HB1510 overhauls several parts of Maryland’s unemployment insurance (UI) law to make fraud prevention and recovery more aggressive and more automated. The bill directs the Department of Labor to build stronger technical safeguards, to perform targeted reviews when certain identity or device signals overlap across claims, and to require proof of identity when a claim is filed.
The measure also expands the Department’s collection tools for fraud overpayments, raises monetary penalties, and lengthens the period during which claimants can be disqualified. For compliance officers and program managers, the bill shifts more operational responsibility onto the Department and employers while increasing the risk that legitimately entitled claimants will face temporary or extended interruptions to benefits if identity questions arise.
At a Glance
What It Does
The bill requires multifactor authentication (MFA) on any publicly accessible Department website or portal used for claims or employer interactions; it mandates targeted claim reviews when identifiers overlap (duplicate bank accounts, mailing addresses, or out‑of‑state/identical IP addresses); it requires claimants to submit specified identity documents with initial claims and disqualifies those who fail to do so or whose name does not match the ID; and it authorizes recovery of fraud overpayments through the Central Collection Unit and withholding of state income tax refunds. The bill raises monetary fraud penalties and imposes new, long‑running disqualification rules tied to recovery.
Who It Affects
State UI administrators and IT teams who must implement MFA, run targeted reviews, and publish annual fraud reports; employers and their HR staffs who will receive verification calls and possible employer notices after final fraud determinations; claimants, especially online filers who must submit scanned identification; and the Central Collection Unit and Comptroller, which will handle fraud overpayment offsets against tax refunds.
Why It Matters
The bill shifts from passive detection to active verification and recovery, giving the Department more technical and collection authority while increasing administrative friction for claimants and employers. It tightens the pipeline for catching fraud but also raises practical and legal questions about access, accuracy, and administrative capacity.
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What This Bill Actually Does
HB1510 creates a package of operational changes the Department of Labor must follow to reduce UI fraud and recover funds. It instructs the Department to require multifactor authentication on any publicly accessible website or portal it uses for receiving claims, employer reports, or benefit payments; the MFA must use at least two factors.
For certain claims the Department must perform phone‑based verification steps before paying benefits: these reviews are triggered when a newly filed claim lists banking details previously used on a different claim within the last six months, when a mailing address matches another active or pending claim, or when an IP address associated with the filing is out of state or matches an existing claim. The Department’s reviewers must call the claimant and attempt to contact the former employer to verify employment and eligibility, and the bill allows the Department to pause benefit payments while that review is underway unless the employer cannot be reached and the Department has no reason to suspect fraud.
The bill requires every initial claim to include one of a specified list of identity documents (driver’s license, state ID, Social Security card, birth certificate, passport, marriage certificate, military or veteran ID, professional license, passport card, tribal ID, or pilot’s license). Filers who apply in person will have their ID copied; online filers must upload a scanned copy.
If the Department finds a claimant did not provide the required ID or the name on the ID does not match the name on the initial claim, the claimant is disqualified beginning with the first week they would otherwise be eligible and remains disqualified until they submit valid matching identification.On recovery, the bill makes a fraud exception to the general rule that the Central Collection Unit does not collect unemployment overpayments: overpayments caused by fraud may be referred to Central Collection and certified to the Comptroller for withholding from state income tax refunds. The statutory monetary penalty for willful false statements is raised (from 15% to 20% of unlawfully received benefits) and interest continues at 1.5% per month; the bill also alters disqualification mechanics so that, where fraud is found and restitution or penalty payments are not satisfied, disqualification effects extend over long timeframes and the Secretary must refer final fraud determinations to appropriate law enforcement within 30 days.
For certain public‑sector employees, the bill requires that the employer be notified after a final determination and directs that an employer must initiate termination proceedings if the employee is still employed, treating the final determination as grounds for immediate termination.
The Five Things You Need to Know
The bill requires multifactor authentication (at least two factors) on any publicly accessible Department website or portal used to submit, process, or pay benefits or to collect information from claimants and employers.
Targeted claim reviews are mandatory when a new claim uses a bank account identical to one used on a different claim within the immediately preceding 6 months, when a mailing address matches another claimant’s active or pending claim, or when the filing IP address is out‑of‑state or identical to an existing claim; the Department must phone the claimant and attempt to phone the former employer and may pause payments during the review.
An initial claim must include one of a specified list of IDs (driver’s license, state ID, Social Security card, birth certificate, passport, marriage certificate, military or veteran ID, professional license, passport card, tribal ID, or pilot’s license); online filers must upload a scanned copy and failure to provide matching ID disqualifies the claimant until they submit valid identification.
Overpayments caused by fraud are explicitly collectible through the Central Collection Unit and the Department may certify fraud debts to the Comptroller to withhold state income tax refunds; Central Collection remains off‑limits for non‑fraud UI overpayments.
The monetary fraud penalty is raised from 15% to 20% of unlawfully received benefits (plus 1.5% monthly interest), the Secretary must refer final fraud determinations to law enforcement within 30 days, and employers of public‑sector employees must be notified and may terminate employees after a final determination.
Section-by-Section Breakdown
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Mandatory multifactor authentication on public portals
This provision directs the Department to require MFA—defined as at least two authentication factors—on any publicly accessible website or portal it uses to accept claims, process benefits, or collect information. Practically, IT teams must evaluate existing login flows, select authentication factors (something you know, have, or are), and implement MFA across claimant and employer interfaces. That creates immediate procurement, integration, and user‑support workstreams and will change how identity is proven during online interactions.
