TN Dept. of Labor Working to Prevent Unemployment Fraud

NASHVILLE – Tennessee Department of Labor & Workforce Development has implemented LexisNexis InstantID from LexisNexis Risk Solutions as an added measure to prevent people from fraudulently applying for unemployment benefits.

LexisNexis InstantID, integrated into Tennessee’s unemployment insurance claims process, helps to confirm the applicant’s identity before processing their unemployment insurance claim. The program uses identity analytics that combine billions of public records and advanced linking technology to generate a knowledge-based quiz, designed so only the true individual would be able to answer the questions. This process of verifying and authenticating the applicant, called identity proofing, enables Tennessee to know whether the individual filing the claim is truly the owner of the identity.  

Since implementing LexisNexis Risk Solutions on December 15, 2015, more than 75,000 claimants have engaged in the identity verification process.  Eighty-percent of these claimants passed and were able to submit an unemployment claim. When the system prevents a person from filing, they must contact TDLWD for assistance. Less than half of the 20 percent who fail to answer the security questions actually made contact with TDLWD to correct any issues.

There is the possibility that those failing the verification process, but not contacting us could have been attempting to file fraudulent claims. If that is the case, the potential cost savings for Tennessee’s trust fund could be as high as $48.6 million, just in the first few months of operation. 

“By authenticating the identity of our claimants during the initial claims process it reduces the risk of the department making improper payments from the unemployment trust fund,” said Unemployment Insurance Administrator Linda Davis. “This keeps the trust fund at a higher level and potentially reduces employer taxes.”

Unemployment insurance fraud is when individuals knowingly collect benefits based on false information. This may occur when an individual continues to work, but reports they are unemployed, or when someone files a claim using a different identity. When this happens, the fraudulent filing does not show up on the victim’s credit report and the crime goes unnoticed.  The only way a victim would become aware someone has stolen their identity is if they needed to file an unemployment claim of their own and their name was already in the state’s system.

“We felt utilizing the identification verification feature of LexisNexis Risk Solutions was a necessary step toward preventing fraud in the unemployment system,” Commissioner Burns Phillips commented. “So far, the numbers show it has been effective in eliminating potential fraudulent claimants, resulting in major cost savings.”

The National Federation of Independent Business (NFIB) recently nominated the Department and its Employment Security Division for the Unemployment and Workers’ Compensation 2016 Unemployment Insurance Integrity Award.  The NIFB Tennessee director cited in his nomination the significant progress the Department has made in combating fraud and abuse, which has resulted in lower tax rates for Tennessee employers.  The organization’s director specifically noted in his letter to UWC the LexisNexis InstantID program and how successful it has been in stopping fraudulent unemployment insurance claims.

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