Don’t Get Blindsided by Unemployment Fraud Claims
Information provided by Gabe L., Smithville’s Director of Information Security
The extraordinary expansion of unemployment benefits by Congress as a response to the Covid-19 pandemic has led to a sharp rise in fraudulent unemployment cases. Unemployment fraud involves a process where criminals use others’ personal information to file for unemployment benefits on their behalf and then pocket the money for themselves. Criminals will deploy a series of methods to obtain personal information, including phishing, utilizing fake websites and social media, and purchasing user information off the dark web. Victims of unemployment fraud are often left with a bureaucratic mess to unravel.
To help detect and respond to identify fraud and unemployment fraud, follow the steps below.
Detection by mail:
Open your mail. Yes, even that pesky junk mail. One of the first clues that you may be a victim of unemployment fraud is through your mail. When people file for unemployment benefits, they may receive letters in the mail from their respective state’s employment bureaus about the status of their unemployment benefits claims, approvals, request for more information, and other communications. It is also possible for you to receive a debit card in the mail that would allow you to access unemployment benefits. Do not activate or use the card. If you received such communications but did not file for unemployment benefits, then you may be a victim of unemployment fraud.
While you are opening your mail, make sure to comb through the mountain of credit card and debit card offer you receive. You may have a notice or a bill for a live credit or debit card that was fraudulently opened in your name.
Lastly, be on the lookout for a 1099-G. That is the tax form for anyone who received unemployment benefits. If you received one in the mail and did not file for unemployment benefits, you may be the victim of unemployment fraud.
Detection by credit and ChexSystem Report:
Your personal information is valuable, and criminals may use it for a myriad of nefarious activities. If the criminal gets ahold of your data and decides to use it to open a credit card or a bank account in your name, they may also be able to use it to file for unemployment benefits. A rounded view of your financial history may assist in the detection of unemployment fraud.
Credit reports provide you an excellent way to preview the status of your outstanding credit card accounts, utilities, mortgages, and other loans. When you apply for a loan, lenders may request to run your credit to evaluate if you can repay that loan. It can also help you identify accounts fraudulently opened with your personal information. Through April 2021, you can go to annualcreditreports.com to get a weekly copy of your credit report from each of the three major credit reporting companies — Equifax, Experian, and TransUnion.
You should also request your ChexSystem report by going to chexsystem.com. A ChexSystem report operates similarly to a credit report, but it involves checking and savings accounts. When you apply for a new checking or savings account, banks may review your consumer history using a tool called ChexSystem before they approve or deny your request. By requesting both your credit report and ChexSystem report, individuals can work to verify that no fraudulent accounts were created in their name.
- Report the unemployment fraud to the state.
Report any case of unemployment fraud to your state bureau that manages unemployment benefits. The United States Department of Labor provides a link to each state’s fraud reporting website. For example, if you live work in Indiana, you would report the unemployment fraud to the Indiana Department of Workforce Development.
- Report the unemployment fraud to the police.
Report any case of unemployment fraud to the state police or the relevant regulatory agency as directed by the state. For example, if you live in Indiana, in addition to reporting the fraud to the Indiana Department of Workforce Development, you would also report the unemployment fraud to the Indiana State Police.
- Report the unemployment fraud to your employer.
Report any case of unemployment fraud with your employer. By notifying your employer of the unemployment fraud claim, you provide them an additional opportunity to contest the claim with their state labor department.
For the taxpayers that did receive an incorrect Form 1099-G, do not fret. The Internal Revenue Service has published guidance on January 28, 2021, that helps taxpayers by instructing them that if they are “unable to obtain a timely, corrected form from states should still file an accurate tax return, reporting only the income they received.”