14 ms·

Scammers siphoned $36B in fraudulent unemployment payments from US

218 points by andygcook 6y ago

edoceo 6y ago
36B (in a year) is about $120 per citizen (assuming 300M population). = $10/mo But also, some of the monies have been recovered Also, my health plan costs $1000/mo. Headline feels targeted to me. Like equivocation of unemployment to scams
- anthony_r 6y ago
  It is 1% of all US federal tax revenue. It is not insignificant. Also, insane that your health plan costs as much as the average citizen's share in all federal taxes (which also include corporate taxes, tariffs and whatnot).
  - com2kid 6y ago
    > Also, insane that your health plan costs as much as the average citizen's share in all federal taxes (which also include corporate taxes, tariffs and whatnot). That's pretty typical for a quality health insurance / month. Good health care plans in America are expensive. My employers have always broken out how much they are contributing towards my health insurance each month, ~$1000 is typical.
    - mrkstu 6y ago
      Looked, since we just did insurance elections- my semi-monthly cost is $580 and the company's is $735 for my family HSA plan. $280 of that is the cash contribution to the HSA, which will get spent, since all costs except checkups go directly against the deductible. But removing the HSA contribution, that is $600 a month by myself, for the premium and $1470 by the company.
    - lotsofpulp 6y ago
      And it’s because healthcare costs that much. Lots and lots of cover your ass liability insurance and credentialed people to pay for.
      - com2kid 6y ago
        As is often said, 33% of US health care costs are the overhead from billing. I always admire the efficiency of dentists, somehow they can get an instant quote from my insurer as to exactly how much is going to be paid for. Eye doctors are the same way. No nonsense, "here is what it costs, here is what your insurance pays, here is what you owe us." I can have a little of of sympathy for insurance cos though, I once had a podiatrist bill my insurance $2000 for work that he obviously didn't do, and another doctor I visited recently either accidentally or purposefully submitted what was plainly the wrong billing code to the insurance company. Veterinary service is interesting, pretty much the exact same medical technology, but the billing is up front, and they even offer package discounts on tests!
        lotsofpulp 6y ago
        > somehow they can get an instant quote from my insurer Because dentists are doing routine work. Doctors like to charge for each and every little thing, rather than by time like most professionals do. So each diagnosis, each procedure, each conversation can have different costs which can't be known up front. If a doctor wanted to provide you the codes they will be using, they easily could. They simply choose not to, to give them the freedom the charge whatever later on, in case they are able to based on what happens during your visit. I love the "new patient" charge code, which is utilized anytime you change to a new doctor. How the hell that differs from a regular "consultation" code for a yearly checkup is beyond me. The same time is spent analyzing and talking to you, the content of the discussion is the same. Surely, the doctor doesn't remember you from last year anyway so they need to spend time going over your notes. And yet, you get the honor of paying an extra $150 to $250 simply for talking to a different doctor.
        ghaff 6y ago
- boredumb 6y ago
  Last year ~6 million people were eligible for unemployment. The fact you are flaunting your entire family's healthcare costs and using the entire US population of adults, retirees and children to justify the theft of 36 billion dollars is concerning.
  - edoceo 6y ago
    Not flaunting, just a fact. Not justifying just showing the math. The cost spread across 1/3 of USA population is $360/yr - still way less than the health care cost. My point is simply that this fraud burden is a much smaller fish
- mynameishere 6y ago
  Every time. Every single time there is somebody totally okay with fraud if it relates to a program he is otherwise in favor of. Can't you just spell out, "UC is good, but fraud is bad, so let's eliminate the fraud, even if it's a mere XY billion dollars." It does not require any internal contradiction to think that way.
  - kthxbye123 6y ago
    Some level of fraud in a social welfare system is absolutely acceptable, if tightening controls to eliminate the fraud would mean that otherwise eligible people didn’t receive benefits they qualified for, or even if it meant that accessing those benefits became much more onerous. I don’t doubt that $36bn is too high, but this kind of analysis is almost never present in these articles and politically in this country the spectre of fraud is usually used as an anti-welfare cudgel
  - nitrogen 6y ago
    Retail stores, banks, corporations, all price in fraud and risk. It's a matter of trading cost of enforcement vs. impact to core mission vs. money recovered.
pnw_hazor 6y ago
"Eventually, the [Washington] state’s computers started to flag anomalies: out-of-state banks, duplicate email addresses and multiple names using the same bank accounts. But there and elsewhere, antiquated state computer systems failed to flag foreign IP addresses, repeated computer serial numbers and techniques to mask that number." The current version of WA employment security dept software was deployed in 2017. It was a boondoggle that cost taxpayers ~$50mm. edit-to-add-link: https://www.king5.com/article/news/investigations/years-late-and-millions-over-budget-state-computer-system-called-a-failure/281-346039336 https://www.king5.com/article/news/investigations/years-late...
- lostmsu 6y ago
  Actually, the software cost now is closer to ~$36.05B
  - pnw_hazor 6y ago
    I am talking about the cost of the software for Washington State. Added a link.
    - MichaelZuo 6y ago
      Well it does seem like the true software cost will be at least over $1 billion for Washington state...
- frompdx 6y ago
  It was a boondoggle that cost taxpayers ~$50mm. If I recall correctly it is also a third party solution provided by a private company. Oregon plans to adopt the same software after not being able to make payments at all for quite some time due to their own antiquated software [0]. From an article I read at the time: Keiser said Fast Enterprises has since blamed ESD for the lack of fraud protection because the ESD “didn’t purchase additional security” that Fast Enterprises could have offered. [1] Seems unbelievable given the expense. At the time I wrote OPB and said. While I think it is a good thing to choose readymade software rather than developing something new and potentially fail to deliver anything, I feel that Oregon is not paying attention to what is happening on the other side of the Columbia river and is potentially making the same mistakes as Washington. [0] https://www.opb.org/article/2020/09/10/oregon-employment-department-picks-company-to-update-outdated-technology/ https://www.opb.org/article/2020/09/10/oregon-employment-dep... [1] https://www.seattletimes.com/business/technical-error-helped-criminals-in-576-million-unemployment-benefits-scam-state-says/ https://www.seattletimes.com/business/technical-error-helped...
kthxbye123 6y ago
The (very reasonable) comment this reply was originally threaded with is now dead, so I’ll post it here: Some level of fraud in a social welfare system is absolutely acceptable, if tightening controls to eliminate the fraud would mean that otherwise eligible people didn’t receive benefits they qualified for, or even if it meant that accessing those benefits became much more onerous. I don’t doubt that $36bn is too high, but this kind of analysis is almost never present in these articles and politically in this country the spectre of fraud is usually used as an anti-welfare cudgel
- Sebguer 6y ago
  Agreed. There should absolutely be anti-fraud mechanisms, but those are not the same as what people tend to start talking about when they start talking about welfare fraud. You can protect against fraud of this scale without adding more rigorous means testing, or mechanisms that really just hurt the people who need the most help.
- wpietri 6y ago
