Unemployment Payouts Have Dropped 40 Percent. Is ID.Me Stopping Scams Or Blocking Benefits?

Hart Van Denburg/CPR News
Charlotte Weismantel joined a small group of protesters outside the Colorado Division of Labor and Employment on Monday, Feb. 8, 2021, demanding that the state and Gov. Polis do more to help Coloradans who lost their jobs because of the pandemic.

The total weekly payouts from Colorado’s unemployment programs have dropped by nearly 40 percent since the state introduced new security requirements in April.

State officials say a new cybersecurity system is likely the biggest cause of the sharp change in unemployment benefits. But it's unclear how much of the drop is the result of the system weeding out scammers, compared to legitimate claimants having trouble with the new technology.

Over the last month, the Colorado Department of Labor and Employment has widely deployed a new cybersecurity program for unemployment users. The state has told tens of thousands of people each week that they must verify their identities through ID.me, a third-party service.

Before the deployment, the state was paying out an average of $176 million a week. In the month since, weekly payouts have averaged about $110 million. 

“So primarily, what’s driving down those claim numbers is going to be the implementation of ID.me,” said Ryan Gedney, senior economist for the Colorado Department of Labor and Employment.  A “sprinkling” of the change may also result from people taking jobs as the economy recovers, he said. But unemployment claims remain historically high, he said, and may rise again as more people make their way through the ID.me system.

A drop in people seeking benefits

The number of people enrolled in unemployment programs also has dropped from about 220,000 to about 160,000, according to state estimates, with continuous declines since ID.me was implemented.

The ID.me program is meant to catch scammers who are using stolen identities to collect unemployment benefits. A sharp drop in payments could show that the verification requirement is working as it’s intended and stopping widespread fraud within the program

Blake Hall, the CEO of ID.me, said in an earlier interview that the program has detected fraud in more than half of the unemployment claims that other states were paying. Colorado officials have said that they believe the fraud rate here to be significantly lower.

Complaints of tech issues

But the rollout has also brought widespread complaints from people who say that their legitimate claims are being blocked by problems with ID.me and other parts of the state system. 

ID.me currently requires access to a smartphone for its main process. The alternative is to wait in a virtual queue — often for five hours or longer— for a video interview. That process still requires access to a computer with a webcam, raising concerns that people without access to modern devices could be shut out.

Other users have reported that they can’t get benefits because the system rejects the documents that they submit to prove their identities, such as bank statements. Some are able to verify their identities on the platform, but are still waiting for their benefits to resume. In some cases, that can mean they’ve fallen afoul of other cybersecurity programs within the state system.

Some of the frustrations — like the hours-long queues — are happening because the ID.me system has been inundated with new users as the startup has expanded its business. The company will soon be working with 25 states, each one sending tens or hundreds of thousands of users to the company’s servers.