Unemployment Fraud: Suspected Colorado Scammers Net Over $73M in Benefits

The Colorado State House in the state capitol Denver.
Amy Sparwasser / Getty Images/iStockphoto

Suspected or likely scammers were paid more than $73 million in unemployment benefits from March 2020 through April 2021 by the state of Colorado, per Colorado Newsline, according to a Dec. 6 performance report from the state auditor’s office.

See: Scam Alert: IRS Warns of Scammers Asking for Gift Cards for Tax Payments
Find: Is Your Unemployment Income Refund Taxable?

These payouts include $3.9 million in benefits paid on behalf of deceased individuals and $100,000 on behalf of children younger than working age. An additional $46 million went to people with “multiple indicators of fraud,” $18.5 million to those with suspicious bank account information and more than $5 million to people in prison — individuals ineligible for unemployment benefits entirely. 

There were also issues with how the Colorado Department of Labor and Employment responded to requests for assistance coming from those who had been put on fraud hold. The department couldn’t provide sufficient evidence that it had resolved nearly three-quarters of such requests.

Requests for resolution took seven weeks on average to address, but the audit also found that 16% of requests took 61 to 120 days to resolve — and that 6% of resolution requests took more than 120 days to engage with.

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The department’s lack of efficiency in resolving claims meant that a majority of those seeking assistance with holds placed on unemployment benefits received little to no help, the audit detailed. The department may have to pay back some of those funds to the federal government. 

See: Social Security Scams: 3 Common Requests and How To Report Them
Find: IRS Offers Advice on How You Can Avoid Being Scammed This Holiday Season

“Nonetheless, this unprecedented challenge has certainly highlighted opportunities for improvement. The Department has already begun work to implement many of the audit’s recommendations, and we are working hard each and every day to combat fraud and ensure all legitimate claimants receive their benefits,” the agency said, per Colorado Politics. 

Department staff also notified auditors that it could take years before they gather the final totals for payments deemed fraudulent in nature.

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About the Author

Josephine Nesbit is a freelance writer specializing in real estate and personal finance. She grew up in New England but is now based out of Ohio where she attended The Ohio State University and lives with her two toddlers and fiancé. Her work has appeared in print and online publications such as Fox Business and Scotsman Guide.

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