  Definitely. I can trivially design an unemployment system that has zero fraud: we just never give out any money at all. We have to balance fraudulent payments against deserving recipients who don't get the money. I used to work with the people who made GetCalFresh: https://www.getcalfresh.org/ https://www.getcalfresh.org/ The basic problem they addressed was that a lot of people who qualified for food stamps didn't get them because it was too hard to apply. You either had to fill out an intimidating set of paper forms or a quirky and intimidating set of web versions of paper forms. GetCalFresh basically just applied the lean startup playbook: make something very simple, drive people to it with ads, and, as Paul Graham suggests, they did things that didn't scale. Initially, they filled out the paperwork by hand. Then they kept adding automation for filling out and faxing in PDFs. They talked with users, removing barriers and solving problems. Rolling out county by county, they've made a huge difference. Average online application time dropped from 45 minutes to 8. Last I checked, they were helping tens of thousands of people per month. I think it's fantastic that all of these people previously going hungry are now getting fed. But for years they weren't, and there are still plenty of deserving recipients who aren't. A lot of what GCF is doing is taking information the government already has and giving it back to them. Why is that necessary at all? I get why unemployment is still a mess. But given the power of networked computers, eventually I'd like to see all safety-net programs get rid of the need to apply at all. For a lot of pandemic layoffs, it would have been possible for state governments to contact people who were probably eligible, have them confirm a few details, and start sending them the money. And as a bonus, a proactive system like that would be much harder to scam.
m0llusk 6y ago
There are many factors involved, but at a basic level there is no robust record of identity and the federal or state level. Arguably both federal and state governments should have a detailed record of who paid what taxes. Such a record could make this kind of fraud much more difficult. This might even be a context in which blockchains have some utility.
- toomuchtodo 6y ago
  Blockchains have no utility here, national ID cards with cryptographic primitive support and robust IRL trust anchors do.
  - SV_BubbleTime 6y ago
    Requiring ID? Some people say that disenfranchisement though. I wonder where the line is for that?
    - tehwebguy 6y ago
      The line is that voting is a right and unemployment isn't. That said, people pay into UI for their whole working life, then when they need it the payout is a joke, so it needs to be improved significantly IMO. The only reason people can survive on it right now is that it's been significantly boosted at the federal level.
    - toomuchtodo 6y ago
      ID must be radically accessible for this to work. Very inexpensive cards and robust social systems for facilitating obtaining ID for those who face challenges getting to issuers.
      - miohtama 6y ago
        Most EU countries have strong online id systems, either guaranteed by banks and two-factor (Nordics) or even national id card (Estonia). In fact you do not need a card, as SMS two-factor prevents 99% of fraud (India, AADHAAR).
michaelmrose 6y ago
US aid to Nigeria is 793M https://explorer.usaid.gov/cd/NGA https://explorer.usaid.gov/cd/NGA Perhaps this should be conditioned on punishing these criminals or just suspended for the next few years
- 2OEH8eoCRo0 6y ago
  My uncle works in cybercrime for a city PD. He says people in his city are regularly tricked into sending their life savings via bitcoin ATMs to Nigerian scammers.
  - rovr138 6y ago
    Bitcoins, Visa gift cards, gift cards in general It’s super widespread.
- jorblumesea 6y ago
  How is collective punishment the issue? Is cutting off aid for an entire country acceptable because of a few bad actors? If anything, wouldn't cutting off aid just increase the need for wealth transfer? If I'm Nigeria, and I'm scamming to the tune of billions, why do I care about small sums?
  - rcstank 6y ago
    When the country in question isn’t taking action against this widespread issue then I’d say it’s acceptable. It’s not just a few bad actors. People are regularly being scammed out of their life savings.
    - deleted 6y ago
      [deleted]
    - jorblumesea 6y ago
      I don't think Nigeria, or many African countries, have the capabilities to enforce justice properly. Both technologically, institutionally and political will. Governments over there are not like governments here. You ask the Nigerian government to round up "internet scammers" and innocent people get targeted, political enemies end up in jail, a few high profile arrests and little happens. You have a very high opinion of African governments if you think we can send them a list of suspects.
jariel 6y ago
In 2020 your government has no way to identify you. It's shocking and absurd and affects everything. Beyond the operational stupidity ... they don't even know better. Not a single anybody outside of the bureaucracy has even identified it as a problem. We have the same thing in Canada: tons of COVID benefits fraudulent. They throw bazillions out the door. Finally - though I don't want to throw smoke over the recent election in the US, it is high time that there are very open and rigorous standard for identification, there's too much at risk. If the government provided the service for free down at the DMV there'd be little excuse.
- colechristensen 6y ago
  What costs do individuals have to pay when their government is very good at identifying them? When you have a piece of data available, it tends to get used. How could that be a bad thing when enhancing identifiably is the topic?
  - john_minsk 6y ago
    It can be anonymous and you will have to present an evidence that certain transaction belongs to you only when the situation requires it. Government can ensure information split at the time of registration and then dictate that only warrant can allow to link the 2. Anyway, the ability of governments to identify their citizens is technological problem. Overall during our history we agreed to potential of being identified by governments. Tech brings new tools to them. I wish they could adopt them quicker. Overall we shouldn't be afraid of new tech and more reliability. But what we need is the system that will be future proof in terms of balance between individual and big entities even if their technological ability to identify you is near perfect.
    - kansface 6y ago
      Assigning some bytes to a person is easy, but how do you authorize transactions? People will not keep a secret... secret. People will not remember a secret. People will lose cards. Smart phone adoption is maybe 75% in the US. Many people do not have internet access, a phone line, or even electricity! People have all sorts of disabilities, many can't read, and many still don't have permanent housing or even an address. The technology is the easy part.
treis 6y ago
And meanwhile my unemployment payments sit at 0 nearly four months after filing. Just sitting at pending a determination. Can't get anyone to answer the phone or e-mail.
- Consultant32452 6y ago
  I have a friend who works as support staff at a school. She was out of work from March when the schools closed to August when they reopened. She still hasn't gotten a cent. I'm sorry this is happening to you. Unfortunately there will be no consequences for anyone responsible.
MichaelZuo 6y ago
This seems to be indicative of the great problem of the future. If a small percentage of the world’s population are devious and seek to ruin things for everyone else, how does the global society punish that? If it’s only just 1% of the population, that’s still over 70 million folks spread across thousands of jurisdictions... The ultimate free rider problem. And will likely grow exponentially until we come up with some way to change the structure of the world, or if the fraction grows, until they consume all the productive surplus.
- cmelbye 6y ago
  This attack vector was created by gigantic, centralized, and ineffective bureaucracies. I’m not sure if it follows that a new international bureaucracy is needed to stop the damage.
  - SV_BubbleTime 6y ago
    I frequently read that the problem with government is that we just need more of it. That they just don’t have enough money and power to be effective yet.
  - MichaelZuo 6y ago
    And yet certain countries will need a ‘gigantic, centralized, bureaucracy’ regardless of any other factor because of the existence of WMDs, so to get rid of such is an impossible option for the globe. What other options are there once the existence of such ‘gigantic, centralized, bureaucracy’ is preordained on this planet for the foreseeable future?
- vlovich123 6y ago
  This doesn't need a global solution I think. Just make a requirement that people need to get a one-use access code in-person from a government office after presenting some ID (DMV or whatever). Alternatively allow this one-use access code to be delivered by mail within the US. That would instantly cull a giant amount of international electronic fraud but does carry some user friction points to figure out. The easiest way to cull a scaling problem caused by technology is to inject some kind of geographic-limiting or human-required action into the process.
