These forms put jobless Californians at risk of identity theft. It will take months to fix them
Despite stark warnings that using Social Security numbers on many mailings is putting Californians’ identities at risk, the Employment Development Department has told the state auditor that it will take until August to stop using the numbers on its top three forms.
The auditor has warned for months, and reiterated in a highly critical Nov. 19 report, that the frequent use of the numbers “continued to put Californians at risk of identity theft.”
The delays in ending the use of the numbers does not appear to have been a major reason for the massive fraud prosecutors revealed Tuesday. Investigators said they have found at least $140 million worth of improper payments made to inmates in what they expect will become the largest taxpayer fraud in California history.
The use of Social Security numbers in mailings was “tangentially related but not directly,” said Chief Sacramento County Deputy District Attorney Steve Grippi. He would not comment further.
Using the numbers on mailings has been a potential problem for some time. State Auditor Elaine Howle told EDD in March 2019 that its use of full Social Security numbers on sensitive documents was dangerous
That was a year before the coronavirus pandemic caused unemployment claims to surge dramatically, and as the numbers grew, a new auditor report warned November 19 that “EDD’s practice of including full SSNs (Social Security numbers) on certain mailed documents has resulted in many individuals’ SSNs being delivered to strangers who may choose to exploit the inappropriate mailings.”
EDD told The Sacramento Bee that its officials have met with the auditor. In a statement, the agency said it “acknowledged that they are behind schedule with the auditor’s timeline and has provided the auditor with its updated schedule.”
In addition to removing the numbers from the top three forms by next summer, it said it would remove the numbers from all other forms by January 2023, as required by state law.
“In addition to protecting customer information, EDD is also focused on improving the accessibility and ease-of-use of these forms,” the agency said.
Lawmakers who have been watchdogs — and sharp critics — of the agency didn’t like the EDD response.
“The EDD has had plenty of time to make these changes,” said Assemblyman Jim Patterson, R-Fresno.
“The bottom line is, It took a pandemic to get them to even think about changes they should have made years ago. That makes them complicit in the fraud that has overwhelmed them.”
Assemblyman David Chiu, D- San Francisco, also expressed frustration.
“It’s disturbing that EDD has taken such a relaxed approach to such a pressing issue,” he said.
“The irony is not lost on me that an agency claiming to be so focused on combating fraud would continue this practice that makes Californians prime targets for fraud and identity theft,” he said.
Since the coronavirus pandemic sent the economy into a tailspin and sent unemployment numbers rising to unanticipated levels earlier this year, the EDD has struggled to keep pace with the volume of claims and questions.
It was also hit with reports that hundreds of agency mailings, including some with valuable debit cards, were sent to the wrong places and addressed to people who didn’t live at those addresses, suggesting massive fraud schemes.
The department has said it saw no link between Howle’s 2019 warnings about identity theft and the surge in suspicious activity.
Howle seemed to suggest otherwise.
“We observed a significant amount of mail that was returned to EDD because it was undeliverable, including mail that individuals received erroneously and returned to EDD. Such mailings may be linked to attempts to fraudulently collect unemployment benefits,” the auditor said.
The report looked at a small sample of the returned mail and “found multiple examples of mailings containing full SSNs.”
The auditor said that if EDD modified its three most commonly used documents, it would have avoided sending full Social Security numbers to 34 million — or 90% — of the mailings it sent from March through mid-October.
EDD this summer put new safeguards in place to make using a false identity more difficult.
Vern Pierson, El Dorado County district attorney, said the new system was a “significant improvement.”
But he said that investigators who listened to conversations between inmates heard them discussing “how easy it is to defeat that. It is an improvement, but it is certainly not an overall fix to the problem.”
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