Blake Hall and ID.me's California Contract

ID.me began in 2010 as TroopSwap, became Troop ID, and adopted its current name in 2013 under co-founder Blake Hall.¹

That is the company California hired in October 2020 to stand between an unemployed worker and their first benefit payment.

How the state acquired it

ID.me arrived through California's emergency procurement response. A Governor's strike team, convened in July 2020 to dig the Employment Development Department out of its claims backlog, recommended in its September 16, 2020 report that EDD adopt an identity-proofing tool meeting the federal government's Identity Assurance Level 2 standard. EDD's later assessment records that the department "adopted ID.me as a solution" on the strike team's recommendation and implemented it in October 2020. From then on, every claimant filing a new unemployment claim online in California had to clear ID.me before the application would go through.²

The speed was the selling point and, later, the complaint. EDD's June 2022 fraud report credits ID.me's real-time online check with letting the department run its self-service portal around the clock (the old system had closed for hours each night to sync with the Social Security Administration) and with keeping imposters off the front end of the process. We found no ordinary competitive procurement file.

The workflow, and the referee

ID.me's job was identity proofing to a specific technical grade. EDD's assessment describes it as aligned with NIST Special Publication 800-63-3 at Identity Assurance Level 2 and Authenticator Assurance Level 2: document-based verification plus, for most people, a biometric "selfie" match against the photo on a government ID. A claimant could opt out of sharing biometric data and still proceed, though by a slower path.²

That slower path ran through a human reviewer. When the automated match failed, the claimant could not simply try again. They had to sit for a live video interview with what ID.me calls a "trusted referee" — a trained identity specialist the company employs to confirm a person's identity by talking to them and inspecting their documents on camera. Of the 7,819,761 people who interacted with ID.me for California unemployment between Oct. 1, 2020, and Dec. 31, 2022, 4,098,292 completed verification. Of those, 3,361,725, or 82 percent, attempted the trusted-referee route rather than clearing the automated check alone. Another 2,624,336 were recorded as unsuccessful, and 1,097,133 abandoned the process.³

The referee model is what turned a software product into a queue. EDD's assessment found that the video interview "requires a strong enough broadband internet connection to transmit live video" and that parts of California lack that access. It also recorded ID.me-reported supervised-chat wait times of 75.6 minutes from January through March 2022, later reduced to about three minutes after remediation.⁴

Two claims about fraud

ID.me told two different audiences two different-sized things about fraud, and the gap between them became a congressional matter.

To EDD, the numbers were operational. ID.me's own tabulation, reproduced in the state assessment and expressly labeled as "provided by ID.me," estimated that the platform blocked 2,638,764 potentially fraudulent individuals from completing California verification. The assessment's narrative gives a different total, approximately 2,640,375. Both are vendor-reported estimates, not audited or adjudicated fraud counts.⁵

To the public, the number was national. In June 2021, Hall said the United States had lost more than $400 billion to fraudulent unemployment claims. In November 2022, the House Committee on Oversight and Reform and the Select Subcommittee on the Coronavirus Crisis said ID.me had "made baseless claims about the amount of federal funds lost to pandemic fraud in an apparent attempt to increase demand for its identity verification services." The committees found that the cited sources did not add up to $400 billion and that the company had overstated its verification capacity and downplayed wait times.⁶

Those are congressional conclusions, not court judgments, and they carry no penalty. The company that supplied the state's fraud gate had a commercial interest in the size of the fraud problem, and by the House's account it inflated that problem in public while the states were deciding how much identity friction to impose on claimants.

The same product expanded into other states and the IRS, and venture investors valued the company at $1.5 billion in 2021.⁷⁸

What the state kept, and what ID.me kept

EDD's assessment says selfie images and associated biometric data "are deleted after 24 hours." It also says identity data more broadly "is stored externally by ID.me and EDD does not have access to the data," and calls for alternatives that put retention under EDD's control.⁹

None of that is a finding that ID.me broke a law or harmed a countable number of Californians. No court judgment or enforcement order against the company over its California unemployment work appears in the documents we have. What the record does hold is a set of documented disputes — a founder's $400 billion fraud estimate that a congressional committee called baseless, a video-interview bottleneck the state's own assessment tied to broadband access, and a data-custody arrangement the department itself flagged for replacement. Those are the terms on which a daily-deals site for veterans became the thing standing between a jobless Californian and the money the state had already decided to send.

