Fraudulent UI Claims Creep Back in Mass. and Other States

FRAUDULENT UNEMPLOYMENT CLAIMS BACK ON THE RISE

While we are finally starting to experience some relief from the hardships of the Covid-19 pandemic, there has been an unfortunate resurgence in unemployment fraud. The Department of Justice remains actively involved in this issue and has created a National Insurance Fraud Task Force that closely works with state unemployment agencies, financial institutions, and other law enforcement partners across the country to fight UI fraud. It is still very important for employers and employees to remain alert to this ongoing issue and to take practical steps to protect their personally identifiable information (PII).

This fraud is occurring on many levels and in a variety of forms. Millions of U.S. citizens, from almost every state, have been victimized by criminal actors impersonating victims and using their stolen identities to submit fraudulent unemployment insurance claims online.  It is theorized, these criminals have obtained the stolen identities using a variety of techniques, including the online purchase of stolen PII, previous data breaches, computer intrusions, cold-calling victims while using impersonation scams, email phishing schemes, physical theft of data from individuals or third parties, and from public websites and social media accounts, among other methods. Criminal actors will use third parties or persuade individuals who are victims of other scams or frauds to transfer fraudulent funds to accounts controlled by criminals. Many fraudulent claims often appear to come from employees who are still working full-time for their employers!

All too often, many victims of identity theft related to unemployment insurance claims do not know they have been targeted until they try to file a claim for unemployment insurance benefits, receive a notification from the state unemployment insurance agency or are notified of the claim by their Human Resources departments.

There are several items which may be red flags employees should be aware of, where unemployment fraud may have been perpetrated using their PII:

• Receiving communications regarding unemployment insurance forms, where the employee has not applied for unemployment benefits.
• Unauthorized transactions on bank or credit card statements related to unemployment benefits.
• Any fees involved in filing or qualifying for unemployment insurance.
• Unsolicited inquires related to unemployment benefits.
• Fictitious websites and social media pages mimicking those of government agencies.

Employees of your organization should exercise caution and follow these general tips. We encourage you to share this information with them:

• Be wary of telephone calls and text messages, letters, websites, or emails requiring personal information or other sensitive information, especially birth dates and Social Security numbers. Be cautious with attachments and embedded links within email, especially from an unknown email sender.
• Be aware of methods fraudsters are using to obtain PII and how to combat them by following security tips issued by the Cybersecurity and Infrastructure Security Agency.
• Monitor bank accounts on a regular basis and request your credit report at least once a year to look for any fraudulent activity. If you believe you are a victim, review your credit report more frequently.
• Immediately report unauthorized transactions to your financial institution or credit card provider.
• If you suspect you are a victim, immediately contact the three major credit bureaus to place a fraud alert on your credit records.
• If you believe you have been a victim of identity theft related to fraudulent unemployment insurance claims, report the fraud to law enforcement, state unemployment insurance agencies, the IRS, credit bureaus, and your employer’s Human Resources department.

Fraudulent UI claims are handled differently by each state Unemployment Office. For employers working with UTCA, strong communication allows us to identify when fraudulent claims have been filed. This ensures all claims are handled in a timely and accurate manner.

While specific to each individual state, most states want employers to follow these general guidelines below in responding to a fraudulent UI claim:

1. The most effective and efficient way is to complete the UI claim form online to provide proper notification to the state that a claim is fraudulent.
2. If the individual still works for you, please select the state’s version of “Still Employed Part-Time” or “Still Employed Full-Time”.
3. If the individual has never worked for you, please select “The claimant did not work for me during the time period stated” or some similar language.
4. The employer should instruct the employee to file a fraud report with the specific state’s UI Department.
5. In many states, “protests” can only be filed online and not by any other mechanisms.
6. Enter “Fraudulent Claim” if your state provides an option for doing so, and then provide information on why you believe the claim was fraudulent (e.g., “Claimant still works for your company and when we spoke to the claimant, they said they never filed a claim”).
7. In a case where both the employer and the employee acknowledged that the claim was not filed by the employee, the employer should fill in the protest form using their UI Online account and the employee should file a Fraud report with the state agency, if applicable.

Please be aware UTCA handles all fraud claim activities for clients, including benefit audits and protests in every state of business.  If your HR department is finding themselves overwhelmed or wary of claims that may be fraudulent, please feel free to contact us. A proper review of your processes can go a long way in mitigating risk and unnecessary costs!

You can find the state by state guide to reporting fraud in your state here . Good luck , and stay vigilant!