Financial Education Blog

Unemployment fraud: How to tell if you are a victim and ways to report it

Fraudulent unemployment claims have reached dramatic levels during the pandemic. Claims continue to rise across the United States, and Ohio is no exception. According to the Ohio Department of Job and Family Services, over 128,000 claims were filed in March of 2021. Of those 128,000 claims, at least 19,000 have been flagged as possible fraud.

 

Fraudsters are seizing on an opportunity created by the pandemic, and are filing fraudulent unemployment claims in both traditional unemployment and the Pandemic Unemployment Assistance programs. Using data stolen from data breaches, fraudsters make a claim using someone else’s identity to access an increased pool of benefits. States, often overwhelmed with claims, and navigating new rules and using outdated systems, have struggled to keep up. The United States Department of Labor’s Office of Inspector General estimates that more than $63 billion has been paid out improperly through fraud or errors since March 2020.

 

Most victims of unemployment identity theft are unaware that claims have been filed/or that benefits have been collected using their identities. Many people only find out about unemployment identity theft when they receive something in the mail, like a payment or state issued 1099-G tax form that’s incorrect.

 

According to the Department of Labor, you may be a victim of unemployment identity theft if you received:

  • Mail from a government agency about an unemployment claim or payment and you did not recently file for unemployment benefits. This includes unexpected payments or debit cards and could be from any state.
  • A 1099-G tax form reflecting unemployment benefits you weren’t expecting. Box 1 on this form may show unemployment benefits you did not receive or an amount that exceeds your records for the unemployment benefits you did receive. The form may be from a state in which you do not live or did not file for benefits.
  • While you are still employed, you receive a notice from your employer indicating that your employer received a request for information about an unemployment claim in your name.

 If you believe you are a victim of unemployment identity theft, it’s important that you report it. According to the Department of Labor, unemployment identity theft should be reported in the following manners:

 

Report unemployment identity theft to the state where it occurred. Use the State Directory for Reporting Unemployment Identity Theft, to report it to the state.

  • If you received a 1099-G tax form for benefits you didn’t receive, the state will need to issue you a corrected 1099-G tax form and will update the tax record with the IRS on your behalf.

 When you file your income taxes, ONLY include income you actually received. Do not wait to receive a corrected 1099-G to file your taxes.

 

Check your credit report for suspicious activity or unauthorized lines of credit opened. You can request free credit reports every week from each of the three credit bureaus through AnnualCreditReport.com or call 1- 877-322-8228; you will need to provide your name, address, social security number and date of birth to verify your identity.

  • Consider freezing your credit. It’s the best way you can protect against having new accounts opened in your name. Visit the Credit Freezepage on the Federal Trade Commission (FTC) website.

 

Report unemployment identity theft that occurred during the COVID-19 pandemic to the U.S. Department of Justice’s National Center for Disaster Fraud. In addition to reporting with the state, reporting with the National Center for Disaster Fraud helps law enforcement stop future unemployment identity theft. Filing this report with the National Center for Disaster Fraud will also notify the U.S. Department of Labor’s Office of Inspector General, which is the primary agency responsible for investigating unemployment fraud.

 

Information in this article came from the Department of Labor and can be found here, https://www.dol.gov/agencies/eta/UIIDtheft. You can learn more about this topic by visiting the link.

 

Additional sources include:

https://apnews.com/article/personal-taxes-pandemics-coronavirus-pandemic-75be691256e0067cc9bd7c47c23ae338