InTheArena 6y ago
The unemployment schemes in Colorado and California have been a total disaster. I received a unemployment debit card in the mail - as well as a claim number. Called the state, filed a FTC report, and called the bank. None of them really cared or did anything about it. In California - the scale of the graft was so bad that they have had to pause the program multiple times. https://abc7.com/unemployment-california-edd-backlog-ca-where-are-my-benefits-usa/6469259/ https://abc7.com/unemployment-california-edd-backlog-ca-wher... Is it too much to ask for a government that both governs and is actually competent?
- disaster_robot 6y ago
  I went through exactly this on Monday night after discovering a Colorado unemployment debit card in my name had been sent to an old address of mine even though I've been living and working in a different state for over 2 years.
- ashtonkem 6y ago
  Apparently it is. I’m a bit surprised at CO being incompetent, and I’d like to hear more. Generally my observation has been that states with one party rule have been less effective than states where both parties have to compete for the approval of the electorate. Based on the last time I lived in CO, I would’ve put it in the latter category.
  - pueblito 6y ago
    My mom got an unemployment card (US Bank handles it in CO) in the mail and she’s never worked; she’s a disabled senior. My dad called the bank and they didn’t care, and he called the state and they didn’t care either. This was around 3 weeks ago
    - ashtonkem 6y ago
      I’ll be curious to see analysis on which states performed better here. But to be fair to CO, there is a good faith reason for governments to not care if they send cards to extra Americans. So long as the federal money printer is still running, spreading money around to Americans will keep the economy alive during the pandemic. Who cares if you give a bit of extra to people who don’t deserve it? Chances are they’ll spend it on local food and what not which’ll help keep other people off unemployment. This is especially true in cases where speed is of the essence, since you’d happily accept some level of errors to get the aid out immediately.
_trampeltier 6y ago
And why excactly, all the world has to send information about every international transaction to the USA? No wonder they have no money for a new computer and controll system, if they are working like this.
steelframe 6y ago
I worked for a big tech company in the Seattle area when the pandemic started. I had previously received notifications of my PII being misappropriated in attacks against my company's medical insurance administrator, as did all of my co-workers. The Washington State unemployment web site only required that you type in the right PII when registering, which pretty much was just your name and SSN. Maybe the address would need to match too, but regardless it was all the stuff that would have been available to any breach such as the ones that hit Equifax or Anthem. Several weeks into the pandemic I got a letter in the mail from the Washington State Employment Security Department (ESD) referencing a claim number and giving me advice on how to start up a tech business or something. I was like, "Um, why is there a claim number on this letter?" I went to the ESD website and tried to register with my SSN, only to be greeted with something like, "Sorry, looks like you're already registered with email address *pwned1337@gmail.com." I knew right away what was going on, and I alerted my co-workers that they should go check out to see if their SSN was associated with some random email address they didn't recognize. Sure enough, about a dozen others in Washington state reported that they were hit too. From those who weren't popped, we learned that just by providing your name and SSN, the web set would spill out your income to whoever's using it and then let them register for unemployment benefits in your name to whatever random bank account you want to link. The fraudsters probably just went through their Equifax or Anthem dumps and selected the higher-income ones in the tech industry. A few weeks later my HR department reached out to me with, "Hi, we got a notification that you're collecting unemployment benefits. You're not planning on leaving the company are you?" To which I replied (in more civil terms), "No, you dipstick, it's the same thing that's happening with the dozens of other employees in Washington state right now, of which I'm sure you're aware. Why aren't you mentioning anything about the massive amount of identity fraud going on with your Washington state employees?" It was radio silence from HR from that point on. I tried calling the ESD fraud hotline, but it was so overwhelmed that it wouldn't even let me get in a queue. It just said, "We're too busy, bye bye" and hung up. I figured the system would work it all out eventually, and about a month ago I got a letter informing me that their investigation into the fraud was completed and that everything was cleared up. An article on this: https://www.king5.com/article/news/local/employment-security-department-unemployment-fraud-audit/281-7f82d90a-abec-4bd4-89cf-f130d0b12ed5 https://www.king5.com/article/news/local/employment-security...
michaelmrose 6y ago
The real story is we could have trivially stopped this fraud by issuing 2FA tokens to every American less than the cost of this fraud. We could also have required debit cards in place of direct payments to random banks be sent to the address on file with the IRS for the majority with correct info on file and handled the minority of exceptions by in person appointments at a government office including for example post offices where you would show government issued photo ID to receive your debit card.
nelsonenzo 6y ago
It's so stupid that they mail recipients for legal liability after the crime, but couldn't mail them and notify that unemployment is beggining before payments are made. step 1) Verify the unemployed mailing address is the same as on the bank account you are sending to. If it is not the same for legitimate reasons, step 2) Mail a pin code to the local address. step 3) Collecting unemployment requires entering that pin. I'm sure there are some edge cases to work out, but this isn't rocket science.
thesuitonym 6y ago
I literally do not care. The US spent almost 700 billion dollars on defense last year. If we're worried about how much the US costs, let's start there.
- criddell 6y ago
  Do we really have to choose just one of those?
- bpodgursky 6y ago
  Those 700 billion dollars went into salaries and healthcare for over a million people. And to a less direct degree, buying US-manufactured high-tech armaments. Maybe you think it's all a dumb thing to spend money on, but the US Army is in a lot of ways a UBI for low-education Americans. And one way or the other, the money is almost all staying in the US, stimulating some industry or another. Sending $36B overseas to Nigeria and Cyprus accomplishes nothing. It's not even comparable.
  - thesuitonym 6y ago
    You can still drastically cut defense spending without touching a single servicemember's pay or benefits. For instance: Instead of buying 7000 missiles, we could have saved 600 million dollars.
    - bpodgursky 6y ago
      The federal government would save 600 million dollars, and Raytheon employees would lose them. Entirely fair to say "well Raytheon factories should be building [tractors / ventilators / etc] instead, but it's not like the money is being shoveled into a hole and buried. The money stays in the US, backstopping US manufacturing. Sending that $600 million to overseas scammers would still accomplish nothing, whereas "wasteful" defense spending does.
zaroth 6y ago
I'm well aware of the common cognitive dissonance whereby a system which you are not familiar with seems like it should be trivial. But I'm having a hard time understanding where the complexity of these systems actually lie. State and Federal employment records already exist with your social security number, address, employer address, employer ID number, and amount of taxes that have been withheld. I can retrieve my own copy of this record online from the IRS and my own state relatively easily. Someone should not be able to [automatically] claim unemployment benefits for past income on which taxes have not been withheld, or estimated taxes have not been paid. That seems trivially fair. Even people making minimum wage will have payroll taxes withheld. Calculating an upper limit on the amount that can be processed automatically should therefore be trivial. Next is the question of where to send the payment. DMVs cover a large percentage of the population. Beyond the DMV, there's voter registration, credit reports, address of record for where the last tax refund was sent, utility bills, phone records. When I had a larger than typical refund last year, my state sent me a letter asking for copies of my and my wife's social security cards, passports, and utility bills before they would issue the refund. I felt that was pretty burdensome considering I was requesting the refund to the same exact bank account number which I had been paying them from for the last 5 years. It's obvious the state is just totally incapable of running even the simplest of validation rules. It's just helicopter money dropping from the sky, and they don't really care who gets it, because it's not their money. It's not like anyone is going to lose their job or not get re-elected because of it. The fact that's it's so easy to funnel all this money out of the country is a pretty wild indictment of FinCEN and the like.
