California Employment Development Department, Fraud Tools Assessment (annual report 2025)
Summary
The Fraud Tools Assessment annual report 2025 of the California Employment Development Department (EDD), prepared for the California State Legislature under Assembly Bill 138 (Chapter 78, Statutes of 2021). It covers identity verification and authentication, the Thomson Reuters (TR) fraud detection tool, cross matching and data sharing, public awareness campaigns, and the Fraud Governance Group. For January 1, 2024, through September 30, 2024, it reports that the ID.me platform prevented 7,028 potentially fraudulent UI claims and 115 potentially fraudulent SDI medical provider claims. The TR table for 2024 year to date shows 5,526 UI fraud claims mitigated and $19,325,063. The report says the contract with ID.me expires in June 2025 and that Socure was selected to replace ID.me.
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“California Employment Development Department, Fraud Tools Assessment (annual report 2025).”
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Fraud Tools
Assessment
Table of Contents
1 Executive Summary .......................................................................................................... 2
1.1 Context....................................................................................................................... 2
1.2 Confidentiality............................................................................................................ 2
2 Scope of Assessment ....................................................................................................... 2
3 Identity Verification and Authentication......................................................................... 5
3.1 ID.me – Mitigated Fraud............................................................................................... 5
3.2 Identity Verification – Next Steps ................................................................................. 6
4 Fraud Detection Tool ........................................................................................................ 7
4.1 TR – Mitigated Fraud ................................................................................................... 7
4.2 TR – Next Steps .......................................................................................................... 7
5 Cross Matching and Data Sharing .................................................................................. 7
5.1 Inter-Agency Cross-match and Internal Processes Fraud Mitigation ............................ 8
6 Public Awareness Campaigns and Collaboration with Law Enforcement .................. 8
7 Fraud Governance Group ............................................................................................... 9
8 Summary ........................................................................................................................... 9
Page 1 of 10
1 Executive Summary
1.1 Context
Assembly Bill 138 (Chapter 78, Statutes of 2021) added Section 340(a)(1) to the
California Unemployment Insurance Code (CUIC), requiring the Employment
Development Department (EDD) to provide a report to the California State Legislature
assessing the effectiveness of the Department’s fraud prevention and detection tools.
This report satisfies that requirement.
1.2 Confidentiality
As Section 340(b) of the CUIC allows, “Details on fraud methods and tools may be
generalized, excluded, or redacted to protect the fraud deterrence practices of the
department.” To preserve the integrity of the Department’s defenses against
perpetrators of fraud and cybercrime, the specifics of the plan must remain
confidential, as it provides a comprehensive list of desired industry-standard tool
features. EDD appreciates the Legislature’s discretion in handling these sensitive matters
and may provide additional details of the assessment in a private forum upon request.
2 Scope of Assessment
EDD administers two major benefit programs: Unemployment Insurance (UI) and State
Disability Insurance (SDI). These programs provide temporary wage replacement
benefits to eligible individuals. EDD employs a Department-wide fraud prevention and
detection strategy, with the collective intent to safeguard taxpayer funds, while
continuing to pay claimants timely.
This assessment takes a comprehensive approach, evaluating not only individual tool
capabilities but also their integration with existing systems, compliance with legal
standards, and impact on operational efficiency.
The Department-wide fraud prevention and detection strategy employed by EDD
includes:
Identity verification and authentication
Cross matching and data sharing
Public awareness campaigns and collaboration with law enforcement
Coordination with the Fraud Governance Group
Page 2 of 10
Fraud Prevention Components in Scope
Fraud Prevention
Description
Component
Identity EDD currently uses ID.me as an identity verification tool. It
Verification and verifies the identities of claimants who apply through the
Authentication Department’s shared customer portal (SCP), which serves as
the public-facing portal for UI and SDI customers.
Per the National Institute of Standards and Technology (NIST)
800-63-3 requirements, this service includes document-based
and biometrically derived identity verification.
ID.me was implemented in October 2020.
