Kansas remains a top state for unemployment fraud despite officials seeking solutions

Jonathan Riley
Morning Sun
This map from the FTC’s Consumer Sentinel Network Data Book 2020 shows Kansas leading the United States in identity theft reports per capita last year. So far in 2021, Kansas is behind only Rhode Island in terms of identity theft reports per capita.

PITTSBURG, Kan. — It is no secret that the Kansas Department of Labor has had a challenging year amid the COVID-19 pandemic, with former Labor Secretary Delia Garcia resigning last June and the department having been led by a series of acting secretaries since then. One major issue the KDOL has been dealing with is rampant unemployment insurance fraud. 

“Fraud is unacceptable and will not be tolerated. It’s stealing from taxpayers at the worst possible time and all attempts at fraud will be referred in the strongest possible manner to law enforcement,” Gov. Laura Kelly said in February. “All 50 states have been overrun with coordinated, sophisticated criminal fraud attempts, and that’s why I wrote a letter with fellow Governors, calling on Congress to provide funding to secure and modernize our systems.” 

While it's certainly true that unemployment fraud has been a problem nationwide amid the pandemic and the widespread job losses and increased unemployment benefits that came with it, however, there has been far more of it in Kansas than in most places in the country. Since before the pandemic, the KDOL has been working to update its four-decade-old computer system.  

A few weeks ago, Kelly announced the state was “taking a major step in fixing” the system, which she described as “antiquated technology,” and on Monday she signed a bill that will modernize it following “a decade of neglect,” she said. 

“This bill and the work accomplished during the legislative session will ensure that the Department of Labor will truly be prepared the next time our state faces an unprecedented economic crisis,” Kelly said in a press release. 

Kansas led the nation in identity theft reports in 2020, according to data from the Federal Trade Commission, with the state accounting for nearly a tenth of government benefits fraud reports nationwide and more such reports than were recorded in all of the U.S. in 2019. So far in 2021, Rhode Island has had a higher per capita number of benefits fraud reports, but Kansas is not far behind. 

While “government documents or benefits fraud” represented only 29 percent of identity theft cases nationwide in 2020, according to the FTC, in Kansas they represented the vast majority, with more than 38,000 in this category out of a total of 43,210 identity theft reports. 

This appears to be a significant underestimate of the total. In October, Acting Labor Secretary Ryan Wright announced that the KDOL had identified more than 100,000 fraudulent claims since the start of the pandemic, and the department said in February it had referred more than 50,000 unemployment fraud cases to federal law enforcement for investigation and potential prosecution – a number that itself represented only a small fraction of the total fraud attempts. 

“Since the beginning of 2020, KDOL stopped approximately 500,000 fraudulent claims that were the result of identity theft and other unemployment related fraud that could have cost more than $22 billion,” the department said in the same February press release. “These stopped claims are the result of many hours of effort from the KDOL fraud team who have worked tirelessly to combat sophisticated criminal rings, which have targeted the state’s unemployment system.” 

And even that does not reflect the total number of attempts to defraud the KDOL. Earlier in February, just days after implementing a new identity verification system, the department announced that it had already blocked over a million fraudulent login attempts and bot attacks. 

The FTC’s Consumer Sentinel Network Data Book 2020 analyzes the data not just by state, but also by major metropolitan area. Notably, the top four metro areas for identity theft in the entire country in 2020 were all in Kansas: Topeka was number one with 1,925 reports per 100,000 people, followed by Lawrence with 1,717, Wichita with 1,395, and Manhattan with 1,207. Statewide, there were 1,483 identity theft reports per 100,000 people in 2020, according to the FTC. 

For smaller communities in Kansas, getting an accurate count of unemployment fraud cases is easier said than done.   

The FTC’s Consumer Sentinel Network gathers data from a variety of sources, which are not identified individually in total numbers of reports for each state and metro area. A KDOL spokesman said the department does not have numbers of unemployment fraud reports broken down by county, and the Kansas Attorney General’s Office does not track unemployment fraud numbers, according to a spokesman. 

In Crawford County, the county attorney’s office was unable to provide a total number of fraudulent unemployment claims originating locally, but last October, then-Rep. Monica Murnan (D-Pittsburg) said she was receiving phone calls “on a regular basis” from people asking what to do about fraudulent unemployment claims filed in their names. 

Also in October, Pittsburg State University Human Resources Director Lori Dreiling wrote a memo noting that there had been 70 fraudulent claims filed in the names of university employees since May of 2020. In the months since then, that number multiplied several times, although the situation has recently improved. 

“We had about 392 fraudulent claims with a few having had multiple notices,” PSU HR Specialist Diane Letner said in an email Friday. “We fortunately have not received any claims that were considered fraudulent since early March 2021.” 

With no fraudulent unemployment claims at PSU for nearly two months, Dreiling said in an email, it seems the KDOL has the situation “under control for now.” It might be premature, however, to declare the problem solved. 

The FTC published new data this week showing that in the first quarter of 2021, “government documents or benefits fraud” decreased by a total of just 120 identity theft reports nationwide compared to the fourth quarter of 2020. Nor does the flow of fraudulent claims flooding into the KDOL appear to have significantly slowed, with more than 32,000 benefits fraud reports in the state so far in 2021 through the end of March, according to the FTC. 

Although the current pace of identity theft reports piling up at the KDOL would seem at first glance to suggest 2021 could end up an even worse year for unemployment fraud than 2020 was, it should be noted that the last quarter of 2020 alone accounted for more than 33,000 such reports — a large majority of the year’s cases.  

For those who have had their identity stolen and used by criminals to file fraudulent unemployment claims over the past year, it sometimes seems there is little that can be done other than hoping that somebody, somewhere in the unemployment or law enforcement bureaucracy is working to resolve the problem.  

Local resident Nico Prelogar, who worked at PSU up until last year, said he was informed by the university a few months ago that a fraudulent unemployment claim had been filed in his name, and was sent a link to report the issue to the U.S. Department of Labor. 

“The government, I guess they never got back to me,” Prelogar said. “It just kind of went away.”