Employers say they are receiving erroneous information about workers who are still on the job, but are filing for unemployment benefits. The complaints continue for weeks after businesses initially reported fraudulent unemployment insurance claims.
A spokeswoman for the state Department of Labor says the system is working properly and the problem is identify theft.
The Connecticut Business & Industry Association, which drew attention to concerns about fraud last month after receiving questions and complaints from member businesses, said Wednesday it has received another half dozen reports of fraudulent claims in the last 10 days.
David Durkee, a co-owner of Radcor LLC, a Salem consulting firm, said he received notice from the Department of Labor he had filed for unemployment insurance. He said he unsuccessfully tried to reach someone at the agency by phone and instead received a written response that acknowledged an error.
The previous week Durkee said he received information that an employee of his firm employing just two others — he and his wife — had filed for unemployment benefits. Worried that personal information was at risk, he said he put freeze on his credit.
“The software system is kicking out notices or the system is breached,” Durkee said.
Juliet Manalan, a spokeswoman for the Department of Labor, said the system has not been breached. The problem is “100% identity theft,” she said.
Breaches at other sources, credit card issuers, health insurers and other businesses that routinely handle millions of Social Security numbers and other personal information, have led to a trove of data on the dark web, a part of the Internet deliberately hidden, and mined by thieves, she said.
“We’re actually the people telling you there is a problem,” Manalan said. “There’s an identity theft problem and we’re the first ones to notify you.”
Manalan said the new system is functioning exactly as it should, providing information to employers that previously was available only to the state. Businesses are seeing fraud claims in real time just as the agency does, she said.
Over the past two years, the Department of Labor has stopped $3 billion in payouts to fraud claims related to identity theft, Manalan said. A surge in federal unemployment programs during the pandemic triggered a spike in identity theft, she said.
State Rep. Holly Cheeseman, an East Lyme Republican, is skeptical of the Department of Labor’s insistence that the new system is working well. “It strains credulity,” she said.
She demanded that the agency respond immediately to all business communication. “Shouldn’t you want a speedy response? Isn’t that a concern?” she asked.
A third-party business hired by employers to handle unemployment claims said last month that criminal enterprises are engaging in fraud, buying names, Social Security numbers and other private data. Fraudulent claims are not seen as “one-off” cases of employees who lie about why they left their jobs or file claims in several states.
Gov. Ned Lamont and Labor Commissioner Danté Bartolomeo on July 6 launched the revamped $60 million unemployment benefits system to replace a 40-year-old program that was strained to the limit during the pandemic when as many as 390,000 weekly unemployment insurance claims were processed.
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