While the number of Coloradans on continued unemployment has declined each week since late March, the number of people filing for a benefit reserved for gig workers has increased even as more people are vaccinated and return to work.
Known as Pandemic Unemployment Assistance, this federal jobless benefit provides money to Colorado residents who don’t pay into the state’s unemployment insurance system. But such new claims have nearly doubled since late May — and tripled since May 1. For the week ending June 19, there were 1,686 applicants applying for the first time in a year.
Colorado Department of Labor and Employment officials said the counts each week can vary so drastically that it’s difficult to determine a trend, but the uptick is likely linked to 26 other states ending federal benefits months before the funding runs out on Sept. 4.
“We believe that much of the increase in June claims load is a result of increased attempts to file fraudulent claims as the programs end in other states,” said Phil Spesshardt, director of the Division of Unemployment Insurance.
For the week ending June 26, the number of first-time PUA claims increased 18% from the prior week for a total of 1,989. For the four weeks ending June 26, initial PUA claims doubled to 6,101 compared to about 3,034 for four weeks in May.
State unemployment agencies have been fending off unemployment fraud since the pandemic began, as the promise of thousands of dollars in federal benefits in one claim proved tempting.
In June, Colorado officials estimated $22 million had been paid to fraudsters, though increased anti-fraud efforts have prevented more than $500 million in payments going out. Other states have acknowledged billions more lost to fraudsters — nearly $900 million in Texas (and $9.1 billion prevented), somewhere above $1.7 billion in Illinois and a whopping $30 billion in California.
26 states ending early
With governors in 26 states opting to end most or all of their federal benefits early — 22 already have and four more will pull out by July 31 — an estimated 4.7 million unemployed workers so far have been cut off nationwide, according to a report by the National Employment Law Project, which advocates on behalf of workers.
The cutoff impacts three out of four people receiving unemployment benefits, including a disproportionate number of people of color. “While these premature, ill-advised and cruel cessations of benefits will harm all workers who need them, the brunt of the impact will be felt by Black, Latinx, Indigenous, and other people of color,” NELP’s report said.
States don’t have to pay back the federal pandemic unemployment benefits, Alexa Tapia, NELP’s unemployment insurance campaign coordinator, said. So the inconsistency nationwide may be confusing — or too tempting — to those who are now going without.
“Keeping in mind these are fully federally funded benefits, it’s just a matter of a state administering them,” Tapia said in an email. “I was contacted by a PUA claimant, a nursing mother, living in Oklahoma (prematurely cutting off benefits), who wondered if she could apply in Colorado instead, where she also resides.”
Gov. Jared Polis said he’s not ending federal unemployment benefits early. The benefits include a $300 weekly bonus, payments to PUA users and extended benefits to those who’ve exhausted state benefits. Colorado’s participation in the federal program ends on Sept. 4.
“Congress shouldn’t be paying out these benefits if they do not want states to use it. If Colorado ended these benefits prematurely, it would harm individuals, business owners and the broader economy,” Polis said in a letter to three Colorado Republicans in Congress who wanted him to end the enhanced federal benefits.
For Coloradans who moved out of the state and now find their new home state is ending benefits early, chances are slim that they’re eligible to file in Colorado. The laws don’t allow people on unemployment to have active claims in more than one state, Spesshardt said.
“Just because they used to live in Colorado, does not necessarily make them eligible to receive benefits from Colorado,” he said.
PUA users can only file a claim in the state where the work was done, he added.
Unemployment fraud triggers
The Department of Labor continues to add more anti-fraud triggers and review its system for new types of fraud. The rise in false claims by entities using stolen personal data has led to the Colorado unemployment office increasing the number of anti-fraud triggers to 60, compared to about five before the pandemic began.
But efforts to combat fraud have left thousands of Coloradans stuck with their accounts on hold. One worker, Jack Elliott, said his unemployment benefits have been on hold for 13 weeks because he cannot get his identity verified even though he’s visited the unemployment office in person. He doesn’t trust the state’s official ID verification service operated by a company called ID.me.
“The State of Colorado Unemployment agency has made a determination that ALL Unemployed people are FRAUDS and have decided that an internet company is more suitable to find out if I am a real person or not,” said Elliott in an email.
Colorado, like all states participating in federal unemployment programs, was required to add an ID verification service to battle fraud. The state chose ID.me, which already was being used by a few other states and verifies users via smartphones or laptops. Verification is based on credit reports, photo selfies and other personal documents. The service was problematic for those with no access to technology tools and it created a backlog of long waits for others trying to get through last spring. According to Department of Labor data, 1,000 to 2,000 identities are being verified each day.
Authorities say they are pursuing the thieves but could not share details because investigations are ongoing. Few cases have come to light.
Two weeks ago, the U.S. Attorney’s Office for the District of Colorado charged Anthony Zaghab, a Denver resident, with receiving more than $40,000 in unemployment insurance benefits “on behalf of ineligible family members without their knowledge,” according to the Attorney’s Office. The agency also alleges Zaghab fraudulently applied for and received $660,000 in federal COVID-relief Paycheck Protection Program loans that were intended to help small businesses retain workers.
Other cases are popping up nationwide. Three women in southern California pleaded guilty last month for a scam that netted $1.2 million in unemployment benefits collected on behalf of prison inmates. A Michigan woman who worked for the state’s insurance agency pleaded guilty Wednesday for using her insider access to release $3.8 million in unemployment benefits during the pandemic. An Illinois woman was indicted this week by a federal grand jury for fraudulently obtaining more than $800,000 in unemployment benefits from Arizona, Ohio and Texas.
Spesshardt said that Colorado continues to review its fraud holds to stay ahead of fraudsters but also make sure Coloradans get paid. He said the department said it recently released “holds on a group that impacted a couple thousand claims.”
Overall though, the state’s unemployment numbers are improving. In May, Colorado’s unemployment rate dropped to 6.2% after spending three months at 6.4%. Approximately 3 million Coloradans were employed in May, which was nearly back to pre-pandemic levels. And 71% of nonfarm payroll jobs lost in the spring of 2020 are back.
“My observation,” said Brian Lewandowski, an executive director at the Leeds Business Research Division at the University of Colorado, “is there is a general downward trajectory in (the) moving average of initial filings, but the difference from week to week is noisy. Colorado continues to record solid job growth and the unemployment rate decreased in May.”
This story was updated on July 2 with the latest initial unemployment claims filed for the week ending June 26.