A positive fraud signal requires humans to determine if that signal is correct or a false positive. This demands a balance between catching more fraud and requiring more people, or creating delays. When a system strikes the wrong balance, the results can be very negative. For example, Washington State’s fraud detection system for its unemployment claims has had problems.
As a Governing.com article notes, Washington State opened the floodgates, making fraudsters very happy to the tune of $576 million:
“Revelations last week that this spring’s $576 million unemployment fraud, the largest in state history, started much earlier than previously acknowledged have spurred a storm of new questions over the handling of the crime.
Data released Aug. 3 by the state Employment Security Department (ESD) shows that criminals were filing fake claims in the first week of March. That’s more than two months before ESD publicly disclosed the fraud and temporarily froze benefit payments, in mid-May, by which time a staggering 56% of the weekly claims ESD was paying were from criminals, many of them reportedly overseas.
But even before Monday’s disclosures, some state lawmakers and others were questioning whether ESD had inadvertently abetted the scam by lowering fraud detection protocols to speed up legitimate claims by hundreds of thousands of Washingtonians left jobless by the pandemic.
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group
