Computer Glitch Falsely Accuses Unemployed of Fraud

Michigan – The State of Michigan used an error-prone computer system that has wrongly accused tens of thousands of people of unemployment insurance fraud dating all the way back to 2007. Michigan residents who have been falsely accused are estimated to number between 27,000 and 50,000. Those wrongly accused of fraud were in many cases subjected to 400% fraud penalties, wage garnishment and other aggressive collection techniques, such as seizure of income tax refunds. Tens of millions of dollars were unlawfully taken. A class action law suit has been filed against the state in attempts to reimburse the wrongfully accused.

UPDATE:  On Thursday February 2, 2017, The Michigan Unemployment Insurance Agency settled a federal lawsuit stemming from the state’s past reliance on an automated computer system that made tens of thousands of false fraud claims against residents. The settlement requires the agency to “conduct an investigation consistent with prevailing U.S. Department of Labor requirements” before making a fraud determination. Any re-determinations of misrepresentation or fraud will be issued “only after the input and review by agency staff, and after the claimant is informed of the conflicting information and provided an opportunity to respond.” However, the settlement does not award monetary damages to plaintiffs, beyond mandatory refunds of fines and penalties levied for false fraud determinations. A separate class-action suit seeking additional financial compensation remains active in state court.

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