EDD can't confirm the 30 percent fraud rate, but all that fraud has not only led to your tax dollars being stolen, but it's also caused many legitimate claims to be delayed or even denied. The goal is to stop these claims so help can get to those who truly need it.
RELATED: Why is Bank of America draining EDD bank accounts?
Jon Coss serves as Vice President of Risk Fraud and Compliance at Thomson Reuters.
The EDD confirms it hired the firm recently to help it verify the validity and identity of all claimants.
"There was a hole in the system. Fraudsters exploited it. They communicated through the dark web and then, just you know, they ran through the hole in the dam," said Coss.
RELATED: EDD shuts down 350K accounts for suspected fraud; legitimate workers still left with no money
Coss says there's the mom-and-pop fraud such as what was found in the Los Angeles County city of Torrance. Just weeks ago authorities there confiscated guns along with over 150,000 dollars in cash and 130 EDD benefit cards in the arrests of 27 people.
"They send them to mail boxes or PO boxes or to try to intercept it before it gets to the intended correct person," said Captain Mark Athan of the Torrance Police Department.
But Coss says there's also the more sophisticated crime rings lurking on the internet, with tentacles around the world.
"We've seen fraud rings from the UK, from Nigeria, from Russia and countries and also domestically move in," said Coss.
VIDEO: How investigators caught inmates running EDD scam ring out of jail
He says these rings are literally putting in thousands of claims using disposable email accounts that go to a single inbox, which he says makes defrauding the system much easier.
If you don't know how to do it, there are plenty of how-to guides for sale.
"Essentially the how-to guides will be kind of like a walkthrough. Okay? For whoever is purchasing the guide on which boxes to fill, how you need to fill it, what will be accepted and what won't," said Mara Gibor of the security firm Q6 Cyber.
She showed us an ad she found in the underground. A fire symbol next to California means the state is a hotbed of fraudulent activity.
"Unemployment, backpay, direct deposit and physical card method for sale," the ad reads.
There's another one: "CALI EDD and Unemployment -- new sauce, not old." (Sauce is slang for "hot.")
RELATED: EDD mistakenly takes $10,000 from SF man's account in attempt to fight suspected fraud
Miss Jai Williams is a victim of this fraud. The Fairfield resident says her benefits were frozen numerous times by EDD.
Finally, when she gained access to her account, a hacker drained her card of $3,700.
She says the thieves not only stole her money, they stole her dreams.
"That alone has caused enormous effects on me because that would have sent an amazing foundation for myself. And for me to have that chance taken for me that's not fair. That's not fair and not right," Williams said.
Gibor suspects Williams may have downloaded malware which allowed thieves to steal the password to her EDD account.
"Knowing that those login credentials are harvested, a threat actor can then go and advertise that account for sale," said Gibor.
RELATED: On-again, off-again EDD benefits leaves Bay Area woman in state of confusion
7 On Your Side found several offers to sell numerous EDD benefit cards on the internet.
"EDD cards for sale," read one ad. Another read "EDD debit card needed for sale."
The real victims are people with legitimate unemployment claims.
"I just want to make people aware that these people need help. We need help out here because this is happening," said Williams.
The EDD believes its new anti-fraud system will speed up claims. It currently has nearly 300,000 outstanding claims and is resolving eligibility issues on 164,000 of those claims.
Take a look at more stories and videos by Michael Finney and 7 On Your Side.