As part of the EDDNext modernization effort, EDD will introduce
Socure as a replacement to ID.me for 10% of UI customers
initially and ultimately for 100% of UI and SDI customers. The
proposed change is expected to result in an improved
customer experience, enhanced data quality, and continued
deterrence of fraudulent activities (see page 6).
Fraud Detection Thomson Reuters (TR) [Pondera and CLEAR Platform] is used by
Tool EDD as a fraud detection tool in conjunction with internal
screening criteria. TR provides the following services to EDD:
Fraud detection screening;
Business intelligence; and
Investigations management
TR screens new UI and SDI customers for non-identity-related
fraud risk (e.g., mailing address, county and federal
incarceration status). TR is used to enhance EDD’s manual
process for screening identity-related fraud risk for paper and
phone UI claimants.
For purposes of this assessment, this report focuses on TR’s fraud
detection capabilities.
TR was implemented in December 2020.
Page 3 of 10
Fraud Prevention
Description
Component
Cross Matching EDD performs internal fraud mitigation efforts by cross-matching
and Data Sharing data with the California Department of Corrections and
Rehabilitation, Department of State Hospitals, and the
Department of Juvenile Justice.
EDD participates in the National Association of State Workforce
Agencies (NASWA) Integrity Data Hub, which was implemented
in June 2023. This multistate data system provides advanced
data cross-matching and analysis capability that detects and
prevents UI fraud and improper payments. EDD shares UI new
claim data and provides daily updates to the Integrity Data
Hub. Currently, EDD is reviewing the Integrity Data Hub data
and defining business requirements for the next phase of the
project.
Public Awareness EDD communicates to all stakeholders (public, claimants,
Campaigns and employers, physicians/practitioners) how to report fraud, avoid
Collaboration with scams, avoid committing fraud, and the penalties and
Law Enforcement prosecution for providing false information or not reporting
information to EDD. This communication is provided at
edd.ca.gov/FightFraud
In addition, EDD’s Response to Fraud page includes statistics on
investigations, arrests, and convictions. It features recent news
articles and quotes that reinforce EDD’s efforts in fraud
prevention which also serves as deterrence.
EDD has created investigative guides for law enforcement and
has offered technical assistance to partners working on fraud-
related cases. Regional contacts have been established for
each division of the State allowing EDD to work with agencies
that need assistance with unemployment fraud cases. EDD has
also set up a system where out-of-state state and local law
enforcement agencies can obtain information from EDD to
investigate and prosecute UI fraud in their jurisdiction.
Governance EDD's Fraud Governance Group is a key component of the
Department's successful fraud prevention efforts. The group
effectively coordinates and guides various initiatives, such as
identity verification, fraud detection, data sharing, public
awareness, and law enforcement collaboration.
Page 4 of 10
3 Identity Verification and Authentication
ID.me is classified as an identity verification tool that authenticates a given person’s
identity via user-provided information, documents, and “selfie” images, or a live virtual
interview with ID.me via a trusted referee. Customers may also opt out of the “selfie”
image process and not share their biometric information; selfie images and associated
biometric data are deleted after 24 hours. EDD requested and received from ID.me the
NIST 800-63-3 IAL2 & AAL2 Annual Conformity Review on June 14, 2023.
3.1 ID.me – Mitigated Fraud
The data collected from January 1, 2024, through September 30, 2024, was thoroughly
analyzed separately for UI claimants, SDI claimants, and SDI medical providers. During
this period, the ID.me platform prevented 7,028 potentially fraudulent UI claims, 2,862
potentially fraudulent SDI claims, and 115 potentially fraudulent SDI medical provider
claims from being filed.
