PHOENIX, Arizona.- Since March 2020, the Arizona Department of Economic Security (DES) has issued more than $10 billion in unemployment assistance to claimants in critical need of support. During the COVID-19 pandemic, millions of hardworking Americans found themselves without employment and the means to sustain themselves during one of the largest economic downturns in recent history. The vital distribution of this assistance was issued to aid Arizona families in need in order to allow them to remain in their homes and put food on their tables.
According to the National Conference of State Legislatures (NCSL), the onset of the COVID-19 pandemic led to the single largest increase in unemployment since data collection began in 1948. States issued stay-at-home orders, mandated capacity reductions at restaurants and businesses, and implemented a wide range of social distancing measures. The reported unemployment rate shot to 14.8%, more than 3 to 4 times that of prior months, although some economists estimated the rate actually tipped the scales at 22.9%.
While DES had yet to experience a demand for services of this magnitude, we were able to quickly scale our teams, develop brand new unemployment programs and systems, hire staff to accommodate the demand and respond to the unprecedented need within Arizona communities. This was no small feat in the middle of a global pandemic.
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On March 27, 2020, federal lawmakers enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which established three new unemployment programs: Pandemic Emergency Unemployment Compensation (PEUC), Federal Pandemic Unemployment Compensation (FPUC), and most notably, Pandemic Unemployment Assistance (PUA). States were given an extremely short turnaround time after the passage of the Act to implement and operate these programs. According to a September 2022, Government Accountability Report (GAO), during the pandemic, initial claims for regular Unemployment Insurance (UI) benefits nationwide reached a historic peak of more than 6 million per week in late March and early April 2020, and states reported receiving more than 1.3 million weekly PUA initial claims in late May 2020. Arizona was not alone as all states were in a position to overcome these challenges. Building a new system to support programs was a challenge Arizona was able to overcome within six weeks, as we launched the PUA program, expanding benefit eligibility and issuing assistance to those impacted by COVID-19.
Identifying and Preventing Fraud
The next challenge for all states was combatting the nearly insurmountable fraud that invaded the PUA program across the nation. The simplicity by which the program was created by Congress enabled anyone with a name, date of birth, address, and Social Security Number to self-attest to being unemployed and receive benefits with limited scrutiny. Fraudsters who easily obtained this information through corporate data breaches and the dark web began submitting fraudulent claims across the country. Well-organized attempts at identity theft – domestic and abroad – would yield billions from states across the nation.
Fortunately, Arizona was one of the first states to swiftly enhance existing and implement new fraud detection and prevention controls to maintain the integrity of the program. Through data analytics used to identify fraudulent behaviors and patterns, and later identity verification to filter out the vast majority of fraud from entering the system, Arizona prevented more than $75 billion in fraud and paved the way for other states to follow suit.