- treis 6y ago
  >I'm well aware of the common cognitive dissonance whereby a system which you are not familiar with seems like it should be trivial. I build these sorts of things and while it's not trivial it's also really not that hard. It's just insane the amount of money the government will spend on crap. The field I work in is pretty small and I know a decent amount of the developers that use it. One project I worked on for the government, I showed up on day one and ran into a few people that had either no desire or no ability to do development work. And they were in team lead/senior roles. Then, come to find out that you can't do anything for the project until you have a background check. And, by anything, I mean anything. No meetings, e-mails, or anything with an armed guard enforcing it. So there was an office full of people billing out at $200+ an hour for months doing literally nothing. Then, come to find out that the way they wanted the software couldn't do. Like within an hour of hearing the requirements and what they were building I knew that it (1) wasn't possible and (2) the design they chose had fundamental flaws. Several years of effort and 10s of millions of dollars later they gave up on it. The government is just a big whale too dumb, corrupt, and/or lazy to defend itself while a gigantic swarm of consultants/vendors are ripping off hunks of its flesh like the sharks they are.
nimbius 6y ago
I feel like this article is very suspicious. nowhere is a source linked or cited other than a federal official for 36 billion during the month of november nowhere on https://www.hudoig.gov https://www.hudoig.gov (the OIG official site) can I find this report. 36 billion is an almost comical number without some sort of meaningful supporting evidence. I think it warrants serious consideration if this HN article should be flagged or not.
- mistrial9 6y ago
  agree, and .. wondering out loud how much "fake - look over THERE" is going on to cover actual corruption within the USA over these benefits, by those connected to the US system somehow
solotronics 6y ago
Maybe the answer is a push model vs pull model for money? Cryptographically secure money has its own new set of problems, but at least someone can't "pull" any amount of money from you with nothing but an account number.
Technically 6y ago
When there's a $740B defense package on the table, this is not the grift I'm worried about. $36B is a drop in the bucket compared to the wealth transfer upward that occurred in the last year. Lettem have it. What's the worst that can happen?
11thEarlOfMar 6y ago
Many (many) years ago, in Illinois, in order to collect unemployment, I had to visit a state employment office and meet a state employee and explain the circumstances around how I'd become involuntarily unemployed. No big deal, the checks came. So I wonder: would the additional cost of employing humans to vet unemployment claims face to face cost less than the corruption of an automated system?
- throwaway0a5e 6y ago
  Go look at how much toll booth collectors used to make and the various scandals (usually along the lines of politicians using their influence to hand out the jobs as favors) before they got automated. In a perfect world you'd be right. But in the real world it winds up hemorrhaging money at every turn.
  - 11thEarlOfMar 6y ago
    I laughed. At least the booty would land in the bank accounts of Americans. But you're right
  - alisonkisk 6y ago
    So it sounds like the fraud is far too small to care about.
- whoknew1122 6y ago
  The biggest assumption with this sort of solution is that all state governments will act in good faith. I've had people wait weeks just to get an appointment with the welfare office in Texas. Texas (and other states) routinely cut funding for departments that support social safety nets. Because the politicians in charge are diametrically opposed to the very idea of social safety nets. Instead of putting more effort into combating and preventing fraud, these politicians would rather push for further cuts. The argument being that by making it less profitable to commit fraud, there will be less fraud. All the while ignoring people who actually need the social safety neet.
  - 6y ago
vmception 6y ago
> Eventually, the state’s computers started to flag anomalies: out-of-state banks, duplicate email addresses and multiple names using the same bank accounts. There are also entire markets of compromised remote protocol computers, sorted by location and bandwidth, payable in cryptocurrency. This allows you normal, dynamic residential and office IP addresses that even flagging VPNs will allow people to get around. It is likely these are used as well, and gives state agencies a false sense of security. I don't consider those organizations having any solution.
robocat 6y ago
It is hard from the article to see where they pull the $36b headline number from... “California officials drew headlines recently for announcing they suspect as much as $2 billion was paid out in improper payments. Other states have reported lower losses: $242 million in Massachusetts, $200 million in Michigan, $18 million in Rhode Island, $8 million in Arizona and $6 million in Wisconsin.” California is about 15% of US GDP, so even if many other states were hit much worse, getting to $36b is hard.
hamsterOnWheel 6y ago
Much of it is assuredly going to organized crime, just as always when a lot of government money is moving around at once. The similarities between the bad loans bailed out during the Savings and Loan Crisis and the Financial Crisis have convinced me of that.
throwawaysea 6y ago
In Washington state, the unemployment agency has been hindering investigations to the point that a public warning has been issued to the agency's leaders about it from the investigators (https://www.seattletimes.com/seattle-news/politics/washington-auditor-warns-unemployment-agency-on-interference-with-audits-into-massive-fraud/ https://www.seattletimes.com/seattle-news/politics/washingto...). The head of this agency recently claimed that $357M of $600M has been recovered. However, it is hard to trust this figure because the agency has already been called out for misstating financial impact (https://www.seattletimes.com/seattle-news/times-watchdog/state-auditor-weak-security-accounting-errors-in-600-million-unemployment-fraud/ https://www.seattletimes.com/seattle-news/times-watchdog/sta...). What's really damning is the level of incompetence. Washington state's unemployment agency went an entire year without standard anti-fraud checks, leaving them broken that entire time. They only fixed it this year, seemingly because this unprecedented level of fraud caught the public's attention. The agency's leader, Suzi LeVine, was picked by Governor Jay Inslee to lead this agency as a "natural fit". But the reality is that it was a nepotistic appointment - LeVine was a Sales and Marketing executive at Expedia and then US ambassador to Switzerland. Her early career work experience at Microsoft was more technical but it was too long ago and too limited to give her "tech credentials". However, she was a prominent DNC fundraiser and donated significantly to Inslee's campaigns (https://www.seattletimes.com/seattle-news/politics/how-democratic-party-fundraiser-and-former-ambassador-suzi-levine-came-to-run-embattled-state-unemployment-system/ https://www.seattletimes.com/seattle-news/politics/how-democ...), so here we are.
rapind 6y ago
This is why universal programs are better. If you have gatekeepers you incentivize corruption. If you have tests you incentivize cheating. There's just too many knobs and dials (programs). Something like UBI is much simpler and therefor has far fewer attack vectors. The only test is to verify citizenship. A process to handle claims of non-receipt would be easy if a cheque can be expired and a new one sent. Who cares if wealthy citizens also get a pittance (to them)? It's more fair that they do anyway! Expire the cheques after like a year, so people can simply opt out by not cashing them before they expire.

