Job loss due to the pandemic resulted in an unprecedented number of unemployment claims across the country. Unfortunately, some of those claims have been determined to be fraudulent. Cybercriminals don’t miss an opportunity to steal your identity and misrepresent the facts for their financial benefit. What does this mean if it happens to you?
Fraudulent claims hurt everyone. Fraud slows down legitimate claim processing, pays our tax money to ineligible individuals, increases costs to employers, and hurts our overall economy. Some reports indicate that as many as one-third of claims are fraudulent.
Can it Impact You?
Yes, it can! Earlier this year, my husband received a letter from the Idaho Department of Labor regarding an unemployment claim filed in his name. Not only is he employed, but he lives and works in Indiana. These false claims are such a problem that in September of this year, the U.S. Department of Labor provided $100 million in funding to support states investigating fraud and help recover unjustified payments.
How Does This Happen?
One of the most frustrating aspects of fraudulent unemployment claims is that you can’t prevent it from happening. Each state has its own unemployment agency, which handles unemployment claims for its residents. Unfortunately, there isn’t a centralized data base or a method to lock or freeze your employment status, so states process all filed claims.
When states receive unemployment claims, there are typically communications sent to both the employee and former employer. If any of the personal or employer contact information has been changed in the fraudulent filing, you or the employer may not receive notifications for some time.
Depending on the claim’s status and if the cybercriminal was not able to intercept the mailing, you might even receive a debit card that would be used to access the benefits. Do not activate or use the card! Instead, report it.
It’s even possible that a claim filed under your social security number will first be known to you when you receive a Form 1099-G from the government. This is the tax form that is generated to report unemployment compensation for the year. Keep an eye out for these as you gather your tax documents in the spring.
What Do I Do?
Contact the unemployment agency for the state where the claim was filed. This fraud is so rampant that some states have a link right on their website to report fraudulent claims. If you need to call, be prepared to wait or possibly enter a callback number. Unemployment offices are overwhelmed right now, and it may take some time for you to hear back.
Let your employer know. They can be on the lookout and ready to contest any benefit requests and report the claim as fraudulent.
Check your credit. This cannot be overemphasized! If a cybercriminals have enough information about you to think they can claim benefits in your name, they likely won’t stop there. You are entitled to one free report per year from each of the three major credit reporting agencies (TransAmerica, Experian, and Equifax). You can go to www.annualcreditreport.com to start the process. If you see anything unexpected on your report, contact the fraud department for the company named.
Freeze your credit after reviewing your report. When your credit is frozen, no one, not you or a criminal, can open a credit card account or take out a loan in your name. If your credit is not frozen, it’s essentially the same as leaving your front door unlocked every night. Someone is likely to access it at some point, and you won’t find out until the damage is done. In the future, if you need to access your credit, you can contact the credit reporting agency and lift the freeze for a short time while your credit is checked. While this may seem like a hassle, it is much less time consuming than dealing with fraudulent accounts in your name.
Implement a fraud alert. After you are done freezing your credit, you can also request a fraud alert regarding your personal information. Alerts notify the three major credit reporting agencies that someone has gained access to your social security number and other personal information.
File a report at www.identitytheft.gov. Given the uptick in fraudulent claims, there is a button on their main page that says “Unemployment Benefits Identity Theft – Click Here to Report.”
From here, you will answer questions about your situation, and an FTC Identity Theft Report will be generated. Keep this for your records.
Contact your local police to file a report. Share all the supporting documentation you have.
Continue to monitor your credit, financial accounts, and open all of your mail, even if it appears to be junk mail. Identity theft criminals are always crafting new ways to tap into the financial resources of others. That’s not going to change, even with a COVID vaccine. The best we can do is to be proactive to make ourselves unattractive targets.
Sarah Mahaffa is a Senior Wealth Advisor with Bedel Financial Consulting Inc., a wealth management firm located in Indianapolis. For more information, visit their website at www.bedelfinancial.com or email Sarah at firstname.lastname@example.org.