Colorado's state government will use the tech service ID.me to verify the identity of people using its unemployment benefits system. The Virginia-based privately run company uses technology like "video selfies" to weed out fake applications for various government services.
At first, Colorado will use the service just to review suspected cases of fraud. People whose accounts have been flagged by fraud detection systems will be able to go through ID.me to confirm their identity and unfreeze their benefits.
The service is expected to debut within two weeks in the state. The Colorado Department of Labor and Employment plans to send emails to people who can use it, starting with those who have already contested their fraud holds.
"We will start with a small batch of roughly 1,000, prioritizing those who have contacted the Division and have been waiting the longest," wrote Cher Roybal Haavind, deputy executive director for the labor department, in an email.
"Within a matter of days we will increase the load, eventually sending emails to all claimants on fraud holds, with the exception of those deemed legitimately fraudulent."
New efforts against fraud
States across the U.S. are working with companies like ID.me as they try to stem a wave of attempted unemployment fraud.
Criminal organizations have harvested stolen personal information from data breaches and used it to file fraudulent requests for benefits. Recently, some Coloradans have told CPR News that they received tax forms listing thousands of dollars of benefits that they did not receive.
Nationwide, "improper payments" may have consumed some $36 billion, or about 10 percent, of federal unemployment money distributed through the CARES Act, according to the Office of Inspector General for the U.S. Department of Labor. The federal government has pressured states to ramp up their anti-fraud efforts.
The state labor department recently started to run all new unemployment claims through a separate program that checks for 27 different red flags. Colorado's software has flagged about 20 percent of claims for potential fraud since the system was upgraded on Sunday.
But those checks also have snagged thousands of claims that were later deemed to be legitimate.
Haavind said that the ID.me platform should allow people to clear their names more quickly if they are incorrectly flagged for fraud. Currently, it can take weeks or months for a flag to be removed by investigators.
Eventually, the state plans to require all new claimants for unemployment to use ID.me. The state's contract with the company will last at least two years, and Colorado will pay $3.50 for each individual use of the service. Labor department officials expect to cover some of the costs with recent federal stimulus money.
A growing market
States including California, Idaho, North Dakota and Pennsylvania are using the platform. In California, the service asks users to submit a "video selfie" along with their Social Security number and images of their photo ID. The service then relies on automated checks to detect potential identity theft.
But people who fail those checks are asked to do a video call with the service instead. In California, there have been reports of unemployed people waiting for hours only to be disconnected from those calls, according to The San Francisco Chronicle.
The people most likely to have problems include those without credit or those whose credit information is frozen, according to ID.me. Using the service requires access to a smartphone or tablet.
State labor department officials haven't yet confirmed what steps users will have to take to confirm their identity with ID.me in Colorado.
The Virginia-based company is expanding quickly with its new business. ID.me plans to hire more than 1,000 people, expanding its staff from 350 currently.
