Fraud Reduction Bill to Cross-Check EDD and Prisoner Records Passes Committee

A bill to require the Employment Development Department (EDD) to check benefit applications against prisoner incarceration records to reduce unemployment benefit fraud was passed in the Assembly Consumer Privacy and Protection Committee on Thursday.

Assembly Bill 110, authored by Assemblywoman Cottie Petrie-Norris (D-Laguna Beach), would cross-check all EDD benefit application recipients with California Department of Corrections and Rehabilitation (CDCR) prison records. Specifically, the CDCR would provide the names and social security numbers of all prisoners to the EDD to check, with the county jail systems also providing the same of all prisoners currently serving a sentence. Names and SS numbers would be given to the EDD every month under the bill, as well as whenever the EDD asks.

In turn, the EDD would then verify the info with the CDCR as a way to double check and reduce the chances that non-fraudulent benefit applicants are not delayed or denied.

Assemblywoman Petrie-Norris wrote AB 110 due to the high numbers of EDD fraud being uncovered during the pandemic. 35,000 fraudulent Pandemic Unemployment Assistance (PUA) claims were filed on behalf of prisoners alone last year. According to the state auditor’s office, out of the $11.4 billion to $31 billion lost by the EDD last year in fraudulent claims, the EDD paid $810 million in benefits to those associated with incarcerated individuals.

“In the midst of this terrible crisis, fraudsters and criminals spotted an opportunity to bilk California taxpayers for billions of dollars,” said Assemblywoman Petrie-Norris on Thursday in a press release. “AB 110 is a simple, common sense step to stop unemployment insurance fraud involving California inmates.”

Widespread support for AB 110

Since being introduced in December 2020, AB 110, as well as the near-duplicate SB 39, have received bipartisan support with few who have actively opposed the proposed law. Many law enforcement groups and business organizations have also thrown their support behind the law due to the bill greatly reducing fraudulent unemployment cases and saving taxpayers potentially billions in blocked fraudulent cases.

“Failure to protect against fraud undermines the public’s confidence and encourages criminal activity,” noted Orange County Sheriff Don Barnes. “AB 110 puts important protections in place that will ensure unemployment benefits only go to eligible unemployed individuals. Cross-checking lists of unemployment benefit claimants against incarceration data is a common-sense fraud prevention measure that will protect taxpayer dollars.”

The California Chamber of Commerce also agreed.

“The fraud on California’s UI Fund that has been widely reported throughout this pandemic is unacceptable,” said the California Chamber of Commerce in a statement on Thursday. “The California Chamber of Commerce is glad to support Assemblywoman Petrie-Norris’ AB 110, which would facilitate sharing of information between the EDD and California’s correctional system to ensure that fraudsters do not utilize inmates’ information to steal money from California’s Unemployment Insurance Fund.  We would also note that other states’ already employ this basic safeguard, and are glad to see a common-sense solution being imported into California.”

Experts noted that the large number of Democrats, Republicans, and Independents behind the bill prove just how serious unemployment fraud is in California.

“You’ll be hard to find anyone who thinks that keeping the same EDD fraud check system in place is a good idea,” noted Ronald Flanagan, a former fraud investigator for a major financial institution in California, to the Globe. “You need to keep developing new fraud standards all the time to stay ahead. The EDD failed to do that and proceeded to just approve people quickly due to the volume. I know it was a pressing need, but there are quick ways to do that. They failed to implement them, approved people quickly, and the next thing you know, California is out billions of dollars.

“This is a smart move to install this cross-check system, but we can’t stop here and call it a day. We need to keep adding more and more of these checks or find other methods of fraud detection and run it against different scenarios on how it could be overridden by fraudsters to make sure it works. It does take time, yes, and manpower, but saving billions by spending a few million seems like a good ratio to me.”

If passed, California would become the 36th state to cross check unemployment benefit data with incarceration records.

Following passage in the Assembly Consumer Privacy and Protection Committee on Thursday, AB 110 is expected to be heard in the  later this month.