PHOENIX (3TV/CBS 5) -- When Gillian Phillips received a letter from the Department of Economic Security about a claim for unemployment benefits, she was concerned. Days later, a prepaid debit card loaded with money arrived at her home from the state.

"I'm going 'I didn't apply for this!'" Phillips told 3 On Your Side.

Phillips never claimed unemployment benefits, but someone else did using all of Phillips' information. Fortunately, in this case, the money didn't go where the bad guys wanted it to.

"It is scary," Phillips said. "What if I need those benefits and I can’t get them?"

Milton Moskowitz never applied for unemployment either, but he received more than $8,000 from the state.

"It’s taxpayer money that’s being sent out improperly and that does not sit well with me," Moskowitz said. "How much money is being handed over to scammers right now?"

In Arizona, DES says there have been 251 confirmed cases of unemployment insurance fraud related to identity theft since February. An additional 5,000 potentially fraudulent claims are under investigation, according to DES spokesperson, Brett Bezio. He said fraudsters are using information gathered in phishing scams and data breaches to file for unemployment benefits. It is unclear how much money has been lost, to date.

The Department of Economic Security is now delaying some payments in an effort to halt fraudulent claims. The delays affect Arizonans who filed claims Sunday in the Pandemic Unemployment Assistance portal.

"Given that the file for Pandemic Unemployment Assistance payments for this past weekend alone reached over $750 million, the Department made the decision to hold payments and evaluate claims for any indications of fraud before issuing the funds," Bezio said. "The Department assessed all claims received over the weekend to determine those that contained possible fraud and are in the process of releasing payments for those that did not trigger a fraud indicator."

"We understand that many families struggling during the pandemic rely on these funds, and any delay in payment can create additional hardship for these families," Bezio added. "We moved as quickly as possible to assess these payments for fraud and issue benefits to Arizonans while ensuring the integrity of our programs. We appreciate our claimants’ patience and partnership."

The U.S. Secret Service is investigating a wave of similar cases across the country. The agency estimates scammers could be cashing in on billions as unprecedented demand strains unemployment systems.

"This is the one they've been waiting for," said Adam Levin, a cyber security expert and the founder of Cyberscout.

Levin says victims of this fraud should immediately notify their employers, DES, and credit reporting agencies.

"If someone has enough information to be able to impersonate you when it comes to an organization dealing with unemployment benefits, then they have enough info about you to commit every form of identity theft."

Several viewers told 3 On Your Side they struggled to get help from DES when they tried to report the fraud.

"It was pretty much impossible to get a hold of anyone," Moskowitz said.

Bezio said people who suspect they are victims of fraud should report it to DES online.

Moskowitz said he finally received a call from the DES Office of the Inspector General, though it's unclear how the state will ultimately recover the money that was sent to Moskowitz.

"She said they’re going to try to get the money back from Bank of America, and she said most likely they will be able to," Moskowitz said. "She said there’s a small chance they won’t be able to and then they’ll have to ask me to withdraw it and send it back to them."

According to Bezio, DES is working with several agencies including the Secret Service and the U.S. Department of Labor to investigate unemployment fraud.

 

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