Picture this. You just celebrated 10 years at your job. There’s cake, balloons – an entire party. Fast forward to the next day and you received a notice that someone has filed an unemployment claim under your name or even worse -- you are under investigation for unemployment (UI) fraud. *Record scratch* how did we get here?
UI fraud, a type of identity theft, occurs when an individual tries to claim UI benefits with a false identity…or someone else’s identity, like yours. UI fraud can also occur when people continue to collect benefits even after returning to work, intentionally or unintentionally failing to report their newfound income.
It starts big as a nationwide issue, but certain states have felt the hurt more than others. As of May 2021, Iowa Workforce Development had identified around 37,000 cases of fraudulent unemployment claims for fiscal year 2019. And the state of Maryland has dealt with over 500,000 unemployment fraud cases in a six-week period.
UI fraud has become so prevalent that the U.S. Department of Justice (DOJ) formed a National Unemployment Insurance Fraud task force, designed to keep individuals safe by providing information about elevated risk.
Unemployment fraud risks
Speaking of risk, who is at a higher risk for UI fraud? The answers are not necessarily surprising.
The following are all more likely to be susceptible to UI fraud due to their info already being compromised in the past, like:
- Previous victims of identity theft.
- Those who have had their personally identifiable information (PII) exposed in a past data breach and
- People who have given their PII to an individual to file UI benefit claims.
General identity theft more commonly affects children and seniors, members of the military, social media users and repeat victims.
Unemployment fraud warning signs
Even if you don’t fall within a high-risk group, you can keep a look out for UI fraud red flags, like the following indicators:
- You file a lawful UI claim on behalf of yourself, and your claim was rejected because your state workforce agency has already received a claim under your name.
- You did not apply for UI benefits but receive a letter saying that your application has been received.
- You receive a notification that you failed the security verification for UI benefits.
- You are informed by a current or former employer that a UI claim has been submitted using your PII.
- You receive a W-9 for UI benefits paid using your information.
Once you notice one of these suspicious activities, act immediately to minimize damage.
How to handle unemployment fraud
When reporting UI fraud, pay attention to your state’s specific requirements. These can be found on pages three and four of the Unemployment Insurance Fraud Consumer Protection Guide, published by the DOJ.
Be sure to also report the incident to your employer, if applicable, as they have additional paperwork to submit.
Finally, the National Center for Disaster Fraud, a sector of the DOJ, can help you manage damages if you file a complaint with them online. You can also call their hotline at 866-720-5721, if you prefer to speak with someone by phone.
Don’t commit unemployment fraud
This idea might make you scoff but forgetting or “forgetting” to cancel your UI benefits could land you in an ugly legal puddle. Once you’re newly employed – congrats, by the way – there are a few ways you can go about stopping the payments.
- Stop certifying. This is the easiest way to cancel your benefits. As you may be aware, to receive UI benefits, you must certify with your state either online or by phone every week. The state will usually automatically close your claim after three missed certifications.
- Contact the state. You can also contact your state’s UI division directly by phone, but this may come with the caveat of long wait times, as live representatives are typically very busy.
Sometimes, the state may accidentally continue to pay you during the first couple weeks of your job, which is known as “overpayment.” Make sure to let your state know about the mistake immediately in order to avoid additional legal trouble.
Stay vigilant against unemployment fraud
Life gets busy but protecting your personal information should always be a top priority, especially as new types of fraud surface. ARAG offers multiple services to help protect our members against identity theft.
Depending on the plan that your employer offers, you could lean on:
- Legal advice and representation from a local network attorney
- Prevention/recovery tools and resources
- Case management for identity restoration
And more. If you’re a member and think you’ve been victimized by UI fraud, call ARAG Customer Care at 800-247-4184 to get started.
