Just as fraudsters bilked hundreds of millions of dollars from the Paycheck Protection Program, online criminals have so far managed to steal billions in unemployment payments from states.

According to Politico, the feds warned states their online claims systems needed more security. But rather than offer guidance and support the feds did nothing. The costs have been huge:

Using huge databases of stolen personal information, cybercriminals based everywhere from Nigeria to London have pocketed an estimated $8 billion meant for people forced out of work due to the coronavirus so far, the Labor Department’s inspector general told states last month. The IG predicts that $26 billion in the federal aid programs alone eventually could be lost to fraud.

The number of fraudulent claims has been staggering:

Colorado officials estimated that three-quarters of unemployment applications they received over the summer were fraudulent, and they reported averting as much as $1 billion in attempted thefts. But criminals still may have absconded with $40 million. Pennsylvania officials say they’ve uncovered tens of thousands of fraudulent applications that resulted in the loss of millions of dollars in unemployment aid. And Montana’s labor department said criminals stole $189 million from its aid program over the summer.

In California, the Beverly Hills Police Department said it recovered $4.5 million in stolen unemployment aid after out-of-state scammers went shopping on Rodeo Drive with bundles of cash and state-issued debit cards.

The immediate victims of such fraud (aside from taxpayers,): people who file legitimate unemployment claims:

“Whenever this fraud ring hits,” [Michele] Evermore said, “the first thing states do is stop processing their backlog to deal with the fraud.”

Image Credit: By Edi Wibowo [CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)], from Wikimedia Commons