PHOENIX — Scammers pocketed nearly 30% of the $16 billion in unemployment insurance payments sent out by Arizona since the coronavirus pandemic began.
The director of the state agency overseeing the program said Thursday that most of the fraud happened in the first several months of the pandemic.
Federally funded emergency unemployment insurance programs designed to help so-called “gig workers” such as Uber drivers were the main target.
Department of Economic Security Director Michael Wisehart says an estimated $4.4 billion was lost to identity thieves.
Most of that money is probably lost forever because it was siphoned off by out-of-state or overseas scammers who took advantage of the lack of identity verification early in the program.
The state was able to recover $1.4 billion it had paid out, Wisehart said. And fraud prevention systems the state rolled out in the summer of 2020 have prevented more than $75 billion in additional fraudulent payments from being made, he said.
“I feel horrible for the taxpayer, for myself as a taxpayer, for all taxpayers, that this happened,” Wisehart said of the fraud loss. “But I’ll tell you, I would be way more angry at me and us if this was into 2021 and it extended beyond the first two or three months of the pandemic where it was true chaos.”
Other states also were hard hit by scammers. The U.S. Department of Labor in June estimated that more than $87 billion will have been stolen nationally by early September.