218 points by andygcook 6y ago

36B (in a year) is about $120 per citizen (assuming 300M population). = $10/mo But also, some of the monies have been recovered Also, my health plan costs $1000/mo. Headline feels targeted to me. Like equivocation of unemployment to scams

anthony_r 6y ago
It is 1% of all US federal tax revenue. It is not insignificant. Also, insane that your health plan costs as much as the average citizen's share in all federal taxes (which also include corporate taxes, tariffs and whatnot).
- com2kid 6y ago
  > Also, insane that your health plan costs as much as the average citizen's share in all federal taxes (which also include corporate taxes, tariffs and whatnot). That's pretty typical for a quality health insurance / month. Good health care plans in America are expensive. My employers have always broken out how much they are contributing towards my health insurance each month, ~$1000 is typical.
  - mrkstu 6y ago
    Looked, since we just did insurance elections- my semi-monthly cost is $580 and the company's is $735 for my family HSA plan. $280 of that is the cash contribution to the HSA, which will get spent, since all costs except checkups go directly against the deductible. But removing the HSA contribution, that is $600 a month by myself, for the premium and $1470 by the company.
  - lotsofpulp 6y ago
    And it’s because healthcare costs that much. Lots and lots of cover your ass liability insurance and credentialed people to pay for.
    - com2kid 6y ago
      As is often said, 33% of US health care costs are the overhead from billing. I always admire the efficiency of dentists, somehow they can get an instant quote from my insurer as to exactly how much is going to be paid for. Eye doctors are the same way. No nonsense, "here is what it costs, here is what your insurance pays, here is what you owe us." I can have a little of of sympathy for insurance cos though, I once had a podiatrist bill my insurance $2000 for work that he obviously didn't do, and another doctor I visited recently either accidentally or purposefully submitted what was plainly the wrong billing code to the insurance company. Veterinary service is interesting, pretty much the exact same medical technology, but the billing is up front, and they even offer package discounts on tests!
      - lotsofpulp 6y ago
        > somehow they can get an instant quote from my insurer Because dentists are doing routine work. Doctors like to charge for each and every little thing, rather than by time like most professionals do. So each diagnosis, each procedure, each conversation can have different costs which can't be known up front. If a doctor wanted to provide you the codes they will be using, they easily could. They simply choose not to, to give them the freedom the charge whatever later on, in case they are able to based on what happens during your visit. I love the "new patient" charge code, which is utilized anytime you change to a new doctor. How the hell that differs from a regular "consultation" code for a yearly checkup is beyond me. The same time is spent analyzing and talking to you, the content of the discussion is the same. Surely, the doctor doesn't remember you from last year anyway so they need to spend time going over your notes. And yet, you get the honor of paying an extra $150 to $250 simply for talking to a different doctor.
        ghaff 6y ago
boredumb 6y ago
Last year ~6 million people were eligible for unemployment. The fact you are flaunting your entire family's healthcare costs and using the entire US population of adults, retirees and children to justify the theft of 36 billion dollars is concerning.
- edoceo 6y ago
  Not flaunting, just a fact. Not justifying just showing the math. The cost spread across 1/3 of USA population is $360/yr - still way less than the health care cost. My point is simply that this fraud burden is a much smaller fish
mynameishere 6y ago
Every time. Every single time there is somebody totally okay with fraud if it relates to a program he is otherwise in favor of. Can't you just spell out, "UC is good, but fraud is bad, so let's eliminate the fraud, even if it's a mere XY billion dollars." It does not require any internal contradiction to think that way.
- kthxbye123 6y ago
  Some level of fraud in a social welfare system is absolutely acceptable, if tightening controls to eliminate the fraud would mean that otherwise eligible people didn’t receive benefits they qualified for, or even if it meant that accessing those benefits became much more onerous. I don’t doubt that $36bn is too high, but this kind of analysis is almost never present in these articles and politically in this country the spectre of fraud is usually used as an anti-welfare cudgel
- nitrogen 6y ago
  Retail stores, banks, corporations, all price in fraud and risk. It's a matter of trading cost of enforcement vs. impact to core mission vs. money recovered.

pnw_hazor 6y ago

"Eventually, the [Washington] state’s computers started to flag anomalies: out-of-state banks, duplicate email addresses and multiple names using the same bank accounts. But there and elsewhere, antiquated state computer systems failed to flag foreign IP addresses, repeated computer serial numbers and techniques to mask that number." The current version of WA employment security dept software was deployed in 2017. It was a boondoggle that cost taxpayers ~$50mm. edit-to-add-link: https://www.king5.com/article/news/investigations/years-late-and-millions-over-budget-state-computer-system-called-a-failure/281-346039336 https://www.king5.com/article/news/investigations/years-late...

lostmsu 6y ago
Actually, the software cost now is closer to ~$36.05B
- pnw_hazor 6y ago
  I am talking about the cost of the software for Washington State. Added a link.
  - MichaelZuo 6y ago
    Well it does seem like the true software cost will be at least over $1 billion for Washington state...
frompdx 6y ago
It was a boondoggle that cost taxpayers ~$50mm. If I recall correctly it is also a third party solution provided by a private company. Oregon plans to adopt the same software after not being able to make payments at all for quite some time due to their own antiquated software [0]. From an article I read at the time: Keiser said Fast Enterprises has since blamed ESD for the lack of fraud protection because the ESD “didn’t purchase additional security” that Fast Enterprises could have offered. [1] Seems unbelievable given the expense. At the time I wrote OPB and said. While I think it is a good thing to choose readymade software rather than developing something new and potentially fail to deliver anything, I feel that Oregon is not paying attention to what is happening on the other side of the Columbia river and is potentially making the same mistakes as Washington. [0] https://www.opb.org/article/2020/09/10/oregon-employment-department-picks-company-to-update-outdated-technology/ https://www.opb.org/article/2020/09/10/oregon-employment-dep... [1] https://www.seattletimes.com/business/technical-error-helped-criminals-in-576-million-unemployment-benefits-scam-state-says/ https://www.seattletimes.com/business/technical-error-helped...

kthxbye123 6y ago

The (very reasonable) comment this reply was originally threaded with is now dead, so I’ll post it here: Some level of fraud in a social welfare system is absolutely acceptable, if tightening controls to eliminate the fraud would mean that otherwise eligible people didn’t receive benefits they qualified for, or even if it meant that accessing those benefits became much more onerous. I don’t doubt that $36bn is too high, but this kind of analysis is almost never present in these articles and politically in this country the spectre of fraud is usually used as an anti-welfare cudgel

