Labor and Economic Opportunity
Executive order and directive formally establish Unemployment Fraud Response Team and UIA tools resulting in current 0.57% fraud rate - over 3 times lower than before the pandemic
December 29, 2021
Media Contact: Nick Assendelft, 517-388-3135
Gov. Gretchen Whitmer signed Executive Order 2021-16 today permanently establishing the Unemployment Insurance Fraud Response Team which solidifies the coordination among state departments and law enforcement partners to identify, investigate and prosecute individuals who steal jobless benefits intended for Michigan workers.
The governor also issued Executive Directive 2021-14 directing the Unemployment Insurance Agency to continue to use new technologies, integrate stakeholder expertise, partner with community organizations to educate potential UI claimants, and prioritize enforcement of UI fraud cases through the Response Team.
"It's extremely important that we continue to push back on bad actors who look to take advantage of a vital safety net resource for out-of-work Michiganders," said Gov. Whitmer. "While we are seeing increased success in identifying and stopping fraudulent claims, we cannot let up. We owe it to workers to make sure this jobs resource is available when they need it the most. Today's action ensures the Unemployment Insurance Fraud Response Team continues to have the expertise and tools necessary to ramp up our efforts to prevent bad actors from defrauding the system."
A new report prepared by Deloitte released today found UIA, now under new leadership, prevented nearly $43.7 billion in benefits in imposter fraud or intentional misrepresentation by the applicant. The report also determined between Oct. 3, 2020, and Sept. 30, 2021, UIA's anti-fraud efforts cut the rate of cases involving imposter fraud and intentional misrepresentation to only 0.57%. For comparison, the US Dept. of Labor (DOL) shows Michigan's average pre-pandemic fraud rate was 2.01% from July 2017 through July 2020 and the federal agency has estimated that the fraud rate during the pandemic could be much higher than the 3% national average.
"Our diligence in identifying fraudulent claims proves that we now have effective processes to identify criminals who steal benefits from unemployed workers and Michigan taxpayers," said Julia Dale, UIA director. "We will use all the sophisticated tools available to us - and pursue new opportunities and partnerships - to continue aggressively fighting unemployment insurance fraud."
Today's report looked at federal and state UI benefits programs launched to help workers affected by COVID-19. It defined likely imposter fraud as claims filed by an apparent bad actor to fraudulently extract funds. The report defined likely intentional misrepresentation as claims filed by a legitimate claimant who appeared to be misrepresenting their eligibility for benefits.
A November 2020 Deloitte report documented steps UIA had taken to enhance its fraud risk management capabilities to address identified vulnerabilities in the unemployment system. The report did not include cases of intentional misrepresentation. Many of those and subsequent measures to prevent fraud are solidified in today's executive directive:
In addition, the UIA will:
UIA's What is Fraud webpage details its anti-fraud actions and how you can prevent fraud.
The creation of the Fraud Response Team builds on the efforts of Attorney General Nessel's previously established Michigan Unemployment Insurance Fraud Task Force. The work of the Task Force, which was first announced in June 2020, has resulted in 54 Michiganders being charged with UI fraud by either state or federal authorities - in some cases netting millions of dollars - with 37 cases pending. Nine people have pleaded guilty or been convicted and three have been sentenced. Those accused of facilitating fraud include five UIA employees or contract workers.
"I applaud Gov. Whitmer's action to ensure bad actors continue to be identified through the Unemployment Insurance Fraud Response Team," said Nessel. "Michiganders currently out of work should not have to worry that the benefits available are being exploited by criminals, which is why our task force has remained focused on rooting out fraud. I look forward to working with our agency partners to support this new endeavor."
The COVID-19 pandemic has been an extremely difficult period for the UIA as the agency faced enormous challenges beginning in March 2020. Despite these challenges, the UIA has paid over $39 billion in benefits to more than 3.3 million workers, with over 99% of eligible claimants receiving benefits. Besides organized fraud schemes, the agency also faced:
Incomparable levels of sophisticated, international criminal actors exploited the pandemic with new technology tools and previously stolen information to file fraudulent claims. In May 2020, the U.S. Secret Service warned of an international criminal ring committing large-scale fraud against state unemployment programs across the country. In June 2020, DOL warned that the pandemic created a perfect storm for criminal activity across the country and nearly every state has been a victim of fraud schemes. Emerging reports from states across the country reveal billions of dollars in fraudulent claims were lost to criminal activity.
Today's Deloitte report estimates that out of a potential $52.2 billion in attempted fraudulent claims between March 1, 2020, to Sept. 30, 2021, an estimated $2.7 -$2.8 billion was paid to claims involving likely imposter fraud and an estimated $5.6 - $5.7 billion was paid to claims involving likely intentional misrepresentation fraud. The bulk of payments were federally funded through the various Pandemic Unemployment Assistance programs.
The report also estimated that state-funded UI claims totaled only 2.9% of the total amount identified. With over 97% of imposter fraud and intentional misrepresentation claims coming from federal jobless programs, there was minimal impact to the state's unemployment trust fund.
"It's extremely disheartening that bad actors have defrauded the much-needed benefits intended for hard-working Michiganders and the scale of their actions is stunning," said UIA Director Dale. "We have been successful over the past year in limiting the percentage of cases that are fraudulent to less than 1 percent, but we will never stop fighting for our workers."
If you suspect you are a victim of fraud of identity theft, report it through Michigan Web Account Manager (MiWAM). Go to Michigan.gov/UIA for information on preventing fraud or identity theft.
Claimants with questions about their accounts can call UIA Customer Service at 1-866-500-0017, 8 a.m. to 5 p.m., Monday through Friday; employers can call 1-855-484-2636. Or go to Michigan.gov/UIA.