Fraudulent Unemployment Claims On The Rise In Washington

OLYMPIA, WA — Washington's Employment Security Department says it is seeing a rise in fraudulent unemployment claims once again. But unlike the first wave of false claims, the ESD says these aren't going through.

As the unemployment rate skyrocketed at the start of the pandemic last April, the ESD's rush to pay out unemployment claims ended up costing the state up to $1.1 billion in 2020, as the ESD paid out more than 122,000 "known or probable" fraudulent unemployment claims.

Since then the ESD has been audited, and has revamped their security measures — a revamp that they now say is paying off, as a second wave of false unemployment claims barrages their system.

The agency says they first detected this second wave the week ending May 8, when new unemployment claims unexpectedly jumped 58 percent after nearly a month of consistent decline. It grew another 18 percent the following week as the false claims intensified.

"We have also seen a recent increase in fraudulent claim applications, which is contributing to the increase in initial claims," the agency said. "Our controls to identify these fraudulent claims are working. These claims will show up in the weekly claims numbers even though they are not paid."

The ESD has not said how many claims they are currently investigating for fraud, but did see about 65,000 new unemployment claims between the week ending May 1 and the week ending May 15.

The jump is notable because the unemployment rate has remained relatively stagnant for several months now. ESD data for April shows the state with an unemployment rate of 5.5 percent for the second month in a row. Before that it was 5.6 percent in February, and 6 percent in January.

For comparison, the rate was 16.3 percent at the height of unemployment last April. It remains above the pre-pandemic unemployment rate, which hovered between 3.9 and 4.1 percent.

“This month shows that recovering lost jobs from the pandemic is not a seamless process,” said ESD economist Paul Turek. “Meanwhile, leisure and hospitality services, the hardest hit sector in the economy, continues to make a comeback.”

Catching this second wave of fraudulent claims will be critical in restoring public faith in the department, which took a hard hit last fall when the first wave slipped through, costing the state hundreds of millions of dollars. The ESD's troubles have only continued since then: in December, State Auditor Pat McCarthy's audit found the Employment Security Department had failed at multiple levels to contain the fraud. Following that, a data breach at the State Auditor's Office compromised ESD data of $1.6 million Washington unemployment applicants.