Sebguer 6y ago
Agreed. There should absolutely be anti-fraud mechanisms, but those are not the same as what people tend to start talking about when they start talking about welfare fraud. You can protect against fraud of this scale without adding more rigorous means testing, or mechanisms that really just hurt the people who need the most help.
wpietri 6y ago
Definitely. I can trivially design an unemployment system that has zero fraud: we just never give out any money at all. We have to balance fraudulent payments against deserving recipients who don't get the money. I used to work with the people who made GetCalFresh: https://www.getcalfresh.org/ https://www.getcalfresh.org/ The basic problem they addressed was that a lot of people who qualified for food stamps didn't get them because it was too hard to apply. You either had to fill out an intimidating set of paper forms or a quirky and intimidating set of web versions of paper forms. GetCalFresh basically just applied the lean startup playbook: make something very simple, drive people to it with ads, and, as Paul Graham suggests, they did things that didn't scale. Initially, they filled out the paperwork by hand. Then they kept adding automation for filling out and faxing in PDFs. They talked with users, removing barriers and solving problems. Rolling out county by county, they've made a huge difference. Average online application time dropped from 45 minutes to 8. Last I checked, they were helping tens of thousands of people per month. I think it's fantastic that all of these people previously going hungry are now getting fed. But for years they weren't, and there are still plenty of deserving recipients who aren't. A lot of what GCF is doing is taking information the government already has and giving it back to them. Why is that necessary at all? I get why unemployment is still a mess. But given the power of networked computers, eventually I'd like to see all safety-net programs get rid of the need to apply at all. For a lot of pandemic layoffs, it would have been possible for state governments to contact people who were probably eligible, have them confirm a few details, and start sending them the money. And as a bonus, a proactive system like that would be much harder to scam.

m0llusk 6y ago

There are many factors involved, but at a basic level there is no robust record of identity and the federal or state level. Arguably both federal and state governments should have a detailed record of who paid what taxes. Such a record could make this kind of fraud much more difficult. This might even be a context in which blockchains have some utility.

toomuchtodo 6y ago
Blockchains have no utility here, national ID cards with cryptographic primitive support and robust IRL trust anchors do.
- SV_BubbleTime 6y ago
  Requiring ID? Some people say that disenfranchisement though. I wonder where the line is for that?
  - tehwebguy 6y ago
    The line is that voting is a right and unemployment isn't. That said, people pay into UI for their whole working life, then when they need it the payout is a joke, so it needs to be improved significantly IMO. The only reason people can survive on it right now is that it's been significantly boosted at the federal level.
  - toomuchtodo 6y ago
    ID must be radically accessible for this to work. Very inexpensive cards and robust social systems for facilitating obtaining ID for those who face challenges getting to issuers.
    - miohtama 6y ago
      Most EU countries have strong online id systems, either guaranteed by banks and two-factor (Nordics) or even national id card (Estonia). In fact you do not need a card, as SMS two-factor prevents 99% of fraud (India, AADHAAR).

michaelmrose 6y ago

US aid to Nigeria is 793M https://explorer.usaid.gov/cd/NGA https://explorer.usaid.gov/cd/NGA Perhaps this should be conditioned on punishing these criminals or just suspended for the next few years

2OEH8eoCRo0 6y ago
My uncle works in cybercrime for a city PD. He says people in his city are regularly tricked into sending their life savings via bitcoin ATMs to Nigerian scammers.
- rovr138 6y ago
  Bitcoins, Visa gift cards, gift cards in general It’s super widespread.
jorblumesea 6y ago
How is collective punishment the issue? Is cutting off aid for an entire country acceptable because of a few bad actors? If anything, wouldn't cutting off aid just increase the need for wealth transfer? If I'm Nigeria, and I'm scamming to the tune of billions, why do I care about small sums?
- rcstank 6y ago
  When the country in question isn’t taking action against this widespread issue then I’d say it’s acceptable. It’s not just a few bad actors. People are regularly being scammed out of their life savings.
  - deleted 6y ago
    [deleted]
  - jorblumesea 6y ago
    I don't think Nigeria, or many African countries, have the capabilities to enforce justice properly. Both technologically, institutionally and political will. Governments over there are not like governments here. You ask the Nigerian government to round up "internet scammers" and innocent people get targeted, political enemies end up in jail, a few high profile arrests and little happens. You have a very high opinion of African governments if you think we can send them a list of suspects.

jariel 6y ago

In 2020 your government has no way to identify you. It's shocking and absurd and affects everything. Beyond the operational stupidity ... they don't even know better. Not a single anybody outside of the bureaucracy has even identified it as a problem. We have the same thing in Canada: tons of COVID benefits fraudulent. They throw bazillions out the door. Finally - though I don't want to throw smoke over the recent election in the US, it is high time that there are very open and rigorous standard for identification, there's too much at risk. If the government provided the service for free down at the DMV there'd be little excuse.

colechristensen 6y ago
What costs do individuals have to pay when their government is very good at identifying them? When you have a piece of data available, it tends to get used. How could that be a bad thing when enhancing identifiably is the topic?
- john_minsk 6y ago
  It can be anonymous and you will have to present an evidence that certain transaction belongs to you only when the situation requires it. Government can ensure information split at the time of registration and then dictate that only warrant can allow to link the 2. Anyway, the ability of governments to identify their citizens is technological problem. Overall during our history we agreed to potential of being identified by governments. Tech brings new tools to them. I wish they could adopt them quicker. Overall we shouldn't be afraid of new tech and more reliability. But what we need is the system that will be future proof in terms of balance between individual and big entities even if their technological ability to identify you is near perfect.
  - kansface 6y ago
    Assigning some bytes to a person is easy, but how do you authorize transactions? People will not keep a secret... secret. People will not remember a secret. People will lose cards. Smart phone adoption is maybe 75% in the US. Many people do not have internet access, a phone line, or even electricity! People have all sorts of disabilities, many can't read, and many still don't have permanent housing or even an address. The technology is the easy part.

treis 6y ago

And meanwhile my unemployment payments sit at 0 nearly four months after filing. Just sitting at pending a determination. Can't get anyone to answer the phone or e-mail.

Consultant32452 6y ago
I have a friend who works as support staff at a school. She was out of work from March when the schools closed to August when they reopened. She still hasn't gotten a cent. I'm sorry this is happening to you. Unfortunately there will be no consequences for anyone responsible.

MichaelZuo 6y ago

This seems to be indicative of the great problem of the future. If a small percentage of the world’s population are devious and seek to ruin things for everyone else, how does the global society punish that? If it’s only just 1% of the population, that’s still over 70 million folks spread across thousands of jurisdictions... The ultimate free rider problem. And will likely grow exponentially until we come up with some way to change the structure of the world, or if the fraction grows, until they consume all the productive surplus.

cmelbye 6y ago
This attack vector was created by gigantic, centralized, and ineffective bureaucracies. I’m not sure if it follows that a new international bureaucracy is needed to stop the damage.
- SV_BubbleTime 6y ago
  I frequently read that the problem with government is that we just need more of it. That they just don’t have enough money and power to be effective yet.
- MichaelZuo 6y ago
  And yet certain countries will need a ‘gigantic, centralized, bureaucracy’ regardless of any other factor because of the existence of WMDs, so to get rid of such is an impossible option for the globe. What other options are there once the existence of such ‘gigantic, centralized, bureaucracy’ is preordained on this planet for the foreseeable future?
vlovich123 6y ago
This doesn't need a global solution I think. Just make a requirement that people need to get a one-use access code in-person from a government office after presenting some ID (DMV or whatever). Alternatively allow this one-use access code to be delivered by mail within the US. That would instantly cull a giant amount of international electronic fraud but does carry some user friction points to figure out. The easiest way to cull a scaling problem caused by technology is to inject some kind of geographic-limiting or human-required action into the process.

