Since the COVID-19 pandemic, about 30 percent of the $16 billion in Arizona’s unemployment insurance payments fell into the hands of scammers, according to the state agency’s director acting as the supervisory body of the program on Thursday.
The illegal activity was recorded mostly during the first multiple months of the health crisis and affected emergency unemployment insurance programs backed by the federal government. The fraud has targeted programs aimed to help people who cannot qualify for assistance as they had side jobs, like Uber drivers. These so-called gig-workers’ employers do not shoulder their employee’s unemployment insurance.
According to Department of Economic Security Director Michael Wisehart, the total cost lost to scammers reaches between $4.3 billion and $4.4 billion. Majority of the scammed amount can never be retrieved as it was tapped by scammers who are not based in the state or probably operating overseas.
Wisehart said that the state has managed to get the $1.4 billion it paid out, noting that the unveiled fraud prevention systems in Arizona have protected over $75 billion from getting into the pockets of scammers.
He added that Arizona was able to secure over $10 billion to help the affected workers and their families. This is considered by the state as a huge win as it recorded a significant jump in unemployment claims that made the process a struggle, AP News reported.
“I feel horrible for the taxpayer, for myself as a taxpayer, for all taxpayers, that this happened,” the director said. “But I’ll tell you, I would be way more angry at me and us if this was into 2021 and it extended beyond the first two or three months of the pandemic where it was true chaos.”
Arizona is not the lone state that was impacted by the problem. In June, it was estimated that states will shell out over $87 billion of the $873 billion in special COVID-19 unemployment benefits improperly by Sept. 6, the inspector general’s office at the U.S. Department of Labor noted.
