Unemployment fraud continues to create challenges and potential financial repercussions for employers years after bad actors took advantage of overwhelmed unemployment agencies in the midst of the pandemic. While unemployment fraud has always posed risks to vulnerable individuals, the widely publicized challenges experienced by state unemployment agencies across the United States exposed vulnerable spots in their systems, allowing fraudsters to take advantage and collect billions of dollars in illegitimate benefits.
In March of 2020, the U.S. Department of Labor issued a notification to the state unemployment agencies warning that as a result of the COVID-19 pandemic to expect an increase in the filing of fraudulent unemployment claims using the identities of other individuals. Individuals were taking advantage of the influx of new claims and the urgency to process those claims quickly to sneak in unemployment claims using information obtained from the dark web or prior data breaches. Although certain states were being targeted early in the pandemic, it was extremely likely every state would be vulnerable and would be targeted at some point in time.
As awareness of the fraudulent activity rose, other government agencies became involved in the investigation of unemployment fraud attributable to identity theft. The U.S. Secret Service issued an alert in May of 2020 reporting information was received that indicated a Nigerian fraud ring was exploiting the COVID-19 crisis and was committing large scale fraud against state unemployment insurance programs. The FBI is also involved in the investigation of this activity and issued a press release confirming there has been a spike in fraudulent unemployment claims being filed related to the COVID-19 pandemic that involved the use of stolen personal information. The report indicated stolen identities are being obtained using a variety of techniques that include the online purchase of stolen PII, information available as a result of previous data breaches, computer intrusions, and from public websites and social media accounts, among other methods.
While fraud volume has significantly decreased since its peak during the pandemic, bad actors continue to utilize breached information to infiltrate unemployment systems and fraudulently collect benefits. Therefore, it is still important to understand what actions can be taken when an unemployment claim has been fraudulently filed.
The first step in the process is for Thomas & Company to file a response with the unemployment agency to advise the claim was fraudulently filed using the identity of an active associate. The sooner this information is made known to the state, the quicker they can begin the investigation and stop any potential payments from being issued.
- This should result in the claim being locked and forwarded to the fraud unit for further investigation. We will also monitor your employer’s account to ensure there are no erroneous charges associated with this claim. Please note that filing a claim using the identity of another person is a felony and subject to prosecution
Next, the fraud investigators advised to have associate’s contact the fraud unit directly to report that their identity has been used to file a claim for UI benefits. As a result, we have created a state contact list for the fraud units that includes the various methods that can be used to report that identity theft fraud has occurred with the state agency fraud units.
- The state contact list can be accessed at this link: https://support.thomas-and-company.com/hc/en-us/articles/360059003794.
Finally, the associate impacted should take steps to ensure that they protect their identity from further fraud by taking the following actions.
- Report the UI Fraud through the Federal Trade Commission website (www.ftc.gov/identitytheft), The FTC also has additional information and guidance related to identity theft and recommended actions a victim of identity theft should take.
- Contacting any bank and credit card companies and alert them of the identity theft.
- Communicate with the IRS and compete the form associated with Identity Theft (https://www.irs.gov/identity-theft-central).
- Contact all three of the credit reporting agencies (Equifax, Experian and TransUnion) to place a freeze on your credit report.
For more information about unemployment claim fraud, you can view our knowledge base of additional information.