Natural State News

A new act to further ensure unemployment fraud prevention was signed into law in April and expanded the state's ability to recover benefits that were acquired fraudulently.

Unemployment fraud in Arkansas reached $31 million in improper payments by February, reported the Arkansas Democrat Gazette, and the state's improper payments have been above 10% in 14 out of the past 17 years.

The $31 million estimate comes from a 10% fraud rate that Arkansas paid out over $310 billion from May to December 2020, the Gazette reported.

Zoe Calkins, communications director for the Arkansas Department of Commerce, Division of Workforce Services, said Act 667's procedures were already implemented in her division.

"While Act 667 further ensures that fraud prevention and detection measures are met and prioritized, most of the procedures required by Act 667 were already fully implemented within the Arkansas Division of Workforce Services (DWS)," Calkins said in an email to Natural State News. "DWS will continue to review our policies around these procedures and will provide the required report regarding its fraud detection and prevention progress to the Legislative Council by Dec. 31, 2023, at which time DWS anticipates having a new unemployment system that will enhance the agency’s ability to detect and defer fraud."

Act 667 allows employers to notify DWS if an individual refuses an offer that is suitable work. 

"Employers can notify DWS of a refusal of an offer of suitable work one of two ways," Calkins said. "The unemployment insurance employer services portal, Tax 21, has options for reporting individuals who refuse offers of suitable work, do not return to work when recalled, do not show up for or pass drug screens, and do not show up for interviews. And the refusal of work form, an online form that employers can fill out and submit directly through the DWS website." 

Some employers have alerted DWS of people who refuse to work.

"At the beginning of the year, DWS developed messaging and increased outreach informing employers about how to report refusals of work," Calkins said. "In February, seven employers reported 25 refusals of work. Since then DWS has seen small but consistent increases in the number of employers reporting each month. In July, 85 employers reported 278 refusals of work." 

Other requirements of Act 667 have also been implemented. 

The DWS unemployment insurance system cross-matches with the Arkansas Department of Correction database, and it also cross-matches with state and national new hire databases, according to Calkins. In addition, the "DWS Office of Compliance and Integrity, Fraud Investigation Unit has fully implemented use of the NASWA data integrity hub," she said

A report by Axios showed nearly half of pandemic unemployment fraud benefits were at risk of fraud, and much of it was paid to foreign crime syndicates. About $400 billion in pandemic unemployment benefits may have been stolen.

Aside from fraud, a positive was identified for those states that lowered unemployment benefits. A University of Chicago study found states that cut the benefits accounted for as much as 75% in increased job growth.

Gov. Asa Hutchinson, himself a victim of unemployment fraud, signed House Bill 1765 into law in April. The law expands the government's ability to recover benefits that were acquired fraudulently. It also requires recipients to be cross-matched with lists of those who are incarcerated and uses the integrity data hub to prevent and also detect fraud.

The COVID-19 pandemic has led to even more potential fraud. Arkansas Secretary of Commerce Mike Preston previously told Natural State News the state investigated more than 27,000 pandemic unemployment claims, including 10,000 claims for potential fraud.