CEO of LegalShield and IDShield, protecting and empowering people through legal plans and privacy management solutions.
Picture this: you open your mailbox to find a letter from a state agency containing details about your recent unemployment insurance claim or a 1099-G tax form showing the benefits you received the previous year.
The trouble is, you never filed for unemployment. Someone used your name, Social Security number, address and date of birth to obtain thousands of dollars in fraudulent unemployment benefits. Now what? How do you begin to untangle this mess? What can you do to report the crime, amend your financial records and protect yourself in the future?
This really happened to an IDShield member last year, and sadly, she is far from alone. Our company provides identity theft protection, monitoring and restoration, and we have seen an alarming uptick in unemployment fraud cases since last spring. It’s devastating to see people who are already at their most vulnerable — worrying about their health and finances in the middle of a pandemic — being forced to spend their limited time and resources on fixing yet another stressful problem.
In the past year, millions of Americans have filed for unemployment benefits. Some had recently been furloughed or laid off; others were struggling to make ends meet with part-time or gig economy work. But instead of the benefits they were counting on, many applicants received more bad news: someone had already filed a false claim in their name. How would you feel if, as a result of this violation, you received a tax bill for benefits you never received? And adding insult to injury, now you had to argue with the IRS (no one’s idea of a low-stress endeavor)?
Unemployment fraud is a growing crisis that harms individuals and our society at large. Left unchecked, it undermines government credibility, adds to the national debt, depletes government resources and disrupts citizens’ lives, all factors that increase stress and lower economic productivity. Here’s what you need to know about the dangers of unemployment fraud, how to take proactive steps to protect yourself and what to do if you’re a victim.
Why Unemployment Fraud Is Increasing
Unemployment benefits fraud became widespread in 2020, as criminals targeted new government programs designed to give assistance to record numbers of people out of work during the pandemic. A prime target has been the Pandemic Unemployment Assistance (PUA) program, which was created to provide temporary relief as part of the federal CARES Act. Scammers are enticed by the prospect of cashing in on thousands of dollars of unemployment benefits, and they often succeed due to system glitches and security flaws in the overwhelmed state-run agencies that distribute the payments.
Unemployment programs have delivered more than $650 billion to Americans in the last year, but at least $63 billion was dispersed improperly, much of it caused by fraud, according to February 2021 data from the U.S. Department of Labor’s Office of the Inspector General. Some unemployment fraud victims uncover the crime when they go to apply for benefits, but many others are only realizing what happened now as they prepare to file their taxes. They may get a letter out of the blue from the IRS or a state agency, detailing unemployment benefits they supposedly applied for and received last year — possibly with a significant, unexpected tax bill.
A tough but important lesson we’ve learned while assisting members with unemployment fraud claims is that the burden falls heavily on the shoulders of individual victims. If you are the victim of unemployment fraud, the government doesn’t allow you to enlist the services of a company or a private investigator to gather evidence of a false claim and resolve it on your behalf. You must act as your own representative and advocate to clean up the mess. We can provide support, advice and consultation to walk our members through the process, step by step, but it still requires months of active participation and many different forms to clear up a case.
Five Ways To Protect Yourself From Unemployment Fraud
I believe there is an opportunity for reform here to ease the stress experienced by victims, but in the meantime, it’s important to know how to protect yourself. It is well worth your time and effort to take preemptive action to avoid being a victim of unemployment fraud. Here are a few small steps that will make a big difference:
• Create an account at www.ssa.gov (Social Security Administration), where you can review your earnings statement. Look for errors or discrepancies that might indicate someone reporting fraudulent income.
• Never provide personally identifiable information (PII) — such as your birthdate, Social Security number or mailing address — to an unknown source via email, text message, phone call or website. Be vigilant about not clicking links or downloading attachments in emails from unfamiliar senders.
• Monitor your credit card and bank accounts regularly for fraudulent activity, and report unauthorized transactions immediately.
• At least once a year, check copies of your credit report from each of the three major credit bureaus (Transunion, Equifax and Experian). If you find inaccuracies, request a credit or security freeze to prevent anyone from opening new accounts in your name. If your credit reports are accurate, set a fraud alert for each report.
What To Do If You’re A Victim Of Unemployment Fraud
If you find that someone has filed a false unemployment claim in your name, report it right away by filing an Identity Theft Affidavit (IRS Form 14039) at identitytheft.gov. If you did file for unemployment benefits but were denied because of a false claim, contact the benefits agency and explain your situation. Provide as much information as possible, and ask them what else they need to resolve the issue.
The unemployment system will unfortunately remain a target for scammers for the foreseeable future. Put security measures in place now to protect yourself from potential harm. Just like locking your doors and having home insurance, your unique identity is your responsibility to protect.