Delaware unemployment office faces surge in attempted fraud, unemployed pay the price

Nearly a year and a half since Delaware businesses first started closing due to the COVID-19 pandemic, people across the state are still struggling to get the unemployment benefits they are due.

Reports of fraudulent activity on unemployment claims have swamped the Delaware Labor Department over the past few months, and as a result legitimate applicants are being affected.

It's led to many people's payments freezing as the department tries to get a hold over the phenomenon that has impacted other states, including Maryland. The Delaware department could not confirm how many people's claims have been put on hold due to attempted fraud.

But many of the people still on unemployment aren't able to wait for the money, especially as pandemic-era government assistance programs such as frozen student loan payments and an eviction moratorium begin to expire and the delta variant poses a new chapter of economic uncertainty.

"It couldn't come at a worse time," said Division of Unemployment Director Darryl Scott.

Over the past year and a half, the unemployment process has been nothing short of a nightmare for many people in Delaware.

The department processed more than 175,000 claims in 2020 compared to about 32,000 in 2019, overwhelming the small unemployment office with thousands of claims a week. Many were forced to wait weeks to months to even see a penny of what they were due.

The rate of unemployment claims has slowed down since then. In the last week of July, the department reported less than 600 new claims. Nearly 260,000 unemployment claims have been filed since the start of the pandemic.

But many still report trouble with their claims and few answers from the Labor Department, whose call center has been inundated with questions from confused, frustrated and panicked claimants who depend on the government-assisted paycheck to survive.

One of them is Michael Dorsey, a 39-year-old Wilmington resident, who worked for ShopRite six days a week for 13 years before the COVID-19 pandemic. He's been forced to stay home during the pandemic because he is immunocompromised. 

Now, his inability to get vaccinated due to his health condition, on top of the imminent spread of the delta variant, has kept him from going back.

He had been using the bulk of his unemployment benefits to pay his rent until the Labor Department, citing fraudulent activity, put his claim on hold for about a month. He said he never found out what exactly was wrong with his claim, or how to fix it.

He fell behind on rent just as a pandemic-era federal eviction moratorium was to expire at the end of July. He got desperate. His only power left was hounding the Labor Department every day via phone and email.

“I emailed them about 50 times,” he said. “When I called them, they were saying, ‘Well we can't tell you anything. Just wait to see what happens.’”

“I'm not blaming them because to me it sounds like they don't know what's going on, either,” he added. “I think they have no idea.”

So he waited. And by a stroke of grace, he said, he received his benefits on July 27, just a few days before the eviction process would have started.

But he worries about other people in Delaware, especially elderly people, who are less familiar with navigating the internet or the automated responses you face when calling the Labor Department for help. Some people don’t even have access to a computer, he added.

“A lot of elderly people, a lot of people, are going to be left stranded,” Dorsey said. “It’s not justifiable.”

Others have been less fortunate.

Timothy Sheppard, a 46-year-old who filed for unemployment shortly after the pandemic started last year, has had trouble getting paid for several weeks over the past year and a half, including almost all of last July and this month. His claim was inexplicably put on hold, and the Labor Department has not told him why, he said. He has not been told that it's related to fraud.

“There's been no communication,” Sheppard said. “The only people who I’ve talked to are the customer service people that they hire who know absolutely nothing which is not their fault. They struggle trying to get information for you, they can't get information for you. No one tells them anything.”

Sheppard went on Delaware unemployment after working in housing inspections and other jobs in lower Delaware while taking care of his 77-year-old mother in Salisbury, Maryland. 

Sheppard said he had an allergic reaction after his first dose of the vaccine, so he can’t get his second shot. He has tried finding work as a chef, but his inability to get vaccinated has prevented him from finding a kitchen that will hire him -- especially as the delta variant spreads through his city, he said. 

“I don’t know what to tell bill collectors,” he said. “It makes me very angry because I have people dependent on me.”

'Hijacked' claims cause new backlog

The Labor Department got more than 72,000 claims between April and June alone, a significant and initially unexplained increase. 

More than 60% of those claims failed an initial identity verification after actual people and employers got notices that someone was trying to file a claim using their identity, Scott said, leading officials to believe that they were linked to fraudulent activity.

Meanwhile, some people who are already on unemployment have had their claims "hijacked," leading to their payments being put on hold while the department tries to resolve the claim. 

According to the department, nearly 18,000 of the 25,000 reported cases of fraudulent activity have come in the last three months.

The Labor Department has stressed that it will not seek personal information via unsolicited texts, emails or regular mail, or contact claimants via WhatsApp or social media. These could be instances of fraud, according to the department.

The department plans to hold public events in the future to help get the word out about how to avoid fraud and address backlog issues.

The department is still trying to figure out who or what is responsible for the deluge, and is trying to add staff to fix those claims more quickly, Scott said.

The fraudulent claims and spikes in calls from those affected have overloaded the department again, making it harder for those people to get answers.

The department is even asking claimants to send them a photo of themselves holding their documentation along with the documentation itself because they've had instances of fraudulent documents, Scott said.

"It's just caused a significant backlog throughout the organization," Scott said. "So we know we're not responding as quickly as we want to or need to. But we're continuing to ... focus our efforts to try and respond as quickly as we can."

The state has the lowest unemployment benefit in the region ranging from $20 to $400 per week, and many who have received benefits say they've faced extreme financial sacrifices including threats of repossession of their car, homelessness and hunger.

And even as vaccinations have allowed much of the economy to return to normal, many people have struggled to get back to work due to child care, health conditions and limited options in their field.

The department hears regularly from claimants who can't afford food, medicine, rent or car payments, and some staff members are struggling to handle callers who threaten suicide or self-harm due to the stress, Scott said.

"We clearly understand the strain," Scott said. "Unemployment, in and of itself, is a very stressful process. ...  And then you throw these factors in where you finally have a little bit of financial relief, and you get this fraud activity that was thrown in the mix.

"That challenges us to respond in a timely manner, and also delays that critical safety net of support that the program is supposed to provide."

Sarah Gamard covers government and politics for Delaware Online/The News Journal. Reach her at (302) 324-2281 or sgamard@delawareonline.com. Follow her on Twitter @SarahGamard.