The VEC transitioned to new IT systems last year but continues to battle with fraudulent unemployment claims.
The Virginia Employment Commission has lost approximately $470 million from identity theft, at the same time as it was shifting to a shift to new IT systems and recovering from a cyberattack, VEC Commissioner Carrie Roth told a legislative oversight committee.
Roth told lawmakers from both chambers in the Virginia General Assembly that the VEC has identified approximately 258,000 claims for employment assistance during the COVID-19 pandemic that were potentially fraudulent, of which more than 83,000 could have resulted from identity theft. The potentially fraudulent claims total almost $1.6 billion in state and federal unemployment benefits.
VEC’s legacy system had been the subject of a report last November by Virginia’s Joint Legislative and Review Commission, which held the oversight hearing with VEC and was highly critical of the agency at the time, including its efforts to transition to new IT systems.
VEC transitioned to those new IT systems last November in a bid to make it easier for residents to file claims for unemployment insurance and track their applications online. That system was briefly shut down after a ransomware attack last month on a third-party vendor that supplies UI services to several states.
That attack prompted the U.S. Department of Labor to refer the event to its inspector general for further investigation, and it also shone a light on the need for backup systems so state agencies can keep processing claims even amid a disruption. But those backups, which could use a different vendor on different cloud servers, can be an expensive burden for state agencies to bear.
DOL previously recommended in a November 2020 letter that agencies take other steps to bolster their cybersecurity, including by carrying out regular audits and better protecting their systems against attacks.
Virginia lawmakers said they remain concerned about the identity theft issue. State Sen. Adam Ebbin, who chaired the oversight committee meeting, told the Richmond Times-Dispatch that while there has been “significant progress” in reducing backlogs at VEC, identity theft remains “concerning and alarming.”