January 1, 2024 – September 30, 2024: UI Claimants
Started Abandoned1 Unsuccessful Verified
Verification
1,152,943 67,224 72,707 1,005,984
(5.83%) (6.31%) (87.25%)
Attempted Did Not Pre-verified Did Not Self-
Trusted Attempt Attempt Service
Referee Trusted Trusted
Referee Referee
26,389 46,318 647,928 299,031 59,025
(36.3%) (63.7%) (64.4%) (29.7%) (5.9%)
Estimated Fraud Prevented: 7,028 Individuals
January 1, 2024 – September 30, 2024: DI Claimants
Started Abandoned Unsuccessful Verified
Verification
725,264 32,246 37,880 652,189
(4.44%) (5.22%) (87.92%)
Attempted Did Not Pre-verified Did Not Self-
Trusted Attempt Attempt Service
Referee Trusted Trusted
Referee Referee
9,547 28,333 345,398 275,982 30,809
(25.2%) (74.79%) (52.95%) (42.31%) (4.72%)
Estimated Fraud Prevented: 2,949 Individuals
1 Individuals who were presented with a path forward in the identity verification process but opted not to
proceed.
Page 5 of 10
January 1, 2024 – September 30, 2024: Medical Providers
Started Abandoned Unsuccessful Verified
Verification
7,865 1,326 1,126 5,298
(17%) (14%) (67%)
Self-Service Trusted Self-Service Trusted
Referee Referee
1,057 69 5,118 180
(94%) (6%) (94%) (3%)
Estimated Fraud Prevented: 115 Individuals
The estimated volume of fraudulent users that ID.me prevents from completing identity
verification is determined through meticulous monitoring conducted by ID.me’s Security
and Data Analytics teams. This monitoring encompasses the detection of social
engineering, synthetic identity theft, and other forms of fraudulent activity across state
and federal partners. The identification of fraudulent activity includes the examination
of ID.me’s fraud flags, the detection of duplicate personally identifiable information,
and the supervision of verification attempts.
3.2 Identity Verification – Next Steps
The current contract with ID.me expires in June 2025. As part of EDD’s modernization
effort, EDDNext, market research, and a competitive bidding process was conducted in
2023 with four identity verification vendors. Socure was selected to replace ID.me’s
services.
The model used by ID.me as an identity service provider requires new claimants to
interact with two separate websites. First, claimants sign-in to myEDD, the Department’s
shared customer portal. Then, claimants navigate to ID.me’s website to verify their
identity. Following verification, they must return to myEDD. Some claimants abandon
this process and therefore EDD does not have information for these customers.
The new, frictionless identity verification model offered by Socure will enable claimants
to verify their identity directly within myEDD, giving EDD more insight into customer
abandonment points or process continuation. This transparency allows EDD to collect
the data provided by the claimant to minimize data collection requirements in
subsequent interactions. If necessary, Socure also supports verification using documents
and “selfie” images, or a live virtual interview if needed.
In the first phase of Socure’s implementation, 10 percent of UI customers will be
directed to verify their identity within the myEDD portal, without the need to navigate to
a separate website. This phased approach will allow EDD to study the customer journey
and the identity verification data before increasing the percentage of customers using
Socure and prior to integration with SDI.
Page 6 of 10
4 Fraud Detection Tool
TR is a fraud detection tool that assesses the likelihood of a fraudulent claim using
internal and third-party data sources, based on specific parameters. TR information is
reviewed on the following parameters:
Efficacy of existing fraud filters;
Sources referenced;
Outputs generated by the tool.
4.1 TR – Mitigated Fraud
The table below represents the number of claims, and the estimated amount of fraud
mitigated because of the use of the TR tool. At the time of this report’s publication, 2024
data was only available through September 30, 2024.
UI Fraud Claims
TR - Calendar Year UI Fraud Mitigated
Prevented
2024 YTD Total 5,526 $19,325,063
SDI utilizes TR in a different method compared to UI. SDI reviews claimants and medical
providers that have been flagged by TR to examine if appropriate action needs to be
taken.
TR - Calendar Year SDI Fraud Claims Reviewed (Total)
5,149
2024 YTD Total Claimants: Medical Providers:
1,828 3,321
4.2 TR – Next Steps
EDD continues to identify any constraints and limitations within TR provided information
regarding its algorithms and business rules documentation, the output assessment, and
requirements. EDD continues to review its use of TR to refine techniques and optimize
the filters.
