Unemployment Fraud: How It’s Detected & Reported
Millions of Americans became jobless during the COVID-19 pandemic and filed for unemployment benefits. However, criminals quickly seized the opportunity to scam unsuspecting individuals whether they were unemployed or not.
Overwhelmed state unemployment agencies with outdated processing systems are becoming increasingly vulnerable. Many folks will not know they are a victim until it’s too late. Here’s what you need to know to protect yourself and what you can do if you have fallen victim to unemployment insurance fraud.
What Are Unemployment Scams and How Do They Work?
Unemployment scams happen when fraudsters steal your personal information. They use your information to file a false unemployment claim in your name—but then they collect the benefits.
Here are some common techniques criminals use:
- Phishing: They send emails, texts, or social media pings that trick you into providing personal data. These messages will appear to come from legitimate sources like your state’s unemployment agency or a well-known company.
The messages typically create a sense of urgency or promise a benefit that persuades you to click on a link or provide your information.
- Smishing (SMS Phishing): This is similar to phishing but is done solely through text messages. Scammers send texts claiming to be from your state’s unemployment office that ask you to click on a link to verify your information or apply for benefits. The links lead to fake websites that steal your personal data.
- Impersonation: Scammers pretend to be from a government agency or your employer to get your information.
They might call you claiming to be from your state’s unemployment office or your employer’s HR department and ask you to verify personal information like your social security number or birth date, saying this is to process your unemployment claim.
- Data Breaches: Scammers can also get your personal information through data breaches. They may target companies or government agencies that store a lot of personal data. These include credit bureaus, healthcare providers, and online retailers. Once they have your information, they can use it to file fake unemployment claims in your name.
- Insider Threats: Sometimes, scammers may have help from insiders. These insiders work at state unemployment agencies or companies that process unemployment claims. They may steal your personal information or help fraudsters bypass security measures to file false claims.
Once the scammers have your personally identifiable information, they will file a claim with your state’s unemployment agency. You often won’t learn about the fraud until you try to file a real claim or get a notice from the unemployment agency.
It’s important to be careful and protect your personal information. This helps you avoid falling victim to identity theft. Be cautious of unsolicited messages or calls asking for your personal data.
Always verify the identity of the person or organization before providing any information. Regularly check your credit reports and financial accounts. This can help you find any suspicious activity and take action quickly.
How to Detect If You’ve Been a Victim of an Unemployment Scam
There are several ways you can find out if you’ve been a victim of an unemployment scam:
Review Your 1099-G Form
Unemployment benefits are taxable income. If you receive a 1099-G form from your state’s unemployment agency—but you didn’t file for benefits—this is a clear sign of fraud. The 1099-G form states that you have “received” unemployment compensation for the year.
If you didn’t receive benefits, someone else used your identity to claim them.
Check for Notifications From Your Employer
Your employer may notify you about an unemployment application that was submitted in your name while you’re still employed. This is a red flag because it means someone has used your information to file a fraudulent claim.
Be Aware of Issues When Filing for Benefits
It’s a strong indication of fraud if you applied for unemployment benefits and discovered that someone has already made a claim in your name. The scammer may be collecting your funds, leaving you unable to access the benefits you need.
Watch for Unusual Mail or Emails
If you receive mail or emails from your state’s unemployment agency about benefits you didn’t apply for, this could be a sign of fraud. Be cautious of any unsolicited communication regarding unemployment benefits, especially if it asks for personal information.
Pay Attention to Your Bank Statements
Regularly review your bank account and debit card statements and check for any unauthorized transactions. Scammers may attempt to access your accounts or make fraudulent charges using your stolen identity.
If you notice any suspicious activity, contact your bank or credit union immediately to report the issue and protect your funds. Consider setting up fraud alerts or notifications from your bank or credit union to inform you of any unusual transactions.
Be Alert for Official Notifications
Your state’s unemployment agency may send you an official notification if they suspect fraudulent activity on your account. Pay close attention to any correspondence from the agency and follow their instructions to report and resolve the issue.
