Minnesota blocked cybercriminals targeting unemployment benefits, report finds

Minnesota was the target of international cybercriminals who tried to defraud the state's unemployment insurance system during the COVID-19 pandemic.

But the state was effective at blocking many of those attempts, a report released Wednesday by the Minnesota Legislative Auditor found. In June 2021 alone, the state Department of Employment and Economic Development stopped initial payments to 2,500 suspicious accounts, more than one-third of all accounts opened that month.

However, the agency referred few cases to law enforcement, auditors found. That's because many of the fraudsters are overseas, economic development officials said.

"We really are employing constant vigilance," said Evan Rowe, an assistant commissioner at DEED, at a legislative hearing. "There’s a piece of this for truly transnational problems that requires a larger scale action than maybe one state can do, and we want to be part of that solution."  

Minnesota is not alone. Fraudsters targeted enhanced unemployment programs in many states during the pandemic. 

Congress added up to $600 a week in additional benefits and governors issued executive orders speeding up the application process as the U.S. economy plunged into a recession. Minnesota economic development officials said they had to increase application capacity tenfold when the state lost more than 400,000 jobs at the start of the pandemic.

"(Stolen identity) is a type of fraud that has increased in prevalence in the last two years, which is why we chose to focus on it," said Judy Randall, the legislative auditor. 

Auditors recommended that DEED make yearly reports to the Legislature about fraud in the unemployment insurance program and should evaluate its processes for reporting fraud to law enforcement.

Minnesota's fraud prevention efforts may have delayed payments to eligible applications by up to one week, auditors found. Some legitimate accounts were wrongly flagged, forcing recipients to contact the state to correct the errors.