Unemployment Identity Theft

Unemployment Fraud is on the rise across the country and it’s been said that we should expect to see an increase in these types of crimes in the months ahead.  This is a form of identity theft and it’s important to be aware of the warning signs and ways to protect yourself and your employees if you are a business owner.  Below offers some guidance should you encounter this situation, however, the best resource for guidance is your state’s Department of Labor.

How do I know if I’m a victim of unemployment fraud?

  • You could receive a notice in the mail from a government agency about an unemployment claim or payment.
  • You might receive a 1099-G tax form reflecting unemployment benefits you were not expecting or may never have received. This form itself could be from a state in which you do not live.
  • Your employer could receive a notice that you’ve requested unemployment benefits. In this case, they would alert you of the claim.
  • You might receive solicitations from people/companies you don’t know promising earlier and faster unemployment benefits, indicating new accounts, offering money in exchange for personal information, or letting you know that an unemployment benefits claim has been made in your name.

What to do if you were a victim of unemployment fraud:

  • Contact your state unemployment office to report the fraud. If there were false claims made in multiple states, reach out to each state individually.
  • Contact your employer if they are not already aware. More often than not, employers receive the unemployment request before the victim receives the notice in the mail.
  • The Department of Labor also recommends the following:
    • File a complaint with the FTC online at IdentityTheft.gov.
    • File a police report. Request a copy to submit to your creditors as proof of a crime if necessary.
    • Place a fraud alert on your credit reports and monitor your credit. It’s suggested to do this with each of the three credit reporting agencies – Equifax, Experian, and TransUnion.  This can deter further crime and would require companies to verify your identity before opening new credit in your name.
    • Check any accounts that were opened without your permission, and close any accounts that you feel may have been tampered with.
    • Request your free credit reports at annualcreditreport.com.
    • Log steps you’ve taken to address the situation.
    • Complete IRS Form 14039, Identity Theft Affidavit, if your e-file return is rejected because of a duplicate filing under your Social Security Number or you are instructed to.

As an employer, you may run into these scenarios:   

You receive an unemployment notice from the Department of Labor for an employee who is currently working full time and/or has not seen a reduction in hours.

  • Contact your associate and ask if they submitted a claim for unemployment.
  • Report the claim as fraudulent through your state’s Department of Labor.
  • Respond to the claim, even though it’s fraudulent. You’ll want to ensure you respond in a timely manner.  Failure to do so could result in payment on the claim.
  • Ensure you check for any potential data breaches within your company. Although it is unlikely, research has shown that these breeches are from organized crime using previous external data breach information.

Your employee receives an unemployment notice that they did not file.

  • You should complete the steps above.
  • Check for your notification. Both the employer and associate should receive notification of the claim.  Each of you will want to file a dispute of the claim.

What guidance should you give your employee if they are a victim?

  • Your employee should also report the claim as fraudulent.
  • Follow the recommendations of the Department of Labor above.

What if you do not recognize the name on an unemployment claim that you receive as an employer?

  • Double-check for alternate names within your company. You may receive claims under your associate’s maiden name or there could be a misspelling.
  • If you determine that you do not or have not employed the person listed, you should follow the steps to report the claim as fraudulent and respond to the claim.

Other tips on how to safeguard your information:

  • Update passwords frequently and use two-factor authentication when possible.
  • Do not overshare information online or respond to suspicious inquiries.
  • Consider getting an IRS Identity Protection PIN, which is a six-digit number that helps prevent thieves from filing federal tax returns in the names of their victims.

As an employer, if you do not already receive Unemployment Claims electronically, check with your state’s Department of Labor to determine how to register.  Working quickly is one of the best defenses against Unemployment Fraud.  For additional resources, please check your state’s Department of Labor website.

-A special article on Unemployment Fraud by Carly Leibengood