Protect Yourself from Unemployment Fraud

Unemployment FraudIt’s no secret that unemployment claims have skyrocketed since the beginning of the pandemic. With many businesses forced to limit or shut down operations completely, more and more people have been turning to their states’ unemployment benefit programs to help make ends meet. The Coronavirus Aid, Relief, and Economic Security (CARES) Act introduced federal funds in addition to standard state funds to assist workers who became unemployed due to the pandemic. In efforts to expedite payments and processing of claims, many state agencies eased some or all qualifications for individuals to receive funds. Unfortunately, with the influx of additional funds and lifting of some qualifications, the number of fraudulent claims has also been on the rise.

Although there is a multi-agency between the Department of Justice, Department of Labor, the FBI, and state agencies, there have been numerous fraud cases involving cyber scams and identity theft. Claims might be filed using an individual’s personally identifiable information (PII) attained through phishing schemes, data breaches, and other scams. Fraudulent unemployment claims can cause major problems for employees and employers alike. A few examples of unemployment fraud include an estimated theft of $550 to $650 million from Washington state, and at least one month with over 75% of claimes ruled as fraudulent in Colorado. Some organizations who have been forced to downsize their workforce might see fraudulent claims being processed alongside legitimate cases. Individuals may not even be made aware of the fraud until they receive a notice approving unemployment claims that they never filed, or in some cases when the following tax season rolls around and they receive IRS form 1099-G reporting their unemployment compensation.

So, what can employers do to prevent fraudulent claims from being processed? State agencies generally issue notices to employers of claims being filed. The department or person in the organization tasked with handling unemployment claims should be extra vigilant and review these notices with added scrutiny. Common fraud cases include claims for individuals who are still employed. Alerting the staff about the increasing prevalence of these scams and educating employees on ways to protect their PII can be helpful.

If your business does receive notice of a claim that is believed to be fraudulent, there are several actions you can take:

Notify the appropriate state agency and the DOL of the fraudulent claim.

Notify the employee. The employee should also report the issue to the appropriate state agency.

A fraudulent claim may also mean an employee’s PII may be compromised, which can lead to concerns about identity theft. Employees can obtain helpful tips and information from the Federal Trade Commission to address and alleviate concerns.

Although they may seem random, an increased number of fraudulent claims may signal a bigger issue within the organization. With remote work and bring your own device (BYOD) policies becoming more common, it’s more important than ever to ensure sufficient controls are in place to protect company and employee data. Work with your IT department to institute safe practices and minimize the risks of data being compromised by utilizing tools such as virtual private networks (VPNs) and multi-factor authentication (MFA) to protect against unauthorized access.