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Sagitec Blog

Fraud: Today’s Biggest Problem for State Workforce Agencies

  • Sagitec Solutions
  • Thu, Feb 25, 2021

While we have said it before, it bears repeating: 2020 was a roller coaster year for state workforce agencies and was the most challenging year since the program’s inception in 1935. State workforce agencies struggled with unprecedented claims volume and massive legislative changes to the program virtually overnight. As such, the focus last year was to empower state workforce agencies to respond to the demand and improve customer service with innovative solutions. Sagitec was able to help multiple state workforce agencies with everything from a comprehensive cloud-based Pandemic Unemployment Assistance solution (that was paying people as soon as four weeks after the legislation was signed) to chat technology that reduced call-center volumes and provided another communication channel for claimants.

In 2021, we will again see heavy UI benefits activity, but the focus will include fraud prevention and detection. We are seeing unprecedented amounts of fraud in all UI programs. The Department of Labor’s Office of the Inspector General (OIG) estimated in a November report that there had been at least $36 billion lost in fraudulent payments in pandemic programs alone through November 2020. Some states reported to the OIG that up to 51% of pandemic unemployment assistance payments could be fraudulent.

Fraud hurts everyone. Businesses find themselves paying higher UI taxes to replenish dwindling UI trust funds. “Still working” citizens find themselves fighting to prove someone stole their identity after being served overpayment notices. State workforce agencies use precious resources to attempt to recoup lost funds. Genuine claimants are forced to wait for benefits as state workforce agencies put payments on hold to investigate fraud networks. And the list goes on.

On the fraud prevention front, Sagitec’s NeosuranceTM solution uses configurable parameters to identify potential fraud and prevent fraudulent payments before they’re made. Once a claim has been flagged as potentially fraudulent, the claimant is prompted to prove their identity. Unless and until this action is completed and verified, the claimant will not be able to perform any other actions.

In a recent press release, a customer stated that they “detected over 156,000 potentially fraudulent unemployment claims filed” in January 2021 using this functionality.

While fraud prevention is paramount to avoid the “pay and chase” issue, it is nearly impossible to prevent all fraud and so detecting fraud before and after it has occurred is important. Our NeoFraudTM solution uses artificial intelligence, machine learning, and predictive analytics to identify potentially fraudulent payments and suspicious activity.

We understand that stakeholders are laser-focused on fighting fraud, and we plan to make sure our clients have the tools necessary to win that fight in the coming year.

Click below to know more about our fraud solution Neofraud.

Read more about Neofraud