available as a standalone product or as part of Socure’s identity fraud and compliance platform, called Socure ID+, described above. DocV can be integrated via a single API with other Socure ID+ modules or by mobile and web SDKs.

If you work for one of the state unemployment agencies, are a member of Congress or are a technology provider for one the states being adversely impacted, please get in touch with us ASAP so we can help solve this crisis together.

For more information on how Socure can transform your unemployment verification process, contact salesinfo@socure.com.