Michigan's Unemployment Benefits Algorithm MiDAS Issued False Fraud Claims to Thousands of People
Curated from incidentdatabase.ai →
Michigan replaced its unemployment fraud adjudication with an automated system in 2013, with no human review of its determinations. Over two years MiDAS accused more than 34,000 people of fraud and applied the statutory penalty, which is four times the amount plus interest, collected through wage garnishment and tax seizure. The state auditor examined a sample in 2016 and found that around 93 percent of the determinations were wrong. People lost homes and entered bankruptcy over debts they did not owe. Michigan settled the class action for 20 million US dollars in October 2022 and budgeted 78 million to replace the system. The design decision that did the damage is a single sentence in a procurement document: the determinations were issued without anybody reading them.
