A significant amount of thefraudulent benefits "have used PII from first responders,government personnel and school employees." (Credit: TeroVesalainen/Shutterstock.com)

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A memo from the U.S. Secret Service says a Nigerian crime ringhas launched a sophisticated attack on a number of stateunemployment insurance programs, exploiting weaknesses in thesystem in order to steal millions of dollars earmarked for helpingjobless U.S. citizens during the COVID-19 epidemic.

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Related: Another 6.6 million file for unemployment,straining U.S. safety net

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The ring has been filing unemployment claims using socialsecurity numbers and other personally identifiable informationbelonging to victims of identity theft who have not been laid offfrom their jobs, according to KrebsOnSecurity. A significant amount of thefraudulent benefits "have used PII from first-responders,government personnel and school employees," the memo says. Some ofthe PII is believed to have been obtained from old cyber hacks.

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The Secret Service says the primary target thus far has beenWashington State. "In the state of Washington individuals residingout-of-state are receiving multiple ACH deposits from the State ofWashington Unemployment Benefits Program, all in differentindividuals' names with no connection to the account holder," thememo alerted.

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The Seattle Times reports that several publicand private employers identified hundreds of suspicious claimsfiled on behalf of employees who were still working. WesternWashington University told the Times that 410 of its 2,463-personstaff had been targeted. Consequently, unemployment payments werestopped for two days in the state while the Employment SecurityDepartment attempted to block the flood of fraudulent claims.

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Between March and April, the ESD told the Times, the number offraudulent claims for unemployment benefits jumped 27-fold to 700,resulting in a loss of nearly $1.6 million.

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Evidence of additional attacks has been discovered in Florida,Massachusetts, North Carolina, Oklahoma, Rhode Island and Wyoming,the Secret Service says.

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The fraudsters are believed to be recruiting people to receivedirect deposits from these fraudulent transactions and then forwardthe funds to the perpetrators. These people, or "mules," are ofteneither unemployed and looking for any source of income or victimsof online romance scams.

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Some of the states being targeted are among the hardest hit byunemployment claims. According to the U.S. Chamber of Commerce,nearly 30 percent of Washington's workforce is currently jobless.Rhode Island has seen 31.4 percent of its workforce filing forunemployment. The Secret Service is warning, however, that allstates are likely to be affected if they don't take steps to betterscreen out fraudulent unemployment applications.

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More than 36 million people have filed for unemployment benefitsin the past two months, The Guardian reports.

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Richard Binder

Richard Binder, based in New York, is part of the social media team at ALM. He is also a 2014 recipient of the ASPBE Award for Excellence in the Humorous/Fun Department.