by Jacob van Cleef, Consumer Watchdog Associate
March 2, 2021
Fraudulent unemployment claims have been on the rise during the pandemic. Scammers received more than $36 billion by fraudulently claiming unemployment benefits last year, with millions of cases of fraud suspected. State governments recovered some of that money, but the fraudulent claims are a large enough problem that state governments are trying to counteract the scammers’ methods, and that could affect legitimate claims.
Scammers from all over the world can buy enough information about people online from criminal enterprises that traffic in data obtained through breaches and other sources.
Though slow to act, states began trying to combat fraud in the summer of 2020. The federal government last fall announced $100 million to help states combat fraud and recoup unemployment payments made improperly. Changes adopted by states include fraud detection software and two-factor authentication, which may be of little value if you’ve never filed for unemployment before and have no contact information, so a new user can create a profile for you. Among the states that have tightened enrollment to combat fraud are Colorado and Washington.
These changes can lead to some genuine claims being flagged as fraudulent. So if you become unemployed, file for benefits as soon as possible because a fraudulent claim in your name will not go through if you’ve already filed. If you have a legitimate claim that is flagged as fraud, contact the unemployment office in your state by phone or your online account.
Scammers make most fraudulent unemployment claims in the names of people currently employed. There is not much employed people can do to stop the unemployment fraud besides not giving out personal information unnecessarily. The scammers already have access to many people’s information such as Social Security numbers and birthdates due to breaches in years past, and that’s usually all they need. For the roughly 150 million people whose credit files were hacked in the Equifax data breach in 2017, the information obtained and probably sold as part of crime rings would include name, address, phone number, date of birth, Social Security number and employment history.
Most of what the average person can do will come after the fraudulent unemployment claim has been filed. People usually find out that a claim was filed in their name when unemployment cards or letters are sent to their homes. Some people have just been alerted in recent weeks when they get a 1099 tax form from the state that benefits were paid out last year.
Here is what you should do if a fraudulent unemployment claim is filed in your name:
Let your employer know what is happening:
If you get a notice of an erroneous unemployment claim in your name, you should contact your employer as soon as possible. In most cases, though, employers find out first, through lists sent by the state of submitted claims. Conscientious human resource departments should notice your name on the list and realize you still work there. If your employer confronts you, inform them that you didn’t file for unemployment and ask your employer to challenge the claim before it goes through.
Inform the state government that you want to fight the claim:
People usually find out about a claim after it has gone through. Notify the state department in charge of unemployment benefits as soon as possible. The state may assume you tried to get unemployment benefits while being employed if you do not notify the state of the fraud. Fighting against the fraud claim after it has gone through can take months, but it is important to not have a fraudulent claim in your name or else you could be expected to repay it if it’s not resolved.
Notify the Social Security Administration:
If someone filed for unemployment in your name, they have your social Security number. That is extremely dangerous in someone else’s hands, so the Inspector General of the Social Security Administration should be notified.
Follow Internal Revenue Service guidance if you get a 1099:
Taxpayers who get a Form 1099-G for 2020 unemployment benefits they did not receive should file an income tax return without that compensation and follow IRS tips outlined here: Identity Theft and Unemployment Benefits.
Consider you could see a broader attack on your identity. If someone has filed for unemployment in your name, they have your personal information -- probably lots of it. You need to be extra cautious and paranoid for a while.
- Watch out for suspicious emails, phone calls or text messages that try to trick you into disclosing personal information, based on already having some information about you. Just because someone tells you the last four digits of your Social Security number or your date of birth doesn’t mean they’re legit. Heck, it wouldn’t be surprising for a con-artist involved in a fraudulent unemployment claim in your name to call or email or text you posing as the state unemployment office.
Remember that banks, government officials and investigators will never contact you out of sky blue and ask for personal information such as account numbers, Social Security numbers, passwords, etc. Never. Ever. And they'll never contact you by email or text and ask you to change your password by clicking on an unknown link. Don't click on links or reply with any information. Never. Ever.
Since you know your identity is under attack, contact your banks and investment accounts first, then credit cards and other types of financial accounts. Tell them you’re a victim of identity theft and that a fraudulent unemployment claim, which required your SSN, was filed in your name. Don’t tell them the details. They don’t care. Ask whether you can put additional verbal passwords on your accounts that don't involve any public records data. We're talking about PINs or random words (like apricot or airplane). You want to make sure someone can't access your accounts for wire transfers or to change your contact information without your secret password.
Monitor your primary bank accounts, credit cards, investments, etc., more carefully than ever. Every week is good. Every day is better.
If you haven’t frozen your files with the three credit bureaus, Equifax, TransUnion and Experian, now is definitely the time. This will protect you from not only from someone opening credit cards or applying for loans in your name, but it will also prevent someone from accessing your information online from the IRS or creating a Social Security account and siphoning your Social Security benefits.
If you want to do a credit freeze, you'll have to contact each of them individually:
Equifax: Call 1-800-685-1111 or go to myequifax.com
TransUnion: Call 1-888-909-8872 or go to https://freeze.transunion.com
Experian: Call 1-888-397-3742 or https://www.experian.com/freeze/center.html
Remember, though, that credit freezes won't help prevent fraud on existing accounts, which constitutes 88 percent of identity theft. That’s why it’s important to monitor existing accounts.
Consider paying for identity theft monitoring. You're looking for the kind that can alert you to any underground use of your Social Security number, credit card numbers, driver's license number or email.
Watch out for anything odd -- a medical explanation of benefits for a service you didn't have or from a provider you don't recognize, a rejection letter for an account you didn't apply for, a missing credit card statement that is more than a few days late. These could be signs of deeper identity theft.
Check your credit reports now, if you haven’t done it recently. Through April, you’re entitled to a free copy of your credit report from each of the three major credit bureaus once a week. (Yes, once a week. It’s part of last year’s CARES Act.) In normal times, you're entitled to one free credit report per year from each of the three major bureaus. Go to annualcreditreport.com or call 1-877-322-8228. Or you can fill out a paper request and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, Georgia 30348-5281. You'll be asked to provide your name, address, Social Security number, date of birth and which bureau you want a report from (Equifax, TransUnion or Experian). Don’t just google free credit report. You could end up on a scam site.
Put every type of protection you can on your financial accounts. If you can require codes to be sent to your phone in order for you to log in, do it. If you can request email or text alerts for purchases or bank account withdrawals or changes to your contact information, then do it. While you're at it, make sure that companies you do business with have all of your current contact information in their files.
Check whether you need to change any information on accounts that use secret questions for password recovery. Don't use secret questions that other people know the answers to. There are lots of people who know your high school mascot. It's probably easy to figure out from your Facebook page or among anyone you knew in high school. Don't use the name of the street you lived on as a child. Or your pet's name. Tons of people know the name of your dog, cat or guinea pig.
Be more cautious about anything you post on social media -- Facebook, Twitter, Instagram, etc. You can provide thieves with a lot of information without meaning to. This is especially troubling if you tag your best friend and or post photos of your dog online, and then use that information as the answers for security questions for bank accounts.
And remember that even if your social media accounts are accessible only to friends or family, the information is still on some company's database and can be accessed or sold.