Unemployment fraud in the United States has reached dramatic levels during the pandemic—the Labor Department inspector general’s office estimates that more than $63 billion has been paid out improperly through fraud or errors since March 2020.
Criminals are seizing on the opportunity created by the pandemic. Using data stolen from prior data breaches, the criminal makes a claim using someone else’s identity to access an increased pool of benefits. About $550 billion was spent in support of those out of work in 2020, compared with an average of $32 billion in the previous five years. States, often overwhelmed with claims, navigating new rules and using outdated systems, have struggled to keep up.
The problem cuts deep for victims, who can face delays getting their legitimate benefits, are at risk for further fraud and are left to resolve much of the problem themselves.
The Signs
Unfortunately, most people don’t know they are a victim until the damage is done.People typically find out about the problem when they receive benefits-related paperwork in the mail, a call from their employer, or when they try to file a legitimate claim for benefits and are denied. In some cases, a criminal may initiate the false claim but the money itself is sent to the victim’s account or home. The fraudsters may also build on a legitimate claim by requesting further benefits and nabbing those.
Unfortunately, the fraud may have been perpetrated months ago but some people may just be finding out now because of tax season. States are required to mail out a 1099-G form, which reports income from unemployment benefits. People may receive these for benefits they never claimed, sometimes from multiple states. A taxpayer may also discover the issue after they file their federal taxes, only to be alerted later by the IRS that they didn’t report all their income, due to the bogus claim.
“We are nowhere near the end of this particular fraud,” said Eva Velasquez, president and CEO of the Identity Theft Resource Center, a nonprofit that helps victims of identity theft.
Anyone can be a victim, Velasquez said. Retired individuals may find out they are a victim when the Social Security Administration alerts them their benefits are being reduced.
Protect Yourself
Velasquez urges everyone to be alert to any suspicious mail, phone calls, email, or social media requests. These could be attempts to gather personal information or a sign of existing fraud.Take Action
If you are a victim, reach out to your state unemployment office to report the fraud. If there were false claims in multiple states, reach out to each state individually. If you need to make a legitimate benefits claim but have a fraudulent claim made in your name, you need to work with this department. Your claim could be delayed while the matter is sorted out.Contact your employer if they aren’t already aware.
Reach out to each of the three credit reporting agencies—Equifax, Experian, and TransUnion—to put a fraud alert on your account and freeze your credit. Those steps will not prevent unemployment fraud from being committed, but could deter further crime. The fraud alert requires companies to verify your identity before opening new credit in your name. A credit freeze limits access to your credit reports, so that no one can open new credit—even you—until the freeze is lifted.
Emily Snell, president of Allstate Identity Protection, expects to see an increase in crimes linked to unemployment fraud in months ahead.
As such, keep a close eye on your credit reports and financial statements moving forward.
Then continue to practice good digital hygiene: update passwords, use two-factor authentication when possible, and don’t overshare information online or respond to suspicious inquiries.
If you haven’t filed your taxes, do so as soon as possible. It becomes much more difficult to do so if a criminal has filed taxes in your name.
Taxpayers who are identity theft victims should consider getting an IRS Identity Protection PIN, which is a six-digit number that helps to prevent thieves from filing federal tax returns in the names of their victims.