AUSTIN (KXAN) – Tammy Coleman stood under a shade tree scrolling through her email on her phone, digging up her communications with the Texas Workforce Commission. She was one of the 8.1 million Texans who lost her job as the pandemic hit in March 2020.
For the past year-plus, her unemployment checks never missed a beat as she continued searching for work.
“I drew $20,000 and they’re saying $65,300 — so clearly there’s another Tammy, right?” Coleman said jokingly as she found an email showing failed attempts to reach the TWC’s hired identity verification firm, ID.me. Her account was hit with a fraud flag and her payments abruptly stopped.
Coleman wasn’t really joking. She’s frustrated. For more than two weeks she’s tried to find how the fraud happened. She’s also submitted copies of her driver license and other forms of ID through ID.me’s online portal.
Coleman said she’s still received no communication from TWC or ID.me and hasn’t gotten confirmation her submission was accepted. She’s locked out of being able to resubmit her information to ID.me.
Coleman would also like to know who got the $45,300 in payments now showing on her account.
“Right now, I’m jammed up as if, ‘She’s not being, you know, she’s being reluctant on putting her information out here.’ So, it makes me look like the bad guy that I’m not sending any of my information,” Coleman told KXAN of how the TWC is likely to perceive her case at this point.
The five different TWC contractors she’s reached by phone over the past two weeks can’t help, either.
“All of them are saying ‘Don’t do nothing, just wait for ID.me to scan your information and upload it to us.’ Why couldn’t I upload it to TWC? And, they don’t have an answer for that,” Coleman said.
“Why am I being accused of any fraud and from day one I’ve provided all my information, and everything was legit, I didn’t have a problem now all of a sudden you got a big number out here and it’s under my name and now I’m suffering. I don’t think that’s right,” Coleman said.
“I definitely need help because no way I got that amount of money and I have all my paperwork. I know I’m going to be all right, but it’s just when? And, what do I tell my bill collectors? ‘Oh, just hold on another 30 days, it’ll be OK?’” Coleman said.
The only communication Coleman had was a May 20 email from ID.me with a support ticket number. Coleman said calls and emails have not been answered.
“I’m just puzzled,” she said. “I don’t even know what the next step is, I really don’t.”
$1.75M Fraud Prevention Plan
The TWC reported 1,142 fraudulent unemployment claims in all of 2019. That number tripled to 3,500 claims from the start of the pandemic in March 2020 and August 2020. A KXAN investigation found it took the TWC another three months after fraud claims tripled to put a system in place to try to stop the fraud.
The solution: the TWC hired Virginia-based identity verification company ID.me to sort claimants from criminals. Half of the United States’ unemployment systems now use ID.me to verify identities.
“It’s kind of like going to the DMV —you’ve got your documents ready, you’ve got your driver’s license, you know, your social security number. You’ve got your phone in your hand that you’re demonstrating ownership when you click on these links,” ID.me’s Senior Vice President Peter Eskew told KXAN.
The company uses government documents, like driver’s licenses and social security cards, to verify identities through its online portal. The system also uses credit records and cell phone billing and requires claimants to upload a selfie the company uses to match the person filing the claim to records containing Personally Identifiable Information.
The TWC said 85% of all claims are verified using this system and are paid within four weeks. The remaining 15% require the person filing the claim to participate in a live video conference to have their identities verified, which sometime stretches the turnaround time past the four-week mark.
The contract is set to expire in November 2022 or until ID.me verifies a set number of identities for the TWC. We don’t know the number of identities that would satisfy the contract because the TWC blacked that information out of the agreement. ID.me would also not answer how many verifications it’s contracted to perform.
Since November, ID.me has verified 127,000 identities, according to the TWC.
TEXAS UNEMPLOYMENT FUND ACCOUNTS
- REG: Regular Unemployment
- PEUC: Pandemic Emergency Unemployment Compensation
- EB: Extended Benefits
- PUA: Pandemic Unemployment Assistance
Our investigation found the TWC contracted ID.me to protect only the Pandemic Unemployment Assistance fund, one of the state’s four unemployment funds. The PUA was created to provide unemployment benefits to the self-employed who typically don’t qualify for benefits. TWC didn’t share the totals in this or other unemployment fund accounts in the state.
