The State of California Has Passed a Legislation to Combat Unemployment Benefits Fraud

The State of California Has Passed a Legislation to Combat Unemployment Benefits Fraud

Governor Gavin Newsom of California signed a package of bills on Tuesday that would allow the Employment Development Department (EDD) to better detect and prevent fraud, as well as protect unemployment benefits applicants from identity theft. The governor expects that by passing this legislation, the state would be better prepared to respond to future economic downturns.

This comes after an audit report issued earlier this year revealed that the EDD granted billions of dollars in illegal jobless benefits payments to inmates who were ineligible to receive them during the pandemic. The EDD has confessed that at least $11 billion of the $176 billion in unemployment benefits paid out was fraudulent, with another $19 billion suspected of being fake.

Thirty-five states have a system that compares unemployment applications to a database of inmates, but California isn't one of them. As a result, the EDD had no idea which of the benefit claimants were in prison.

This legislation will remedy this problem by mandating the state prison system to provide the EDD with inmates' names and social security numbers. Assembly Bill (AB) 397, which mandates the EDD to provide extra notification to claimants before dismissing them from benefits, is also included in the legislation package.

To prevent fraudsters from stealing benefit checks from mailboxes, state lawmakers have ordered the EDD to begin offering claimants the option of direct deposit.

As part of the attempt to sustain spending aimed at enhancing California's unemployment insurance system, Newsom signed other bills earlier this year to improve language access and fortify the state's job centers. Earlier this year, the governor formed the Office of Emergency Services Fraud Task Force to work with local, state, and federal law enforcement to investigate and prosecute fraud schemes. Former US Attorney McGregor Scott is assisting in this attempt.