Vigilance urged as benefits swindled

Jobless-aid boost draws fraudsters

Unemployment fraud in the U.S. has soared during the pandemic, as the Labor Department inspector general’s office estimates that more than $63 billion has been paid out improperly through fraud or errors since March 2020.

Criminals are seizing on the opportunity created by the pandemic. Using data stolen from previous data breaches, a criminal makes a claim using someone else’s identity to access an increased pool of benefits.

About $550 billion was spent in support of those who were out of work in 2020, compared with an average of $32 billion in the previous five years. States, often overwhelmed with claims while navigating new rules and using outdated systems, have struggled to keep up.

The problem cuts deep for victims who can face delays in getting their legitimate benefits, are at risk for further fraud and are left to resolve much of the problem themselves.

Most people do not know they are victims until the damage is done.

People typically find out about the problem when they receive benefits-related paperwork in the mail or get calls from their employers, or when they try to file legitimate claims for

benefits and are denied.

In some cases, a criminal may initiate the false claim but the money itself is sent to the victim’s account or home. The fraudsters may also build on legitimate claims by requesting further benefits and nabbing those.

The fraud may have been perpetrated months ago, but some people may just be finding out now because of tax season. States are required to mail out a 1099-G form, which reports income from unemployment benefits. People may receive these for benefits they never claimed, sometimes from multiple states. Taxpayers may also discover the problem after they file their federal taxes, only to be alerted later by the IRS that they did not report all their income, as a result of the bogus claims.

“We are nowhere near the end of this particular fraud,” said Eva Velasquez, president and chief executive officer of the Identity Theft Resource Center, a nonprofit that helps victims of identity theft.

Anyone can be a victim, Velasquez said. Retired individuals may find out they are victims when the Social Security Administration alerts them that their benefits are being reduced.

Some homeowners have even found their addresses tied up in scams after they put their homes up for sale. The identity theft center said criminals are applying for unemployment benefits using the addresses of homes that are being sold. Once a claim is approved, the state unknowingly issues benefits to the scammers. The thieves get the money electronically, or they try to retrieve the benefit cards from the mail at the “for sale” houses by contacting the new homeowners, or even a postal worker, to request the mail be forwarded to the thieves.

Velasquez urges everyone to be alert to any suspicious mail, phone calls, email or social media requests. These could be attempts to gather personal information or a sign of existing fraud.

Visa describes a few warning signs: offers from people or organizations promising earlier and faster unemployment benefits; solicitations from people offering money in exchange for personal information; and letters or email correspondence indicating new accounts or unemployment insurance benefits have been initiated in the victim’s name.

RECOMMENDED STEPS

Fraud should be reported to the victim’s state unemployment office and employer. If there were false claims in multiple states, then the person should reach out to each state individually. Those still needing to make legitimate benefits claims need to work with the state agency.

Also recommended is filing a report on the Federal Trade Commission’s identity theft website, Velasquez said.

Victims should reach out to each of the three credit reporting agencies — Equifax, Experian and TransUnion — to put a fraud alert their accounts and freeze credit. Those steps could deter future scams.

Emily Snell, president of Allstate Identity Protection, expects to see an increase in crimes linked to unemployment fraud in the months ahead.

Those who haven’t filed taxes should do so as soon as possible. It becomes much more difficult to do so if a criminal has already filed taxes in a victim’s name.

The IRS has tips for victims of unemployment fraud and for filing taxes online.

Taxpayers who are identity-theft targets should 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.