Stopping Unemployment Fraud Isn’t Really That Hard

As news of the unimaginable scale of California’s unemployment fraud continues to break, it’s necessary to understand why this state has been so particularly vulnerable to fraud, and what can be done, now, to prevent it from continuing.

On the low end, we may be looking at $11 billion in fraud (already identified), while on the high end, some estimate the fraud could amount to $31 billion. To put that in perspective, that is 10% of the entire budget for the state of California.

Beyond the budget-breaking loss to all California taxpayers, each individual whose identity was stolen will now be facing a tax bill, since unemployment benefits are fully taxable as ordinary income. This is not a victimless crime by any means, and now the onus is on each person whose identity was stolen, many of whom are not even aware that benefits were filed in their name, to prove they were not the recipient. If somebody is unaware and doesn’t disclose the income, they may face an audit.

It is well known that the data management systems the EDD uses are built with antiquated programming languages. And because of that, modernizing these systems has become a daunting task that some believe would take considerable time and hundreds of millions of dollars to implement – thereby making any short-term fix impossible. That notion is flawed for two reasons:

1.     No cloud-based software and data-management system should cost hundreds of millions of dollars, let alone billions. That may have been true in the 1990s perhaps, but today, so many of the components needed to build a secure platform already exist that it simply won’t cost that amount. Startups that support millions of users, and securely manage their healthcare and financial data, are able to launch and scale – without problems – for investments in the low millions or tens of millions (at most). There simply isn’t any platform that requires hundreds of millions to build – unless it’s a new AI or hardware tool, which is not the case here.

2.     Even if overhauling the EDD data-management system and platform did require a monumental capital investment, the identity-verification piece can operate as a stand-alone solution.

To read the entire column, please click here.

Comments

  1. And YET another reason to recall the pomaded buffoon, Newsom
    RecallGavin2020.com

  2. When California gets it cut of the $1.9 Trillion Bailout cruising through congress try to figure out how much of it will be snatched away in like manner.

  3. Money?
    Just like technology, you know “Big Tech”, really good thing until it is used against you.
    And, debt, the extreme debt that this state has is literally a weapon that can destroy this state. Even if this 2 trillion dollar bill passes and California gets bailed out. We still have the same incompetent government that spends like a drunken sailor!
    And, technology, it has been turned into a weapon to dismantle America. They may not realize it, but the America they are unwittingly trying to destroy is the America where made gained their ability to make their wealth. But, now, they know better because they have more money in their pockets! I commonly refer to them, these one’s and zero’s experts as the “over paid intellectually ignorant” fits them to a “T”!
    So, money and technology, it can be good or evil, just depends on if you have people with moral character handling it, or maybe moron’s who turn it to evil!

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