FRAUDULENT UNEMPLOYMENT INSURANCE CLAIMS SPIKE
ISSUE 100 | VOLUME 4 | APRIL 2021
Each State has Different Requirements and Time Frames for Reporting
The FBI has seen a spike in fraudulent unemployment insurance claims complaints related to the ongoing COVID-19 pandemic involving the use of stolen personally identifiable information (PII).
Because of this, the U.S. Department of Labor (DOL) has reminded employers of their obligations related to unemployment insurance. Companies may be committing fraud if they take certain actions to avoid tax liability or enable fraudulent claims against their accounts. The DOL also called attention to employers’ obligations to report any potential unemployment fraud. Each state has different requirements and time frames for reporting. As an example, employers in California have 10 days from the mailing date of the notice to file an objection.
Employers need to familiarize themselves with their obligations under the applicable state and federal laws. They should also report any fraudulent activity of which they become aware.
Many people have been victimized by criminals impersonating them using their stolen identities to submit fraudulent unemployment insurance claims online. The criminals obtain their victims’ information using a variety of techniques, including buying stolen PII, previous data breaches, computer intrusions, cold-calling victims while impersonating someone else, email phishing schemes, physical theft of data from individuals or third parties, and from public websites and social media accounts. Criminal actors will use third parties or persuade individuals who are victims of other scams or frauds to transfer funds to accounts they control.
According to several reports:
- Georgia found more than 130,000 false claims filed in July.
- Illinois identified more than 120,000 counts of unemployment insurance fraud in August.
- Maryland announced 47,000 fraudulent claims had been uncovered in early July.
What Can Employers Do?
According to the Society of Human Resource Management, employers should inform employees of the spike in this type of fraud and educate them on how to protect personal information. Human resource professionals should be on alert and review any notices from the state unemployment administrator with heightened scrutiny.
Employers tend to be the first to learn of these scams when an unemployment notice is received regarding an existing employee. In some instances, CEOs and upper management have shown up on unemployment notices received by employers. If you encounter such an issue:
- Notify the appropriate state unemployment administrator. Many states now have forms for reporting this type of fraud and most have a hotline to call. The DOL has compiled a list of those hotline numbers.
- Notify the DOL. You can use this form.
- Notify the employee. Inform the affected employee that his or her personal information has likely been compromised.
- Instruct that employee. Have the employee file a police report and report the issue to the state unemployment administrator and to the DOL.
- Assist the employee. You can also provide information regarding resources for addressing identity theft. The Federal Trade Commission has a helpful website.
What Can Employees Do?
If you believe you have been a victim of identity theft related to fraudulent unemployment insurance claims, report the fraud to law enforcement, state unemployment insurance agencies, the IRS, credit bureaus and your employer’s human resources department. The FBI encourages victims to report any fraudulent or suspicious activities to the Internet Crime Complaint Center at ic3.gov.
Many victims of identity theft related to unemployment insurance claims do not know they have been targeted until they try to file for unemployment insurance benefits themselves, receive a notification from the state unemployment insurance agency, receive an IRS Form 1099-G showing the benefits collected from unemployment insurance or get notified by their employer that a claim has been filed while the victim is still employed.
The FBI advises the public to 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 related to unemployment benefits.
- Any fees involved in filing or qualifying for unemployment insurance.
- Unsolicited inquiries related to unemployment benefits.
- Fictitious websites and social media pages mimicking those of government agencies.
Tips to Protect Yourself
- Be wary of telephone calls and text messages, letters, websites or emails that require you to provide your personal information or other sensitive data, especially birth dates and Social Security numbers. Be cautious with attachments and embedded links within emails, especially from an unknown email sender.
- Make yourself aware of methods fraudsters are using to obtain PII and how to combat them by following security tips issued by the Cybersecurity and Infrastructure Security Agency, including:
- Monitor your bank accounts on a regular basis and request your credit report at least once a year to look for any fraudulent activity. If you believe you are a victim, review your credit report more frequently.
- Immediately report unauthorized transactions to your financial institution or credit card provider.
- If you suspect you are a victim, immediately contact the three major credit bureaus to place a fraud alert on your credit records. Additionally, notify the Internal Revenue Service by filing an Identity Theft Affidavit (IRS Form 14039) through irs.gov or identitytheft.gov.