Arizona freezes 43,000 unemployment accounts suspected of fraud, affecting some legitimate claims
Ryan Randazzo
Some Arizonans receiving unemployment benefits have had their unemployment bank accounts frozen because the state's efforts to combat fraud have flagged 43,000 accounts as potentially fraudulent, according to the Department of Economic Security.
It is the second time this year the state has taken such an action in an attempt to cut off payments made to people fraudulently seeking government assistance during the pandemic. In July, the department simply closed 28,000 accounts suspected of fraud, also cutting benefits to many people who had legitimate claims.
About 3,800 of the accounts in that sweep, or about 14%, were found to be legitimate and were repaid, according to DES. It's unknown how many of the accounts in the current sweep could be legitimate, but a DES official said the number is "limited."
People who get unemployment benefits in Arizona usually get a debit card issued by Bank of America for an account where the funds are deposited. They can opt to have they money deposited into their own bank account but many simply use the Bank of America cards to pay for necessities.
DES said the frozen accounts are for "pandemic unemployment assistance," or PUA, which is a program Congress established to pay unemployment to people who were self employed, contractors or otherwise not eligible to collect traditional unemployment when the pandemic hit.
"Based on a report of potentially fraudulent activity from our banking institution, a temporary hold was placed on the accounts of approximately 43,000 Pandemic Unemployment Assistance (PUA) claimants," DES spokesperson Brett Bezio said in an email. "Due to these fraud indicators, the number of legitimate claimants affected by this hold is expected to be very limited."
However, some people getting regular unemployment and not the PUA payments have reported frozen accounts as well.
'I've got no money for gas'
Kevin Curphey, 45, of Apache Junction was able to keep working on a road paving crew through the first economic shutdown this spring, but lost his job in July when his vehicle broke down and he couldn't get to the worksite at 4 a.m., he said.
He began collecting unemployment and then traveled to Medford, Oregon, to get a new vehicle and see his father. When he recently withdrew money from his state-issued Bank of America card in that state, his account was frozen, he said.
Now he is stuck in Medford with his 78-year-old father, trying to straighten things out with DES so he can use the $700 in his account to get back to Arizona and get back to work.
"I potentially have a job with my old employer, I just have to have a vehicle," he said Monday.
Considering all the issues he had with DES to simply get benefits, he thought the problem with his card was another snag, but after a week of waiting on hold with DES with no resolution, he is getting worried.
"I'm about to take a job up here," he said.
It's not that simple though. He still has a home in Apache Junction where he pays rent. Otherwise all he has to his name is a hardhat and work boots, he said.
"I've worked my (expletive) off my whole life, 60-70 hours a week," he said. "I could fly down there, but it does me no good if I can't drive down there because I told (my employer) I'd be back with a vehicle two weeks ago. But I've got no money for gas."
$500 million possibly paid in error
DES officials have said they must take aggressive anti-fraud efforts to ensure illegitimate benefits are not paid. DES Director Michael Wisehart has said that as much as $500 million may have been paid to fraudulent unemployment claims in Arizona alone during the pandemic.
DES Monday morning said its partnership with a company called ID.me should help people verify legitimate accounts that were frozen while weeding out bad actors.
Going forward, everyone applying for PUA will need to use the ID.me program to get paid, according to DES.
Because people who apply for PUA didn't have an employer paying unemployment insurance on their behalf, verifying the applications for people seeking the weekly payments has been a challenge for Arizona and other states.
Reports from around the country indicate that people are fraudulently taking advantage of the program.
But many working Arizonans who haven't earned a paycheck during the pandemic also have relied on the program to help them get by until they can return to their jobs.
Some worked in catering or bartending at sporting events, or other lines of work that remain unavailable because of efforts to curb the spread of COVID-19.
1 million applications in 3 weeks
"DES is working with law enforcement, banking institutions, data analytics companies and state and federal partners to combat criminals committing unemployment fraud while ensuring eligible claimants can continue to receive their benefits," Bezio said. "In the last three weeks alone, DES has received over one million PUA applications, the vast majority of which is suspected fraud."
"All claimants will receive a notice in their PUA portal from DES with instructions to complete the identity verification process," Bezio said. "Upon successfully verifying their identities, DES will complete a final review of their claim to authorize the release of their account."
DES said during a test of ID.me, 30,000 frozen accounts were sent instructions on how to use the ID.me site to verify their authenticity. DES said 18% of those frozen accounts completed the ID.me verification process or contacted DES to verify their identities, "showing the significant amount of fraud being attempted."
DES was able to remove the hold on the accounts within five business days or otherwise address the issues.
Reach reporter Ryan Randazzo at ryan.randazzo@arizonarepublic.com or 602-444-4331. Follow him on Twitter @UtilityReporter.