How to Protect Yourself From Unemployment Fraud
Here are some steps you can take to protect yourself from becoming a victim of fraud and unemployment scams:
Be Cautious With Personal Information
Be careful with phone calls, text messages, letters, websites, or emails asking for your personal information. This includes your social security number and birthdate.
Scammers often pose as legitimate organizations to trick you into revealing sensitive data. If you’re unsure about the authenticity of a request, contact the company or organization directly through their official channels.
Familiarize Yourself With Scammer Tactics
Educate yourself about the various methods scammers use to obtain your personal information. They may send phishing emails that appear to come from a legitimate source, asking you to click on a link or download an attachment.
These links and attachments can contain malware that steals your data. Be cautious of unsolicited messages and avoid opening emails and attachments from unknown senders.
Use Strong and Unique Passwords
Create strong, complex passwords for all of your online accounts. Use a combination of uppercase and lowercase letters, numbers, and symbols to make your passwords more difficult to guess.
Avoid using easily identifiable information such as your name, birthdate, or common words. Additionally, use a unique password for each account to minimize the risk of scammers getting full access.
Enable Two-Factor Authentication
Whenever possible, enable two-factor authentication (2FA) for your online accounts. 2FA adds an extra layer of security by requiring a second form of verification. This makes it much harder for scammers to gain unauthorized access to your accounts, even if they obtain your password.
Be Wary of Unsolicited Job Offers
Exercise caution when receiving unsolicited job offers, especially if they seem too good to be true. Scammers may pose as potential employers and offer you a job opportunity. They will often claim to need your personal information for the hiring process.
Before providing any sensitive data, thoroughly research the company to ensure its legitimacy. Check their website, search for reviews or complaints, and contact them through official channels to verify the job offer.
What to Do If You’ve Been a Victim of Unemployment Fraud?
If you discover that you’ve been a victim of unemployment fraud, take these steps immediately:
Report Unemployment Fraud
Report any incident to your state’s unemployment department. For example, you can report unemployment fraud in PA at: https://www.uc.pa.gov/Pages/Report-Fraud-Here.aspx.
File a Police Report
File a report of identity theft with your local police department. This creates an official record of the crime and can be helpful when dealing with credit bureaus and other agencies.
Check Your Credit Report
Take advantage of the free credit reports offered by Equifax, TransUnion, and Experian.
Regularly review your credit reports for any fraudulent activity such as unauthorized accounts opened in your name. Immediately report suspicious items to the credit bureaus and place an alert on your records.
As a Freedom Credit Union member, you can access your FICO score at any time. This convenient service is offered through Online/Mobile banking – all you have to do to take advantage is enroll!
Consider a Credit Freeze
Consider freezing your credit to prevent scammers from opening new accounts in your name. A credit freeze is the best way to protect your credit from further damage. Visit the credit freeze page on the Federal Trade Commission (FTC) website for more information.
Report Fraudulent 1099-G Forms
Report any 1099-G forms for fraudulent unemployment claims to your employer and your state’s unemployment agency. Keep a record of the people you spoke with and any confirmation numbers provided.
File a Complaint With the U.S. Department of Justice
The Internal Revenue Service also states that you should file a complaint with the U.S. Department of Justice’s National Center for Disaster Fraud (NCDF) by completing an NCDF Complaint Form online or by calling 866-720-5721.
Notify Your Employer
Inform your employer about the fraudulent unemployment claim filed in your name. Your employer can help you contest the claim with the state’s unemployment agency and provide any necessary documentation.
Consider Identity Theft Protection Services
Look into identity theft protection services that can help monitor your credit, financial accounts, and personal information. These services can alert you to potential issues and guide you on how to resolve them.
Links to Other Helpful Resources
- Read the FTC’s tips on Avoiding and Reporting Scams
- Get your free credit report by visiting AnnualCreditReport.com
- Enroll in eStatements and Bill Pay to avoid having more paper documents
Freedom Credit Union Is Here to Help
At Freedom Credit Union, we understand the financial challenges that can arise from falling victim to unemployment fraud. Our team is here to help you get your finances back on track and protect your financial future.
If you’ve been a victim or have any concerns about your financial well-being, please don’t hesitate to reach out to us. Click below to take the first steps towards reclaiming your identity and securing your finances.
