In this issue:

• On Point Technology welcomes IT professional Suzanne Rubey to the team
• Reviewing canceled checks can reveal organized fraud attempts
• Industry News: Hurricanes hinder crackdown on government overspending
• Did You Know? Upping the stakes of committing fraud can keep claimants honest

Welcome to the January 10, 2006, issue of BullsEye, the On Point Technology newsletter. Our goal is to keep you up-to-date on the latest unemployment insurance news and developments at On Point Technology.

On Point Technology welcomes IT professional Suzanne Rubey to the team

On Point Technology is pleased to announce the addition of Suzanne Rubey to our team. A graduate of Northern Illinois University, Suzanne has more than 25 years of experience as an information technology professional, specializing in mainframe programming and analysis, with additional experience in the telecommunications and manufacturing industries. Her latest assignment also exposed her to techniques in identifying credit card fraud.

Suzanne will report to On Point Technology's Westchester office and her immediate responsibilities will include the support of mainframe Barts and the development of Barts and Aware extracts. With Suzanne's expertise and great attitude, she will be an excellent contributor, and we welcome her to the team.

Reviewing canceled checks can reveal organized fraud attempts

Does your agency regularly review the canceled checks returned from your bank to see if they are endorsed with a signature or contain a stamp identifying the company that submitted the check to the bank? And, is the stamp legible?

Why do we ask? Because missing signature endorsements and illegible company stamps were clues that led one workforce agency to the discovery of a very large organized fraud scheme.

Crooks simply don't want to expose their signature, nor do they want to reveal the company they're using to process fraudulently-obtained checks by providing a clear stamp print. Typically, they will smudge the stamp to make sure it's not readable or they will create a stamp that is itself unreadable. One agency found that on the back of some checks, what appeared to the naked eye as a company stamp turned out to be nothing but a bunch of squiggly, smeared lines when viewed under magnification. Someone had created a stamp to deliberately produce this effect—an interesting subterfuge, but easily recognizable to agency staff who know what to look for. Without a signature or a legible stamp, tracing the check back through the bank to the depositor—and thus uncovering the fraud scheme—is not possible.

Checking the checks may be time-consuming and labor-intensive, but finding even one fraud attempt can make the effort pay off for an agency. As an additional fraud deterrent, you can also alert your bank to be diligent in making sure that checks are properly endorsed.

Industry News

Hurricanes hinder crackdown on government overspending — After government agencies misspent an estimated $45 billion last year through overpayments, underpayments and payments that should never have been made, Bush administration officials vowed to crack down on the problem. The unemployment insurance program alone erroneously disbursed an estimated $3.9 billion in UI claims in 2004. With mispayments already a huge concern, the worst hurricane season on record increased the demand for federal benefits and assistance, and confounded the problems facing agencies.

Agencies have had to rely on every available resource to process the increased number of UI claims following the storms. And because the hurricanes destroyed many claimants' documentation proving their eligibility, some agencies have been waiving the procedures they normally use to screen for ineligible applicants. Also, recipients are relocating to other states to find jobs, while possibly still receiving a check from Louisiana—a problem agencies are hoping to contain by using the National Directory of New Hires.

Do you have a fraud story you'd like to share?
Let us know.

Did You Know?

While there is little hard evidence to support it, conventional wisdom in the unemployment insurance community holds that a significant portion of UI benefits fraud is committed by "otherwise honest" people—people who would never consider committing a robbery or burglary. Why, then, would they commit theft in the form of UI fraud?

Several explanations seem to predominate. Some people say they need the money or feel they are entitled to the benefits. Some have the perception that "everybody does it," and have little fear of getting caught. And if they do get caught, they think they'll simply have to repay the money.

These "otherwise honest" people typically try to beat the system by taking a few extra checks after returning to work, or by violating some other provision of their state's Able, Available and Actively Seeking Work requirements. They are, however, the group most likely to be deterred from accepting fraudulent payments if the risk level were heightened.

There are several steps a state UI agency can take in order to create a more fraud-deterrent environment:

• Implement an aggressive fraud/overpayment program, and publicize that you have such a program.
• Pursue recovery of both large and small overpayments, which sends a message that it's not OK to steal "just a little."
• Prosecute as many cases—large and small—as resources will allow.
• Publicize the results of overpayment recoveries and settlements as well as successful prosecutions—no one wants to see a news article linking them to a crime, be it a felony or misdemeanor.

In many instances it's clearly easier and less expensive to deter fraud than to recover an overpayment. Make it risky to be a crook and some honest (or only slightly dishonest) claimants won't take the chance. On Point Technology's Barts and Aware applications are the only commercial, packaged software products available to support such an aggressive program. For more information on how Barts and/or Aware can help your agency deter fraud attempts, contact Bob Yokavonus at 908-526-0426 or e-mail robert.yokavonus@onpointtech.com.