The Covid-19 pandemic has caused the highest unemployment rates since the Great Depression, and created an opportunity for scammers to steal unemployment benefits. What may surprise you is that you don’t have to be unemployed to fall victim to unemployment fraud.
According to the FBI, many unemployment insurance victims do not know they have been affected until they file for unemployment insurance benefits—and some may not know until tax season rolls around.
You might find out you’ve been scammed when you receive an IRS Form 1099-G, a tax form that reports your unemployment compensation for the year—despite never having made a claim.
Or you may be notified by your employer that an unemployment claim has been filed while you’re still employed.
Some of the benefits fraud schemes were linked to a Nigerian-based criminal ring called Scattered Canary. The ring used stolen Social Security numbers and other identity theft information, and was suspected of operating in North Carolina, Massachusetts, Rhode Island, Oklahoma, Wyoming and Florida.
How The Federal Government Is Responding
The U.S. Department of Labor stepped in on Sept. 1, and directed $100 million in funding to combat unemployment fraud across the country. These funds will be used for fraud investigations and to build new identity verification tools to prevent future fraud.
It’s unclear exactly how many people have been affected by skyrocketing unemployment fraud during the pandemic as the Federal Trade Commission (FTC) is still investigating, but the FTC estimates it is affecting “tens of thousands of people” and an estimated $26 billion in payments may fall in the hands of fraudsters.
If your unemployment benefits are stolen, you will not be held liable for those lost funds, and pending an investigation by your state unemployment agency, your unemployment funds will be replenished. Unfortunately, this is not a quick process. An unemployment fraud investigation can take anywhere from several weeks to several months and backlogs of unemployment claims are mounting across the country. This results in delayed benefits to those most in need.
If you’re still working, your unemployment benefits will not disappear if you need them in the future. However, you will most likely deal with issues to clear your name of any fraud before receiving your benefits.
What To Do If You’re A Victim Of Unemployment Benefit Fraud
The situation can create a huge headache for anyone attempting to claim much needed unemployment benefits. The good news is that you will not lose out on any benefits—but the bad news is it can cause major delays if you are claiming benefits now or in the future.
If you discover you have been a victim of unemployment fraud, here are a few steps to begin rectifying the situation.
- Report Unemployment Insurance Fraud To Your Employer And State Unemployment Agency
The first step is to contact your unemployment agency to inform them your unemployment benefits have been compromised. Each state has either a phone number and/or online platform to submit claims. - File A Report With The Federal Trade Commission
File a complaint with the FTC online at identitytheft.gov or call 877-ID-THEFT. They can assist with implementing fraud prevention tools, including placing a fraud alert on your credit, pulling credit reports, and closing any fraudulent accounts opened in your name. - Contact The Three Major Credit Bureaus
If someone is claiming your unemployment benefits, it is very likely they have your Social Security Number. To minimize the damage they can impose on your financial health, it is best to contact the three credit bureaus (Equifax, Experian and TransUnion) to freeze your credit reports. You can do this over the phone, or online. The bureaus legally must freeze, and unfreeze, your credit reports for free.
Once your reports are frozen, anyone who tries to open an account in your name should be thwarted. But remember: If you want to apply for a loan, or credit card, you need to unfreeze your reports first.
4: Finally, you should file a police report with your local police department.
This is the final and very important step. The official police report with be the document you may need to have when working on getting back control of your identity.
