Fraudsters exploiting a change in the application process for the controversial H-1B visa have been shut down by a new rule, federal authorities say.

After U.S. Citizenship and Immigration Services in 2020 imposed a new, two-stage application process for the visa intended for workers with specialized skills, unscrupulous business people colluded to game the lottery-based allocation system, a spokesman for Citizenship and Immigration said.

The new process was meant to slash application costs by letting companies submit initial $10 “registrations” to get prospective foreign workers into the H-1B lottery, instead of paying thousands of dollars in fees and legal costs on a gamble with poor odds — only 85,000 new visas per year are issued, and applications typically number in the hundreds of thousands.

But a flaw in the process became apparent: There was no requirement for companies to submit information such as passport numbers that would identify individual would-be visa recipients. Soon after the new system began, a number of employers started creating new companies and working together to submit multiple registrations for the same workers to up their lottery odds, the agency spokesman said. Registrations skyrocketed from about 275,000 in the first year to nearly 800,000 last year, according to agency data.

“The kind of typical scheme would be a small number of employers forming dozens or more paper companies and registering hundreds if not thousands of workers repeatedly under those same paper companies to try to up the odds of any of those workers getting selected,” said the spokesman.

The perpetrators likely intended to use fraudulently obtained visas to outsource foreign workers to their client companies, the spokesman said.

Citizenship and Immigration launched aggressive investigations last year, and agency officials referred an undisclosed number of suspected perpetrators to law enforcement agencies for possible fraud prosecutions, the spokesman said. The number of final applications submitted to the agency indicated that its public messaging about the fraud crackdown appeared to push many of those who gamed the registration process to abandon their efforts even if they had succeeded in the lottery, he said.

For the registration process earlier this year, Citizenship and Immigration changed the rules to require individually identifying passport or travel-document numbers. The new process appears to have solved the fraud problem, the spokesman said. The number of registrations plunged to about 480,000, a number the agency believes represents largely legitimate applicants and strong demand for the visa.

“All the evidence points to this phenomenon of employers collaborating to beat the odds has basically gone away,” the spokesman said.

The most recent research, by the Bay Area Council, showed nearly 60,000 foreign citizens were approved to work for Bay Area companies under the H-1B in 2019. The businesses targeted for fraud prosecution were not identified by name, so it remains unclear whether any are in the Bay Area.

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