Unemployment claim scams
A new wave of identity fraud is sweeping the nation, as impostors use stolen personal information to open bank accounts and claim unemployment benefits in the names of retirees and others who have no idea this is happening. The FBI estimates that as much as $26 billion could be stolen. The state of Washington has lost $660 million to this type of fraud, but it has tracked down half of that amount to recover some losses.
Ever since major data breaches in recent years at companies like Equifax and Target, a vast amount of personal identifying information has been floating around the “dark web.” Scammers open online bank accounts using those names, addresses, dates of birth and Social Security numbers — but different email addresses. That gives them access to file a claim and receive unemployment benefits.
The big lures for the scammers are the large checks generated from the
$600 per week federal benefit added to state unemployment benefits. Some initial claims include back payments. People have only found out about the fraud when they needed to apply for unemployment themselves. Others will learn of it next year when their state sends them a
1099-G for taxable income in the form of unemployment benefits claimed.
Another unemployment identity scam has recently appeared in Illinois. People — mostly seniors — unexpectedly receive a debit card from the bank that manages state unemployment payouts.
It’s attached to a letter welcoming them to the unemployment system and instructing them to activate the card. Authorities are investigating whether this is an inside job — perhaps someone inside the unemployment department or at the bank — authorizing payments. Once the card is activated, the scammers may have a duplicate card to withdraw funds before the unknowing recipient figures it out.
It’s an unfolding mystery.
Most state unemployment offices are overwhelmed with claims, making it difficult for individuals to question the receipt of an unexpected and fully loaded debit card. This confusion allows the fraud to grow.
Since these unemployment scams have become widespread, it’s important for everyone to be on alert for warning signs and take these steps:
If you receive an unexpected debit card, do not activate it. Instead, report it to the issuing bank immediately. If it purports to be from state unemployment offices, look for its fraud hotline, and leave a message if you can’t get through. Hold on to the unactivated card as evidence.
Get your credit report. You are allowed a free credit report every year from each of the three major bureaus. Go to Annual CreditReport.com for online links to each bureau; you won’t have to pay fees for the report or identity protection services. Then look for any inquiries from banks or credit card companies — perhaps signaling that someone opened an account in your name.
Note: A newly opened online bank account will not show up on your credit report — but the inquiry made by the bank before opening it could be a clue.
Freeze your credit and put a fraud alert on your account. It’s easy and free to freeze your credit report. You’ll be given a PIN, which you should guard carefully, to reopen the report for a specific user, in case you’re refinancing your mortgage, buying a car or applying for a job where a credit check is required.
Make a police report. This could become an essential element if you later become a further victim of identity theft. Your insurance claim can be processed more easily if there is a police report. And if you ever receive a 1099-G for taxable income from unemployment benefits, you will have more proof that you were victimized.
The first rule of unraveling a scam is to follow the money. In the case of identity fraud revolving around unemployment benefits, there is plenty to follow. But it’s a twisted path. And that’s The Savage Truth.
Terry Savage is a registered investment adviser and the author of four best-selling books, including “The Savage Truth on Money.” Terry responds to questions on her blog at TerrySavage.com.