Notes

1. Company-history sources on ID.me’s origin as TroopSwap/Troop ID, the 2013 rebrand, and Blake Hall’s background, including ID.me, Military Times, and Inc. profiles. ↩
2. California Employment Development Department, Fraud Tools Assessment (Assembly Bill 138; Cal. Unemp. Ins. Code § 340(a)(1)), sections 3 and 5.4; EDD, Fraud Deterrence and Detection Report, June 30, 2022. ↩₁ ↩₂
3. California Employment Development Department, Fraud Tools Assessment, p. 11, § 5.4.3, usage and verification table for October 1, 2020 through December 31, 2022. ↩
4. Id., p. 12, § 5.4.4, “Accessibility” and “Processing Time” findings (broadband requirement and 75.6-minute January–March 2022 wait). ↩
5. Id., p. 11, § 5.4.3, “Estimated Fraud Prevented” table and accompanying narrative (2,638,764 and approximately 2,640,375, both supplied by ID.me). ↩
6. U.S. House Committee on Oversight and Reform and Select Subcommittee on the Coronavirus Crisis, ID.me findings release, Nov. 17, 2022. ↩
7. ID.me, “ID.me Raises $100 Million in Funding at $1.5 Billion Valuation,” March 22, 2021. ↩
8. IRS announcement of Feb. 7, 2022, and contemporaneous reporting on the IRS–ID.me contract and ID.me’s subsequent verification-policy statement. ↩
9. Id., p. 12, § 5.4.4, “Data retention” finding (24-hour biometric deletion and external ID.me storage outside EDD access). ↩

Primary sources used in this article

• California Employment Development Department, Fraud Tools Assessment (prepared under Assembly Bill 138, Ch. 78, Stats. 2021; Cal. Unemp. Ins. Code § 340(a)(1)) — ID.me implementation date (October 2020), NIST 800-63-3 IAL2/AAL2 alignment, trusted-referee/live-video-interview workflow, the 7,819,761-individual usage table (October 1, 2020–December 31, 2022) and its subtotals, the ID.me-provided estimate of potentially fraudulent individuals blocked, and the accessibility, data-retention (24-hour biometric deletion; external storage outside EDD access), and processing-time (75.6-minute wait, January–March 2022) findings.
• California Employment Development Department, Fraud Deterrence and Detection Report (June 30, 2022) — ID.me partnership since October 2020; requirement that all online new-claim filers verify identity; 24-hour UI Online availability after deployment.
• U.S. House Committee on Oversight and Reform and Select Subcommittee on the Coronavirus Crisis, findings release on ID.me, November 17, 2022 (contracts with at least 25 state agencies; nearly $45 million collected; "baseless" $400 billion fraud claim; overstated capacity; downplayed wait times).
• U.S. Department of Labor Office of Inspector General, March 2022 estimate (~$163 billion potentially improper unemployment payments), as characterized in the House investigation.
• ID.me press release / PR Newswire, "ID.me Raises $100 Million in Funding at $1.5 Billion Valuation," March 22, 2021 (Series C led by Viking Global Investors).
• Contemporaneous reporting on the IRS–ID.me facial-recognition contract and its February 7, 2022 reversal (Nextgov/FCW; TechCrunch; The Washington Post), including the ~$86 million contract figure and ID.me's statement that its software was used by roughly 30 states and 10 federal agencies.
• Company-history sources on ID.me's origin as TroopSwap/Troop ID (2010), the 2013 rebrand, and Blake Hall's background (ID.me/Wikipedia; Military Times; Inc.).
• Governor's strike team report, September 16, 2020, as cited in EDD's Fraud Tools Assessment (recommendation that EDD adopt an IAL2 identity-proofing tool).

The “estimated fraud prevented” totals are ID.me’s vendor-reported data, not audited fraud counts, and the House findings are congressional conclusions rather than legal judgments.