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New EDD fraud scam targets those who haven't applied for unemployment benefits

The EDD has already lost $20 billion-plus in fraud, but a new scam has those who never applied for benefits receiving letters saying their identity is being used.

SACRAMENTO, Calif. — Another day, another dollar lost in Employment Development Department (EDD) fraud.

So far, California's EDD has lost $20 billion to fraud, according to Sacramento District Attorney Anne-Marie Schubert 

"It's billions and billions of dollars being taken from legitimate folks that are entitled to this insurance," Schubert said.

But she said it could be far, far more especially as a new type of scam has surfaced.

"It came to my attention last week by phone calls of people I actually know and concerns by folks who were getting letters from the EDD," Schubert said. "[These letters said] an account was registered in their name — and these are folks who've never asked for [EDD] assistance."

The hefty cost of fraud has occurred through the EDD's pandemic unemployment program. But now criminals are targeting disability fraud by stealing identities and filing for false disability insurance claims.

"The Department saw a recent rise in new online medical and health provider account registrations and strongly suspects most of those registrations were fraudulent," said Ronald Washington, EDD's Disability Insurance Deputy Director in a statement. "We deployed additional safeguards that further protect providers and claimants from these scams."

The state's disability insurance programs are one of EDD's four key programs, EDD said in a press release. These types of benefits provide partial wage replacement for eligible California workers who are unable to work and have a loss of wages due to illness, injury or pregnancy.

RELATED: EDD progress is 'not enough' for those still waiting on unemployment checks

Schubert released a press release Monday warning the public about this new fraud. She told ABC10 she believes this could be an organized type of crime targeting people's health care information.

"They're going in and trying to get into systems, so they're stealing personal identities and getting their healthcare information," said Schubert.

Schubert said those who've never applied for benefits are vulnerable to this fraud as well as companies because their security systems may be targeted to extract health care information to then be used to steal identities. She also said those who've applied for disability benefits should also be aware.

"It's just an opportunity for these types of criminals to get in a new way of ripping off the system," said Schubert.

In a press release, EDD said to fight this new disability fraud, it has "suspended payments on certain claims" and "boosted the medical and health provider vetting process."

When ABC10 asked Schubert if she believes this is enough action taken by the EDD, she said: "Unfortunately, EDD cannot stop identity theft. What they can do is once they're alerted somebody's identity is being used, they can put those flags [up]."

That's why she said it's important for people to be vigilant, especially if they receive a letter in the mail saying an account has been opened. Those who suspect fraud can file a report by visiting Ask EDD and selecting the "report fraud" category as well as filing an identity theft report with the Federal Trade Commission.

The EDD also published a "Help Fight Fraud" webpage with information and resources for those who may be victims of identity theft.

We have continued to alert Californians about the aggressive scammers at work during this pandemic and encourage them to remain vigilant and safeguard financial and personal information to help prevent fraud, including identity theft.

ABC10 reached out and requested an interview with the EDD, they responded saying they were unable to accommodate and provided us with the following statement:

"Please note that our investigators are working with local, state, and federal partners in exposing identity theft scams, quickly enhancing methods to stop and prevent fraudulent claims associated with identity theft, and prosecuting the unscrupulous offenders to the fullest extent of the law. The EDD has updated information on our website’s Help Fight Fraud page to assist those who receive documents from the EDD but did not file a claim for Disability Insurance (DI) benefits or did not register as a medical provider on our DI online system, as well as how to avoid scams. Those letters are part of our fraud detection efforts at work so we can alert people if someone appears to be using their stolen personal identity information for the purposes of fraudulent DI claims. There is also an FAQ section specific to the DI identity theft scam roughly two-thirds of the way down the page."

Anyone with a question for the EDD can reach out to Reporter Andie Judson via Facebook or Twitter.

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