InTheArena 6y ago

The unemployment schemes in Colorado and California have been a total disaster. I received a unemployment debit card in the mail - as well as a claim number. Called the state, filed a FTC report, and called the bank. None of them really cared or did anything about it. In California - the scale of the graft was so bad that they have had to pause the program multiple times. https://abc7.com/unemployment-california-edd-backlog-ca-where-are-my-benefits-usa/6469259/ https://abc7.com/unemployment-california-edd-backlog-ca-wher... Is it too much to ask for a government that both governs and is actually competent?

disaster_robot 6y ago
I went through exactly this on Monday night after discovering a Colorado unemployment debit card in my name had been sent to an old address of mine even though I've been living and working in a different state for over 2 years.
ashtonkem 6y ago
Apparently it is. I’m a bit surprised at CO being incompetent, and I’d like to hear more. Generally my observation has been that states with one party rule have been less effective than states where both parties have to compete for the approval of the electorate. Based on the last time I lived in CO, I would’ve put it in the latter category.
- pueblito 6y ago
  My mom got an unemployment card (US Bank handles it in CO) in the mail and she’s never worked; she’s a disabled senior. My dad called the bank and they didn’t care, and he called the state and they didn’t care either. This was around 3 weeks ago
  - ashtonkem 6y ago
    I’ll be curious to see analysis on which states performed better here. But to be fair to CO, there is a good faith reason for governments to not care if they send cards to extra Americans. So long as the federal money printer is still running, spreading money around to Americans will keep the economy alive during the pandemic. Who cares if you give a bit of extra to people who don’t deserve it? Chances are they’ll spend it on local food and what not which’ll help keep other people off unemployment. This is especially true in cases where speed is of the essence, since you’d happily accept some level of errors to get the aid out immediately.

_trampeltier 6y ago

And why excactly, all the world has to send information about every international transaction to the USA? No wonder they have no money for a new computer and controll system, if they are working like this.

steelframe 6y ago

I worked for a big tech company in the Seattle area when the pandemic started. I had previously received notifications of my PII being misappropriated in attacks against my company's medical insurance administrator, as did all of my co-workers. The Washington State unemployment web site only required that you type in the right PII when registering, which pretty much was just your name and SSN. Maybe the address would need to match too, but regardless it was all the stuff that would have been available to any breach such as the ones that hit Equifax or Anthem. Several weeks into the pandemic I got a letter in the mail from the Washington State Employment Security Department (ESD) referencing a claim number and giving me advice on how to start up a tech business or something. I was like, "Um, why is there a claim number on this letter?" I went to the ESD website and tried to register with my SSN, only to be greeted with something like, "Sorry, looks like you're already registered with email address *pwned1337@gmail.com." I knew right away what was going on, and I alerted my co-workers that they should go check out to see if their SSN was associated with some random email address they didn't recognize. Sure enough, about a dozen others in Washington state reported that they were hit too. From those who weren't popped, we learned that just by providing your name and SSN, the web set would spill out your income to whoever's using it and then let them register for unemployment benefits in your name to whatever random bank account you want to link. The fraudsters probably just went through their Equifax or Anthem dumps and selected the higher-income ones in the tech industry. A few weeks later my HR department reached out to me with, "Hi, we got a notification that you're collecting unemployment benefits. You're not planning on leaving the company are you?" To which I replied (in more civil terms), "No, you dipstick, it's the same thing that's happening with the dozens of other employees in Washington state right now, of which I'm sure you're aware. Why aren't you mentioning anything about the massive amount of identity fraud going on with your Washington state employees?" It was radio silence from HR from that point on. I tried calling the ESD fraud hotline, but it was so overwhelmed that it wouldn't even let me get in a queue. It just said, "We're too busy, bye bye" and hung up. I figured the system would work it all out eventually, and about a month ago I got a letter informing me that their investigation into the fraud was completed and that everything was cleared up. An article on this: https://www.king5.com/article/news/local/employment-security-department-unemployment-fraud-audit/281-7f82d90a-abec-4bd4-89cf-f130d0b12ed5 https://www.king5.com/article/news/local/employment-security...

michaelmrose 6y ago

The real story is we could have trivially stopped this fraud by issuing 2FA tokens to every American less than the cost of this fraud. We could also have required debit cards in place of direct payments to random banks be sent to the address on file with the IRS for the majority with correct info on file and handled the minority of exceptions by in person appointments at a government office including for example post offices where you would show government issued photo ID to receive your debit card.

nelsonenzo 6y ago

It's so stupid that they mail recipients for legal liability after the crime, but couldn't mail them and notify that unemployment is beggining before payments are made. step 1) Verify the unemployed mailing address is the same as on the bank account you are sending to. If it is not the same for legitimate reasons, step 2) Mail a pin code to the local address. step 3) Collecting unemployment requires entering that pin. I'm sure there are some edge cases to work out, but this isn't rocket science.

thesuitonym 6y ago

I literally do not care. The US spent almost 700 billion dollars on defense last year. If we're worried about how much the US costs, let's start there.

criddell 6y ago
Do we really have to choose just one of those?
bpodgursky 6y ago
Those 700 billion dollars went into salaries and healthcare for over a million people. And to a less direct degree, buying US-manufactured high-tech armaments. Maybe you think it's all a dumb thing to spend money on, but the US Army is in a lot of ways a UBI for low-education Americans. And one way or the other, the money is almost all staying in the US, stimulating some industry or another. Sending $36B overseas to Nigeria and Cyprus accomplishes nothing. It's not even comparable.
- thesuitonym 6y ago
  You can still drastically cut defense spending without touching a single servicemember's pay or benefits. For instance: Instead of buying 7000 missiles, we could have saved 600 million dollars.
  - bpodgursky 6y ago
    The federal government would save 600 million dollars, and Raytheon employees would lose them. Entirely fair to say "well Raytheon factories should be building [tractors / ventilators / etc] instead, but it's not like the money is being shoveled into a hole and buried. The money stays in the US, backstopping US manufacturing. Sending that $600 million to overseas scammers would still accomplish nothing, whereas "wasteful" defense spending does.

zaroth 6y ago

I'm well aware of the common cognitive dissonance whereby a system which you are not familiar with seems like it should be trivial. But I'm having a hard time understanding where the complexity of these systems actually lie. State and Federal employment records already exist with your social security number, address, employer address, employer ID number, and amount of taxes that have been withheld. I can retrieve my own copy of this record online from the IRS and my own state relatively easily. Someone should not be able to [automatically] claim unemployment benefits for past income on which taxes have not been withheld, or estimated taxes have not been paid. That seems trivially fair. Even people making minimum wage will have payroll taxes withheld. Calculating an upper limit on the amount that can be processed automatically should therefore be trivial. Next is the question of where to send the payment. DMVs cover a large percentage of the population. Beyond the DMV, there's voter registration, credit reports, address of record for where the last tax refund was sent, utility bills, phone records. When I had a larger than typical refund last year, my state sent me a letter asking for copies of my and my wife's social security cards, passports, and utility bills before they would issue the refund. I felt that was pretty burdensome considering I was requesting the refund to the same exact bank account number which I had been paying them from for the last 5 years. It's obvious the state is just totally incapable of running even the simplest of validation rules. It's just helicopter money dropping from the sky, and they don't really care who gets it, because it's not their money. It's not like anyone is going to lose their job or not get re-elected because of it. The fact that's it's so easy to funnel all this money out of the country is a pretty wild indictment of FinCEN and the like.

