UI modernization, identity verification limit state fraud loss

To reduce the unemployment insurance (UI) fraud that skyrocketed during the pandemic, New York state’s Labor Department (NYSDOL) is modernizing its computer and security systems.

“Like every state in the union, we were battered by international cyber criminals. This fraud was so sophisticated that it literally tricked every system in the country,” DOL Commissioner Roberta Reardon said at a New York state budget public hearing on March 2. “We have … implemented many safeguards to protect our systems, including multifactor authentication and other measures to enhance the security for our customers and prevent future fraud.” 

NYSDOL’s new measures include an additional layer of identification verification, multifactor authentication (MFA), geofencing and “scores of proprietary cross-matches and other changes to identify and prevent fraud,” according to an email to GCN from a department spokesperson. As of Nov. 15, 2022, these steps have helped DOL prevent $32.9 billion in attempted fraud.

In February 2021, NYSDOL implemented ID.me’s secure digital identity verification technology to authenticate some UI claimants and applicants. When someone receives a notice from NYSDOL by email, text or other means requiring them to verify their identity, they must visit a website and select “Verify with ID.me” to provide digital evidence of their identification.

If an issue arises with verification, the system routes applicants to a video call for additional authentication steps.

Previously, New Yorkers applying for UI benefits had to provide identity documents such as birth certificates, passports and driver’s licenses online or by fax. Then, DOL staff would review their authenticity through a manual process that could take weeks.

Additionally, NYSDOL began an MFA initiative in September 2022 that requires UI claimants to enroll in at least one of four options that will let them verify their identity when they use the NY.gov Unemployment Services portal. The options are Okta Verify, a mobile app that sends a push notification when logging into the portal; Google Authenticator, another app that sends a single-use code for logging in; text message authentication, which also involves a single-use code; and voice call authentication.

Within about a month, 261,000 users had enrolled, and although NYSDOL requires only one MFA method, users may set up several.

“Identity verification allows NYSDOL to root out fraudsters before they can receive benefits on an identity fraud claim,” according to the spokesperson. “The large-scale rollout of these programs created a framework to lay out further protections in the future.”

Another step that DOL took is the use of geofencing to guard against people outside the United States attempting to apply for benefits and preventing artificial intelligence-driven attacks. Working with Google, the department developed fraud detection tools, including similarity engines “to readily identify and prevent applications that shared common elements such as the same driver’s license or [Individual Taxpayer Identification Numbers] from moving forward,” according to a November 2021 report. Each application gets a confidence score based on the presence of fraud indicators.

The department also launched a new website about UI fraud and identity theft to educate and inform New Yorkers. In fact, communication about the changes was one of the main challenges of the security revamp, according to the department.

“We had to ramp up our communication efforts to ensure customers understood the technological changes being implemented during the pandemic,” the spokesperson stated. The department used GovDelivery to send 100 million-plus emails and text messages during the health crisis, and it continues to use GovDelivery today, in addition to posting on social media platforms about changes and promoting job search tools, career-building assistance, and access to thousands of available job opportunities statewide.”

As of Nov. 15, 2022, the new security measures have helped NYSDOL prevent $32.9 billion in attempted fraud.

During the pandemic, the department distributed more than $105 billion in UI benefits to nearly 5 million New Yorkers, and it identified $4 billion in UI fraud—3.8% of that total—during that time, Reardon said at the hearing.

“We are more than halfway into our four-year modernization plan that will result in a completely new UI management system optimized to create a more seamless and secure user experience,” she added. NYSDOL is working in collaboration with the New York State Office of Information Technology Services on the initiative.

When it ends in about 18 months, the modernization aims to have implemented a new omni-channel contact center that will use bot technology to answer customers’ claim questions, an upgraded forms management system and a new intranet system for internal training. NYSDOL also plans to move the UI system from a legacy mainframe to “a state-of-the-art, real-time system,” according to a June 2022 announcement.

Stephanie Kanowitz is a freelance writer based in northern Virginia.