As if this past year of confinement and disruption wasn’t bad enough—from quarantining, home schooling and mask-wearing to suffering reduced income—adding insult to injury, there are now millions that have to deal with another concern: unemployment fraud.
So what exactly is unemployment fraud?
Unemployment fraud occurs when a person knowingly and willingly uses misrepresentation, lying, or deceit to collect unemployment insurance benefits. Unfortunately, there are endless ways to steal your money and identity, and fraudsters are experts at doing this especially when opportunity arises. In fact, fraudulent unemployment claims can originate from both employers and claimants.
Employer-committed fraud can include avoiding tax liability or establishing a fictitious employer account to enable fraudulent claims against an account.
Claimant fraud can be committed by someone submitting false information, continuing to collect benefits when no longer eligible, or failing to report wages or income while collecting full benefits. When scammers claim unemployment benefits in someone’s name, they are either getting to the money before the victim has a chance to, or are filing on behalf of people who haven’t actually lost their jobs.
Consider this: Coronavirus-related unemployment fraud has spread to all 50 states. This surge in fraud comes at a time when many states are struggling to keep up with the volume of claims because of the pandemic economy. Many had prepared for low-level fraud, but not the volume that has occurred in the last year.
Cybersecurity reporter Brian Krebs spoke with a federal fraud investigator (on the condition of anonymity) who remarked that many states simply don’t have enough controls in place to detect patterns that might help screen out fraudulent unemployment applications. The funding just isn’t there, and this is costing states and our country billions.
How the fraudsters work
One of the most notable scams in the last year or so has originated from Nigeria, costing out-of-work Americans $36 billion in lost funds. An anonymous member of the scam network spoke to an independent security company, and explained how he and others compile lists of real people, and then turn to databases of hacked personal information for date of birth and social security number. From there, they search FamilyTreeNow and TruthFinder to get your mother’s maiden name, where you were born, and your high school mascot (doesn’t this sound like security questions we’ve all completed?).
After they have that information, the fraudster said, “It’s easy money.” “Any guilt for ripping off Americans?” the interviewer asked. The scammer replied, “Not really.” He and most of his friends rip off Americans as a side gig for extra money.
The Secret Service has alerted field offices to be aware of fraud networks, sometimes involving “mules” who are unwitting individuals recruited to help launder money. Some of these people are often victims of online romance scams or are out of work and looking for income. No matter how they are recruited, the bulk of the laundered funds are forwarded to the perpetrators.
What to do if I think I’ve been scammed?
If you suspect you are a victim of unemployment fraud, or want to take steps to prevent it, here are some security tips:
- Be wary of telephone calls, text messages, letters, websites or emails that require you to provide your personal information or other sensitive information.
- Monitor your bank accounts regularly and immediately report unauthorized transactions.
- Be aware of methods used to obtain personally identifiable information and how to combat them by following security tips.
- If you’ve experienced unemployment benefit fraud, it could mean your personal information has been exposed and is being used in other ways. If you suspect you are a victim, immediately contact the three major credit bureaus (Equifax, Experian, and TransUnion) to place a fraud alert on your credit reports and consider placing a freeze on them if you are not in the process of applying for a loan. Additionally, notify the Internal Revenue Service by filing an Identity Theft Affidavit (IRS Form 14039) through irs.gov or identitytheft.gov.
- Call the local police agency where you live to report the fraud.
Be on the lookout for the following suspicious activities:
- Receiving communications regarding unemployment insurance forms when you have not applied for unemployment benefits.
- Unauthorized transactions on your bank or credit card statements.
- Unsolicited inquiries related to unemployment benefits.
Additionally, if you believe that your information has been used to fraudulently file an unemployment insurance claim, please contact your local unemployment agency. If you suspect fraud as you are applying, the agency will be notified. If you employer notifies you of a fraudulent claim, contact the Human Resources department to assist you with pursuing the false claim but be sure to also notify the unemployment agency yourself.
Resources: KrebsOnSecurity, USA Today, IRS.gov, Dol.gov, Experian