“ID.me is just in place for net new claims,” Eskew told KXAN. That fact was later confirmed by the TWC.
“We have some great checks in place, and we have continued to add to them, not just ID.me but internal processes in our system, things that our systems look for,” TWC spokesman James Bernsen told KXAN. “It’s not — we just added one piece of the puzzle, we’re constantly looking at this and saying, ‘How can we do better?’”
Trying to fool ID.me
“It is impossible to tell a fake one from a real one anymore. A human can’t, a machine can’t,” cybercrimes expert Brett Johnson said as he scrolled through the Dark Web looking at stolen driver’s licenses. Anyone can buy a faked driver’s license for $40 there.
Johnson a Georgia and a Florida driver’s license up to the camera during a video interview with KXAN. Johnson bought the fake driver’s licenses while working for an identity verification company to test whether the company’s system could spot the fakes.
“These went through the system. They fixed it after that,” Johnson said.
“The United States government, federal authorities have been very good about killing off fake ID operations in the United States. But, when that happened, all those operations moved over to Hong Kong,” Johnson said.
Johnson, once on the U.S. Secret Service’s Most Wanted list, is a reformed cybercriminal and claims to have stolen $7 million committing financial cybercrimes using stolen identities. He now works for private companies and the federal government as a fraud prevention consultant.
Johnson is critical of the use of government documents as part of identity verification processes like the one ID.me is using in 26 states.
“You can’t tell the difference between those and the real things anymore. You can’t. A machine can’t,” Johnson said.
Some criminals have used masks to try to get around the ID.me selfie and video conference verification checks. Eskew said ID.me spends most of its time combatting criminals who use masks, but with all of its checks in place, the company believes it’s stopping $1 billion in fraud each week across the nation.
“This is, in our estimation, the largest cybersecurity threat when it comes to fraud in our nation’s history. And, you couple that with the largest sustained unemployment rate since great since the Great Depression, you’re going to see that, that that recipe for fraudsters trying to attack this system,” Eskew said.
‘Innocent Texans’ suffering from fraud attack
For six weeks, Damon Bonewitz hasn’t missed a single payment request. He also hasn’t seen a dollar in unemployment benefits after the TWC locked his account in April.
Bonewitz recently lost his job because of the economic impact of the pandemic.
He got a letter on April 30 telling him the “identity verification hold” on his claim was unlocked after he went through the ID.me verification process.
Bonewitz agreed to meet us in an Austin hardware store’s parking lot. He came armed with every document related to his unemployment claim, including the letter telling him to verify his identity.
“They want their response as soon as possible by 5/5, which, I mean, I did it within 24 hours of notification,” Bonewitz said. He also had to participate in a live video feed to prove he was not a fraudster.
Nearly a month later, he never got a response from the TWC.
“It’s very frustrating. It’s ruining my credit — I’m increasing my credit cards. I didn’t ask to be unemployed,” he said. “My wife and I were planning to buy a house. We had a deposit down, we were pre-approved for a loan — we just got thrown into the works.”
We’ve spoken with Texans who’ve waited longer than six weeks to have their fraud flags cleared by the TWC.
Bonewitz, an “innocent Texan,” is one of the lucky ones. The day after our interview, he got a notice from the TWC the fraud investigation into his claim was finished and his owed unemployment was deposited into his bank account.
“I would say four weeks is about an average,” Bernsen said, “We really want to get that down. We have two competing goals: we’re trying to have timely and quality payments, while combating fraud, waste and abuse.”
“Every fraud protection you put in can delay, if only slightly, the ultimate payout. And, every step you do to speed up the payouts undermines the fraud protection. So TWC is always aiming to find that sweet spot between the two,” Bernsen told KXAN.
Within the past two months, the TWC reported fraud claims spiking from 350,000 and a loss of $557 million to 734,000 fraudulent claims and a total known loss of $893 million. The agency believes it’s reached a good balance between paying claims quickly while doing its best to protect the state’s unemployment funds.
“The fraudsters are never going to stop. We can’t rest either. And so, we have to keep our efforts going to stay ahead of them,” Bernsen said while acknowledging Texans caught in the middle are forced to wait for benefits owed.
“They’re already victimized and yet it slows them down again, and unfortunately, that’s just the nature of the system we have to protect on the fraud side,” Bernsen said.