Unemployment Fraud: All too easy. All too scary.
The problem of Unemployment Benefits Fraud is a large-scale scam erupting in the midst of the Coronavirus pandemic. This simple, but difficult to detect scam is perpetrated by imposters who are filing claims for unemployment benefits, using the names and personal information of people who have not filed claims. State and federal officials told NBC News in their report entitled Fraudsters Steal Millions from Unemployment Coffers that over $1 billion in unemployment aid is being threatened by fraud, in schemes ranging from lying about personal income to sophisticated cybercrime. Unfortunately, this amount of fraud is clogging up state systems and slowing efforts of local offices to get money into the right hands during this critical time. Unemployment fraud has become such a problem during the pandemic that some states are experiencing an overwhelming volume. Colorado recently reported that over 75% of claims received in a single month were fraudulent. The reason? It is all too easy, and too profitable. Pennsylvania uncovered a widespread prison inmate scheme, spanning three prison facilities, that was netting ringleaders in excess of $100K each in fraudulent claims. This type of fraud is simple to attempt while being difficult to detect. Informing your employees and account holders about the potential for fraud and what to watch out for can help to address Unemployment Fraud quickly.
Unemployment Fraud: How it Works and How to Fight It.
Across the nation, identity thieves are exploiting the COVID-19 pandemic by committing Unemployment Benefits Fraud, which is filing for and collecting unemployment benefits fraudulently by using the identity of someone still employed. This type of scam is very difficult to detect. Sometimes the employer is the first one to know that a scam has taken place by receiving a notice of an unemployment claim from employees who are still very much employed.
Let’s take a quick look at how this scam works. It is important to know how to react quickly to minimize the damage.
Fraudulent claims of unemployment are rampant. States’ unemployment offices across the nation have been targeted for fraudulent claims of unemployment even before the pandemic began, but the activity level has drastically increased over the last year to the point that it is the number one type of identity theft issue reported. Fraudsters are counting on the fact that the unemployment office is overwhelmed with claims, and the state is trying to minimize the financial impact of the pandemic on suffering citizens by processing the claims more readily than it might in the past. If criminals flood a particular state with bogus claims, pressure mounts to move documents through the process, and that just makes it easier for fraudulent attempts to get approved.
How unemployment fraud works. The identity thief collects the personal information of an individual, along with the individual’s place of employment, through one or more previous data breach incidents. Unfortunately, this is all too easy. The thief files for unemployment benefits in the state of residence of the individual, impersonating the worker. The thief typically requests that the funds be deposited into a bank account set up for this purpose.
Alternatively, claims filed by scammers can result in the issuance of a check or payment card. The thief may succeed in using an alternate mailing address which directs payment to their location. Or if that doesn't work, after the fraudulent claim has been filed the scammer may contact the recipient by phone or email, posing as the state’s unemployment office, instructing the unsuspecting employee to “correct the error” by transferring the funds to them.
This type of unemployment fraud is very difficult to detect. In fact, a worker may not know that they have been a victim of unemployment fraud unless:
Social Media Content
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Post #3 - Unemployment fraud is a simple but difficult to detect crime that has become a widespread problem during the pandemic. Protect your good name by staying vigilant. If you suspect unemployment funds have been requested in your name, we can help. We have professional Identity Theft Recovery Advocates standing by. #YourProtectionPartner