UI Fraud Executive Summary

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. We want to assure you that there has not been a data breach at Thomas & Company.

 

Thomas & Company identified an increase in this type of activity in the states mentioned in the alert, and as indicated, it has spread to other state agencies as the pandemic continues. Since the problem first began, we have had the opportunity to talk to numerous state unemployment fraud investigators, FBI agents, Special Agents with the U.S. Department of Labor and representatives with the Attorney General’s office in several states.  Our objective was to determine what actions can be taken when we are advised an unemployment claim has been fraudulently filed using the identity of one of our clients associates. 

 

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. 

Finally, the associate impacted should take steps to ensure that they protect their identity from further fraud by taking the following actions. 

  1. 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. 
  2. Contacting any bank and credit card companies and alert them of the identity theft.
  3. Communicate with the IRS and compete the form associated with Identity Theft (https://www.irs.gov/identity-theft-central).
  4. 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 webinar at the following link: https://support.thomas-and-company.com/hc/en-us/articles/1500000525342