Unemployment insurance fraud: Are you prepared for the COVID spike?
How you can protect employees and the company from pandemic scammers
The COVID-19 pandemic is doing more than robbing people of their health and freedom to live normal lives — it’s also stealing unemployment insurance payments.
The increase in unemployment filings across the country has created a potentially rich vein for scammers to mine. Large-scale scams have reared their heads, with hundreds of millions of dollars already lost to false applications. This causes lengthy, confusing reviews while the scammers disappear inside the unprecedented torrent of benefits requests and questions.
More than 40 million workers have filed for unemployment benefits since the pandemic began. That’s more than seven times as many requests as in all of 2019. The influx of claims has provided cover for identity thieves whose fake applications could wind up costing up to $26 billion in lost insurance payments nationwide.
The damage to furloughed employees and their families can be devastating. But these scams may also affect current employees because the identity theft can — and probably will — extend beyond the UI fraud scams. Many victims won’t even know they’ve been targeted until they try to file for unemployment insurance benefits.
Many state governments are putting their UI programs under tough scrutiny, which is good from the standpoint of ensuring that the claims and payments are authentic. But it can also mean that many people will not be receiving payments they deserve when they need them, often causing serious financial and emotional damage.
How employees can spot malicious activity
Employers may discover fraud if they receive multiple claims in the same day or week for employees who have not worked for the business for a long time, or for current employees. But how can employees know? Here are a few important ways employees can become aware:
They receive communications regarding unemployment insurance forms when the employee has not applied for unemployment benefits
They discover unauthorized transactions on bank or credit card statements related to unemployment benefits
They get unsolicited inquires related to unemployment benefits
They are directed to fictitious websites or social media pages that appear to be government agencies
They get requests for Form W-2s. Scammers will pose as an Executive, Payroll or Accounting department employee saying they can’t access the information because their remote access is temporarily disconnected.
What employees can do to protect themselves after their account is breached
First rule of thumb — act quickly. If an employee believes she or he has been targeted for identity theft, they should inform both their employer and the state unemployment benefits office. (With the state office, it’s best to report the fraud online. It saves time and is far easier for the agency to process. Then keep accurate records including who they spoke with and when.)
Immediately report any suspicious transactions to bank or credit card companies.
Review credit reports as soon as possible from all three credit reporting bureaus — Equifax, Experian and TransUnion. Freeze credit files, which will prevent fraudsters from opening new credit-related accounts in the employee’s name.
Use a new email address for financial and government transactions.
Be on high alert for other fraud. If criminals have enough information to file an unemployment claim, they could try to apply for other benefits — or even try to file a tax return to collect a refund.
File a complaint at the National Center for Disaster Fraud.
Assume that phone calls and text messages, letters, or emails that ask for personal information such as birth dates and Social Security numbers are more than likely scams.
Don’t open attachments or click on embedded links within emails where the email sender is either unrecognized or appears suspicious.
The employee shouldn’t respond to any calls, emails, or text messages telling them to wire money, send cash, or put money on gift cards.
Scammed payments sometimes are accidently sent to the employee’s account. The scammers will probably call, text, or email pretending to be the state unemployment agency. They will say the money was sent by mistake and ask for its return. But a state agency will never request repayment that way.
If the employee receives benefits that were never applied for, they should report it to the state unemployment agency.
What if an employee’s unemployment insurance account is flagged?
Reviews of suspected fraudulent activity are inevitable, but can cause frustratingly long delays. A delay shouldn’t keep employees from collecting what they’re owed. If an employee returns to work before getting benefits they were eligible to receive, they are still entitled to that money.
How an employee can avoid the problem in the first place
Employees can create online benefits accounts through the state even if they are currently employed and don’t need to file a claim. This makes it far more difficult for scammers to create a new account with an employee’s information — and if they try, their behavior is more likely to be detected.
Direct employees to websites at the U.S. Department of Labor and The Federal Trade Commission for more resources and information about identity theft, including unemployment insurance fraud.
