Can blockchain technology help prevent unemployment fraud?

Published On: June 20, 2022

Can blockchain technology help fight fraud at the Employment Development Department?  If pending legislation is approved this year, a study by the Office of Digital Innovation (ODI) will aim to answer that question.  Assembly Bill 2781 by Assemblymember Jordan Cunningham (R-San Luis Obispo) last week unanimously passed the Senate Governmental Organization Committee advancing closer to final approval.  The measure calls for the ODI to study how blockchain technology might help prevent fraud.

With a surge in claims related to the pandemic over the past two years, the EDD has paid out as much as $31 million in fraudulent claims. Because blockchain records are considered “unalterable by design” the technology is uniquely promising for industries that handle sensitive or personal data regularly, such as with unemployment claims, according to an analysis of the bill.

According to the analysis, the bill:

  • Requires the Office of Digital Innovation (ODI) to study the feasibility and appropriateness of the utilization of blockchain technology by EDD for the purposes of identity verification and fraud prevention, subject to the availability of funding, as specified.
  • Requires the study to include evaluation of potential inequities in the processing of claims and administration of benefits that could result from the use of blockchain technology by EDD for identity verification and fraud prevention.
  • Requires ODI, on or before January 1, 2024, to report to the Legislature on the findings of this study, including risks, benefits, and considerations for the potential use of blockchain technology by EDD for the purposes of identity verification and fraud prevention.
  •  Defines “blockchain” to mean a mathematically secured, chronological, and decentralized ledger or database.
  • Includes a sunset date of January 1, 2026.

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