Waste, Fraud, & Mismanagement

EDD Acknowledges Paying $11.4 Billion in Fraudulent UI Claims

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The Employment Development Department (EDD) this week acknowledged that 9.7 percent of the 19.5 million unemployment insurance claims it has paid since March were fraudulent, and said an additional 17 percent are under investigation for possible fraud. That works out to $11.4 billion in confirmed fraud and an additional $20 billion in possible fraud.

Julie Su, secretary of the California Labor and Workforce Development Agency – which oversees the EDD – said during a conference call with reporters: “There is no sugarcoating the reality, California did not have sufficient security measures in place to prevent this level of fraud.”

The state auditor agreed, writing in a January 26 report that the EDD failed to prepare to handle a major increase in unemployment insurance claims and has mismanaged several of its key responsibilities.

The auditor reviewed the EDD’s response to the large increase in unemployment insurance claims in the wake of the COVID‑19 pandemic, including its handling of a backlog of unpaid claims and the ability of its call center to assist people seeking help. The audit does not detail the fraud that has plagued the unemployment insurance system under the EDD’s watch, but noted that one of the EDD’s actions intended to speed the delivery of benefits also “removed a barrier to fraud.”