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Oregon won't say how much it has lost to unemployment fraud

PORTLAND, Ore. (AP) — Oregon officials continue to refuse to publicly disclose how much money the state has lost to unemployment insurance fraud during the pandemic, despite the fact that neighboring states Washington and California have reported huge sums of money wrongly paid after their systems were targeted by sophisticated hackers.

The Oregon Employment Department says it is not “comfortable” disclosing the information because it could provide criminals an opening to exploit their systems further.

“Although some other states have shared fraud-related data, the Oregon Employment Department is not sharing any dollar amounts — including broad estimates — for how much we have identified as fraud, or breakdowns of other numbers,” said Melanni Rosales, the communications director for the department. “That information could shed light on what types of things we find, and when we find them, and could potentially aid criminal schemers.”

Nationwide fraud has overwhelmed state unemployment agencies and antiquated benefit systems that are easy targets for persistent criminals. It has delayed legitimate payments and turned thousands of Americans into victims of identity theft. A review by The Associated Press found that many states have failed to adequately safeguard their systems.

California has been the biggest target, having distributed an estimated $11 billion in fraudulent payments and an additional $19 billion in suspect accounts. Other estimates, according to AP's reporting across the states, range from several hundred thousand dollars in smaller states such as Alaska and Wyoming to $6.5 million in Colorado and to hundreds of millions in more populous states such as Massachusetts and Ohio.

Washington state was among the first hit with fraudulent unemployment claims believed to be tied to a West African scam ring using identities stolen in prior data breaches, such as the massive 2017 Equifax breach. More than 122,000 fraudulent claims made in the state siphoned $600 million. As of January, Washington was able to recover $357 million.

While officials from the Oregon Employment Department say the state is not facing the same scale of fraudulent claims as seen in Washington or California, in terms of dollar amounts or percentage, they refuse to disclose how much the state has lost, details about ongoing fraud prevention tactics, investigations, or the scope of potentially fraudulent activity.

The AP and other media have requested such information from state officials.

Officials did say that the number of identity thefts in the state increased tenfold from 2019 to 2020 and that they have identified tens of thousands of claims as suspicious.

“We know that in Oregon and throughout the country, fraudsters track the news, and even social media, to discover if they have been detected as well as to find new ways to game the system,” Rosales said.

Gov. Kate Brown agrees with the decision not to release the information, saying that the goal is to preserve the integrity of the unemployment insurance system and trust fund.

“This means, we must use every tool available to us to help prevent and combat fraud,” said Liz Merah, the governor’s press secretary. “At this point, we are not willing to jeopardize this foothold by disclosing information that would make it easier for bad actors to game the system.”

However, lawmakers are divided over the department’s refusal to say how much it has lost.

“California and Washington have been forthcoming with some of their issues. I don’t know why we can’t,” Sen. Betsy Johnson, D-Scappoose, co-chair of the Legislature’s joint Committee on Ways and Means, told The Oregonian/OregonLive. “Being transparent about the deficiencies is not going to incentivize fraud. The fraud already exists.”

Rep. David Gomberg, D-Central Coast, has repeatedly raised the issue of unemployment fraud at legislative hearings this year, saying that with a record number of claims, new rules, and new employees, a record number of problems will likely follow.

Since the start of the pandemic, Oregon has paid around $8 billion in jobless benefits. Between March and July 2020, more than 500,000 people filed unemployment claims in the state since, causing major delays in people receiving funds.

However, Gomberg said he is also understanding of the employment department’s current position.

“The Department says that disclosing information now will make it easier for those fraudsters to adjust and get more money. I’ll accept that explanation – but not for long,” Gomberg said. “As the pandemic subsides and unemployment wanes, I’ll be pushing for full and public disclosure.”

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Cline is a corps member for The Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues.