Identity check contractor fires dozens on fraud team as Congress probes

FILE PHOTO: A visitor uses a crosswalk near the Longworth House Office Building on Capitol Hill in Washington

By Paresh Dave

OAKLAND, Calif. (Reuters) -A major U.S. government contractor of identity verification technology that is under investigation by Congress has fired 39 employees over the past week for inappropriate communications, the company told Reuters.

The company,, gutted about half of its fraud review team but said the firings were unrelated to a probe U.S. lawmakers opened last week over "serious concerns" about the efficacy, privacy and security of its technology, including facial recognition.

About two dozen U.S. states and 10 federal agencies, including the Internal Revenue Service (IRS), contract with to catch scammers attempting to siphon off benefits such as unemployment insurance and tax refunds using fake or stolen identities.

Processing waits have been a major challenge for the Tysons, Virginia, startup during the coronavirus pandemic, and U.S. lawmakers said this month that "delays have blocked access to essential government services and benefits." said that some customer support staff were separated from the company "for inappropriate internal communications" that showed disrespect for colleagues and that it would add training and procedures.

Five fired employees told Reuters that the fraud team had shared jokes, sought advice and discussed frustrations on an internal messaging group chat. For example, workers posted a rat emoji to alert colleagues when managers approached patrolling for personal cellphone use or other security violations, two people said.

The job cuts include about half of a 70-person team that reviews users locked out due to suspected fraud or other issues, the workers said. The sources, speaking anonymously, said their exit from had left their remaining colleagues with sharply higher caseloads that they believed would slow response times. told Reuters that the cuts would not significantly affect operations because it was moving other workers into the fraud division and the workload had decreased after the mid-April U.S. tax filing deadline.

The company, which employs about 1,400 people, was valued at $1.5 billion in a fundraising last year by Alphabet Inc's CapitalG and other funds.

While some clients praise its work,'s use of facial recognition software to verify people, along with other issues, have led to a public campaign by rights activists urging the government to abandon it. has said it has stopped fraud in an unprecedented way and that most users' waiting times have been under 30 minutes for the last several months.

Fired employees said they were concerned that did not first issue warnings. It has offered fired workers a month of pay and three months of healthcare if they agree not to bring legal action or speak about the deal, according to a severance agreement seen by Reuters. said that it had no tolerance for disrespectful discussion but declined to comment on the package.

(Reporting by Paresh Dave; Editing by Howard Goller)