Annual public report on fraud prevention and enforcement
The Secretary must publish an annual fraud prevention and enforcement report on the Department’s website covering the preceding fiscal year. The report must quantify reviews that detected ineligible claimants, estimate savings from detections (using detected claims, average weeks paid, and average weekly benefit), list cases where employer contact could not be established, enumerate benefits paid in violation of eligibility rules, and detail referrals of suspected fraud to law enforcement and the agencies receiving those referrals. This increases transparency and creates an ongoing data stream for oversight and program evaluation.
Targeted reviews for overlapping identifiers and pause authority
This new section prescribes three clear triggers for an in‑depth review when a claim is filed: identical bank account information recently used by another claim, shared mailing addresses across claimants, and out‑of‑state or identical IP addresses for online filings. For each trigger the Department must call the claimant, attempt phone contact with the former employer, and confirm eligibility elements before payment. The Secretary may withhold benefits while the review is pending; however, if the Department cannot reach an employer and has no reason to suspect fraud, it may conclude the review and allow payment. The provision standardizes phone‑based verification as a first‑line tool.
ID required at initial claim and disqualification for missing/mismatched ID
Claimants filing initial claims must submit one of a defined list of identity documents; in‑person filers receive their original documents back after a copy is made, and online filers must upload scanned copies. If a claimant fails to supply the required ID or the name on the ID does not match the name on the claim, the Secretary must disqualify the claimant beginning with the earliest week of eligibility and keep the disqualification in place until valid, matching identification is provided. This formalizes document collection as a gate to benefit entitlement.
Collections: fraud exception to Central Collection prohibition and tax refund withholding
The bill makes overpayments caused by fraud collectable by the Central Collection Unit (CCU) despite a general rule that CCU doesn’t handle UI contribution or overpayment collection, and it aligns with Tax‑General §13‑913 allowing certification to the Comptroller to withhold income tax refunds for referred debts. The practical effect is a new, administrative tool for recouping fraud losses via tax‑refund offsets; agencies and CCU will need referral procedures and dispute protocols for contested debts.
Stronger monetary penalties and extended disqualification mechanics
Monetary penalties for obtaining benefits by false statement are increased from 15% to 20% of unlawfully received benefits and interest remains at 1.5% per month. The bill also revises how long a fraud determination affects future eligibility, tying disqualification to repayment status and creating long‑running ineligibility consequences where restitution or the monetary penalty is unpaid. Agencies must track repayment status and apply disqualification rules consistently.
Referrals, prosecution window, and employer notification/termination for public employees
A ‘final determination’—after exhaustion of administrative appeals—must be referred to appropriate federal, state, or county law enforcement within 30 days. Prosecution must be initiated within three years of the offense. For individuals employed by governmental units or contractors, the Secretary must also notify the employer within 30 days and the employer must initiate termination proceedings if the employee remains employed; the statute treats a final determination as grounds for immediate termination regardless of other law or collective bargaining terms.
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Who Benefits
- State unemployment trust fund and taxpayers — stronger detection and new collection tools aim to reduce fraud losses and improve solvency by recovering fraud overpayments and deterring future abuse.
- Honest employers — fewer wrongly charged experience‑rated benefits if the Department’s targeted reviews and employer verifications successfully prevent or remove fraudulent claims tied to their accounts.
- Law enforcement and prosecuting agencies — clearer, time‑bounded referral pathways and documented final determinations make investigative and prosecutorial intake more straightforward.
- Program integrity and oversight bodies — required public reporting creates a richer dataset for evaluating fraud prevention efficacy and resource allocation.
Who Bears the Cost
- Claimants lacking easy access to identity documents or stable phone/internet access — the ID upload requirement, phone verification, and paused payments create barriers and risk wrongful or prolonged disqualification for vulnerable applicants.
- Department of Labor — IT and operations will shoulder the cost and complexity of implementing MFA, case review workflows, phone verification staffing, case management for long disqualification periods, and integration with Central Collection and the Comptroller.
- Employers and HR departments — increased phone verifications and potential involvement in investigations will consume staff time; public‑sector employers risk immediate termination obligations and administrative burdens after final determinations.
- Central Collection Unit and Comptroller — expanded responsibilities to process fraud referrals, with associated case intake, dispute handling, and refund withholding logistics.
Key Issues
The Core Tension
The central dilemma is enforcement versus access: the bill amplifies detection and recovery to protect the UI trust fund and deter fraud, but those same measures—MFA, document gates, paused payments, long disqualifications, and tax‑refund offsets—raise the risk that eligible, low‑income, or digitally underserved claimants will face wrongful delays or loss of benefits and that the Department will incur significant operational and legal burdens to administer the new regime.
HB1510 favors aggressive detection and recovery tools but creates implementation and fairness trade‑offs. Mandatory MFA, device/IP checks, and document uploads will reduce automated and opportunistic fraud, but they also add friction for legitimate claimants — particularly those without ready access to scanned documents, stable bank accounts, or reliable phones.
The bill’s phone‑verification requirement assumes employers can be reached and willing to respond quickly; where employers are unreachable or cooperative, reviews may need fallback procedures to avoid unnecessary payment delays.
Using the Central Collection Unit and income‑tax refund withholding for fraud overpayments strengthens recovery options, but it raises due‑process and timing questions for disputed cases: administrative referrals to CCU could lead to tax offsets before judicial or final administrative resolution if procedures are not tightly coordinated. The employer‑notification/termination directive for public‑sector employees treats administrative final determinations as dispositive for employment decisions, which may collide with collective‑bargaining agreements and raise litigation risks.
Finally, increased penalties and 10‑year‑style disqualification mechanics (tied to repayment) will deter fraud but also create incentives for claimants to litigate repayment and appeal processes—producing administrative backlog unless the Department is resourced appropriately.
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