5 Cross Matching and Data Sharing
In addition to the TR and ID.me tools, EDD performs internal fraud mitigation efforts
through the use of data cross-matching with the California Department of Corrections
and Rehabilitation, Department of State Hospitals, and the Department of Juvenile
Justice. The following sections describe these efforts in more detail.
Page 7 of 10
5.1 Inter-Agency Cross-match and Internal Processes Fraud Mitigation
The following table details the potential fraud mitigated by EDD inter-agency cross-
matches. At the time of this report’s publication, 2024 data was only available through
September 30, 2024.
Cases Number of Claims Fraud Mitigated
UI: 525 UI: $2,360,179
2024 Cross-Match Totals*
DI: 17 DI: $33,159
The following two tables provide details of potential fraud mitigated by utilizing internal-
multiple claims per address and identity verification processes and procedures. EDD
does this by comparing the addresses on the claimant’s application. At the time of this
report’s publication, 2024 data was only available through September 30, 2024.
Multiple Claims per Address Number of Claims Fraud Mitigated
UI Claims: 31,115 UI: $ 153,486,483
2024 Multiple Claims Totals
DI Claims: 4,357 DI: $2,494,460
Internal Identity Verification Number of Claims Fraud Mitigated
UI Claims: 44,376 UI: $ 149,545,333
2024 Totals
DI Claims: 25,482 DI: $63,385,810
6 Public Awareness Campaigns and Collaboration with Law Enforcement
EDD regularly reviews and updates public-facing information related to fraud. The
Department communicates with a high level of detail to the public, including non-
claimants, claimants, employers, physicians/practitioners, and potential fraudsters at
edd.ca.gov/FightFraud.
EDD’s web page also includes a “How to Avoid Scams” section. Benefit programs are
frequently susceptible to exploitation by fraudsters seeking to obtain benefits through
the illicit use of individuals' personally identifiable information. EDD encourages
individuals to report suspected fraud and provides four methods for contacting the
Department. EDD also publishes a “What You Should Know About Unemployment
Scammers” guide in 6 languages other than English including Armenian, Simplified
Chinese, Traditional Chinese, Korean, Tagalog, and Vietnamese. The Department also
regularly partners with media outlets to raise awareness of evolving tactics used by
scammers.
EDD publicly provides fraud prevention statistics on investigations, arrests, and
convictions for fraud on its Response to Fraud webpage. Further information regarding
EDD’s ongoing collaboration with law enforcement is contained in the Department’s
Annual Fraud Report.
Page 8 of 10
7 Fraud Governance Group
EDD's Fraud Governance Group is a key component of the Department's successful
fraud prevention efforts. The group effectively coordinates and guides various initiatives,
such as identity verification, fraud detection, data sharing, public awareness, and law
enforcement strategy. By providing a centralized forum for decision-making,
coordination, and oversight, the Fraud Governance Group helps EDD effectively
prevent and detect fraud, protect public funds, and maintain the integrity of its
programs.
8 Summary
The fraud prevention tools, TR and ID.me, that were successfully implemented in 2020
and leveraged extensively to assist EDD in combating the unprecedented level of fraud
attacks during the COVID-19 pandemic continue to be key in preventing fraud.
EDD’s fraud prevention and detection tools assessment provide a critical lens through
which EDD can continue to gauge the effectiveness of the technologies it employs to
defeat benefit fraud and safeguard taxpayer funds while not unnecessarily burdening
legitimate claimants. The transition to Socure in 2025 will further enhance EDD’s fraud
detection and prevention tools, while also improving the experience of EDD’s
customers. EDD continues to evaluate whether the right technologies are deployed in
its layered, multi-component fraud prevention and detection technology stack and to
identify where it needs to improve, potentially with different technologies or the
reconfiguration of existing solutions.
Page 9 of 10
STATE OF CALIFORNIA
LABOR & WORKFORCE DEVELOPMENT AGENCY
EMPLOYMENT DEVELOPMENT DEPARTMENT
Page 10 of 10
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Cited in: ID.me · Pondera Solutions (Thomson Reuters)