Fifty-fifth Legislature

First Regular Session

House: HHS DPA 8-1-0-0

HB 2397: unemployment insurance; fraud prevention

Sponsor:  Representative Cobb, LD 5

House Engrossed


Outlines requirements for the Arizona Department of Economic Security (DES) to enhance the integrity of Arizona’s Unemployment Insurance Program (UI Program).


The UI Program is administered by DES to provide security to an individual worker when unemployment occurs beyond the worker’s control. Monetary eligibility for UI benefits is based on the unemployed worker’s insured wages paid during a one-year period. The statutory maximum weekly UI benefit in Arizona is $240. (A.R.S. § 23-779)

According to DES, there has been a significant surge in UI benefit fraud, largely associated with identity theft. Phishing scams, previous corporate data breaches and other tactics are currently being used by fraudsters to collect information from individuals and file for UI and Pandemic Unemployment Assistance benefits.


1.   ☐ Prop 105 (45 votes)	     ☐ Prop 108 (40 votes)      ☐ Emergency (40 votes)	☐ Fiscal NoteRequires DES, in order to enhance the integrity of Arizona’s UI Program, to perform the following on a weekly basis:

a)   Use a database that provides cross-matching functions for the prevention and detection of fraud to verify the integrity of Arizona's unemployment insurance rolls;

b)   Check the unemployment insurance rolls against the state department of corrections list of incarcerated individuals to verify eligibility; and

c)   Check new hire records against the national directory of new hires to verify eligibility. (Sec. 1)

2.   Requires the integrity data hub to meet both of the following:

a)   Be designed by the leading unemployment insurance experts at an unemployment insurance integrity center that provides information on the prevention, detection and recovery of improper payments, fraud and delinquent employer contributions; and

b)   Provide critical cross-matching functionality to combat the challenges and urgencies of unemployment insurance fraud. (Sec. 1)

3.   Permits DES to execute a memorandum of understanding with any department, agency or division for any information required to be shared between agencies. (Sec. 1)  

4.   Instructs DES to review the case of an individual enrolled in the UI Program upon the receipt of any information indicating a change in circumstances that may affect eligibility. (Sec. 1)

5.   Requires DHS to do the following:

a)   Adopt and implement internal administrative policies to recover improper overpayments of benefits to the fullest extent possible; and

b)   Recover improper benefit overpayments unless doing so would violate existing law. (Sec. 1)

6.   Directs DHS to submit a report to the Governor, Legislature and provide a copy to the Secretary of State that includes:

a)   The type and amount of improper overpayments detected retroactively;

b)   The type and amount of improper payments prevented;

c)   Monies saved in preventing improper overpayments and, if any, in recouping improper overpayments; and

d)   An explanation for the nonrecovery of overpayments, including the application of any allowable recovery exceptions. (Sec. 1)

7.   Allows DES to adopt any rules necessary for purposes of carrying out the above-mentioned provisions. (Sec. 1)

8.   Defines new hire records and unemployment insurance rolls. (Sec. 1)

9.   Contains a delayed effective date of January 1, 2022. (Sec. 2)



12.  ---------- DOCUMENT FOOTER ---------

13.                    HB 2397

14.  Initials EB/SF        Page 0 House Engrossed


16.  ---------- DOCUMENT FOOTER ---------