treis 6y ago
>I'm well aware of the common cognitive dissonance whereby a system which you are not familiar with seems like it should be trivial. I build these sorts of things and while it's not trivial it's also really not that hard. It's just insane the amount of money the government will spend on crap. The field I work in is pretty small and I know a decent amount of the developers that use it. One project I worked on for the government, I showed up on day one and ran into a few people that had either no desire or no ability to do development work. And they were in team lead/senior roles. Then, come to find out that you can't do anything for the project until you have a background check. And, by anything, I mean anything. No meetings, e-mails, or anything with an armed guard enforcing it. So there was an office full of people billing out at $200+ an hour for months doing literally nothing. Then, come to find out that the way they wanted the software couldn't do. Like within an hour of hearing the requirements and what they were building I knew that it (1) wasn't possible and (2) the design they chose had fundamental flaws. Several years of effort and 10s of millions of dollars later they gave up on it. The government is just a big whale too dumb, corrupt, and/or lazy to defend itself while a gigantic swarm of consultants/vendors are ripping off hunks of its flesh like the sharks they are.

nimbius 6y ago

I feel like this article is very suspicious. nowhere is a source linked or cited other than a federal official for 36 billion during the month of november nowhere on https://www.hudoig.gov https://www.hudoig.gov (the OIG official site) can I find this report. 36 billion is an almost comical number without some sort of meaningful supporting evidence. I think it warrants serious consideration if this HN article should be flagged or not.

mistrial9 6y ago
agree, and .. wondering out loud how much "fake - look over THERE" is going on to cover actual corruption within the USA over these benefits, by those connected to the US system somehow

solotronics 6y ago

Maybe the answer is a push model vs pull model for money? Cryptographically secure money has its own new set of problems, but at least someone can't "pull" any amount of money from you with nothing but an account number.

Technically 6y ago

When there's a $740B defense package on the table, this is not the grift I'm worried about. $36B is a drop in the bucket compared to the wealth transfer upward that occurred in the last year. Lettem have it. What's the worst that can happen?

11thEarlOfMar 6y ago

Many (many) years ago, in Illinois, in order to collect unemployment, I had to visit a state employment office and meet a state employee and explain the circumstances around how I'd become involuntarily unemployed. No big deal, the checks came. So I wonder: would the additional cost of employing humans to vet unemployment claims face to face cost less than the corruption of an automated system?

throwaway0a5e 6y ago
Go look at how much toll booth collectors used to make and the various scandals (usually along the lines of politicians using their influence to hand out the jobs as favors) before they got automated. In a perfect world you'd be right. But in the real world it winds up hemorrhaging money at every turn.
- 11thEarlOfMar 6y ago
  I laughed. At least the booty would land in the bank accounts of Americans. But you're right
- alisonkisk 6y ago
  So it sounds like the fraud is far too small to care about.
whoknew1122 6y ago
The biggest assumption with this sort of solution is that all state governments will act in good faith. I've had people wait weeks just to get an appointment with the welfare office in Texas. Texas (and other states) routinely cut funding for departments that support social safety nets. Because the politicians in charge are diametrically opposed to the very idea of social safety nets. Instead of putting more effort into combating and preventing fraud, these politicians would rather push for further cuts. The argument being that by making it less profitable to commit fraud, there will be less fraud. All the while ignoring people who actually need the social safety neet.
- 6y ago

vmception 6y ago

> Eventually, the state’s computers started to flag anomalies: out-of-state banks, duplicate email addresses and multiple names using the same bank accounts. There are also entire markets of compromised remote protocol computers, sorted by location and bandwidth, payable in cryptocurrency. This allows you normal, dynamic residential and office IP addresses that even flagging VPNs will allow people to get around. It is likely these are used as well, and gives state agencies a false sense of security. I don't consider those organizations having any solution.

robocat 6y ago

It is hard from the article to see where they pull the $36b headline number from... “California officials drew headlines recently for announcing they suspect as much as $2 billion was paid out in improper payments. Other states have reported lower losses: $242 million in Massachusetts, $200 million in Michigan, $18 million in Rhode Island, $8 million in Arizona and $6 million in Wisconsin.” California is about 15% of US GDP, so even if many other states were hit much worse, getting to $36b is hard.

hamsterOnWheel 6y ago

Much of it is assuredly going to organized crime, just as always when a lot of government money is moving around at once. The similarities between the bad loans bailed out during the Savings and Loan Crisis and the Financial Crisis have convinced me of that.

throwawaysea 6y ago

In Washington state, the unemployment agency has been hindering investigations to the point that a public warning has been issued to the agency's leaders about it from the investigators (https://www.seattletimes.com/seattle-news/politics/washington-auditor-warns-unemployment-agency-on-interference-with-audits-into-massive-fraud/ https://www.seattletimes.com/seattle-news/politics/washingto...). The head of this agency recently claimed that $357M of $600M has been recovered. However, it is hard to trust this figure because the agency has already been called out for misstating financial impact (https://www.seattletimes.com/seattle-news/times-watchdog/state-auditor-weak-security-accounting-errors-in-600-million-unemployment-fraud/ https://www.seattletimes.com/seattle-news/times-watchdog/sta...). What's really damning is the level of incompetence. Washington state's unemployment agency went an entire year without standard anti-fraud checks, leaving them broken that entire time. They only fixed it this year, seemingly because this unprecedented level of fraud caught the public's attention. The agency's leader, Suzi LeVine, was picked by Governor Jay Inslee to lead this agency as a "natural fit". But the reality is that it was a nepotistic appointment - LeVine was a Sales and Marketing executive at Expedia and then US ambassador to Switzerland. Her early career work experience at Microsoft was more technical but it was too long ago and too limited to give her "tech credentials". However, she was a prominent DNC fundraiser and donated significantly to Inslee's campaigns (https://www.seattletimes.com/seattle-news/politics/how-democratic-party-fundraiser-and-former-ambassador-suzi-levine-came-to-run-embattled-state-unemployment-system/ https://www.seattletimes.com/seattle-news/politics/how-democ...), so here we are.

rapind 6y ago

This is why universal programs are better. If you have gatekeepers you incentivize corruption. If you have tests you incentivize cheating. There's just too many knobs and dials (programs). Something like UBI is much simpler and therefor has far fewer attack vectors. The only test is to verify citizenship. A process to handle claims of non-receipt would be easy if a cheque can be expired and a new one sent. Who cares if wealthy citizens also get a pittance (to them)? It's more fair that they do anyway! Expire the cheques after like a year, so people can simply opt out by not cashing them before they expire.