The rate at which personal information is being used to file fraudulent unemployment benefits has been accelerating in recent years, and the pandemic environment provided the perfect opportunity for bad actors to amplify their effort. In fact, the Labor Department Inspector General estimates that roughly 10% of the federal funding for unemployment during the pandemic was syphoned to bad actors- this is about 90 billion dollars that is estimated to have been improperly paid out.
So, how is this done? It is frequently done through Phishing. Someone might receive a call, text or email from someone claiming to be the state unemployment agency. Another common way fraudsters have gained people’s personal information is by buying it online. With the large security breaches – Equifax, Target etc., many people’s personal information has been compromised and put online for purchase.
Although this can feel like a personal assault, the truth of the matter is, it’s just a volume game for these bad actors. In many cases, the relaxation of verification during the pandemic propelled these cases forward. As the pandemic took full hold, the number of filed unemployment cases skyrocketed overnight and many state agencies didn’t have the ability to keep up with payments and verification, so things did fall through the cracks.
The good news is that if this has happened to you, there are remedies. If you received a 1099-G at tax time that claims you filed for unemployment benefits, and you know you did not, states are encouraging filing your taxes on time and not including the 1099 G. You can then call the agency after your taxes are complete and ask your state for a corrected version. Keep this corrected version with your filed taxes.
If you are not sure if you have been a victim of fraud the quickest way to find out is by checking your credit. Throughout the pandemic the credit agencies opened the ability to check your credit once per week, as opposed to the usually once per year per agency. This benefit has been extended through April of 2022. To check your credit, you should go to Annualcreditreport.com and check for unknown activity. Another proactive step we commonly recommend to our clients is to actively freeze your, and your children’s if applicable, credit. This will stop any fraud before it starts. You will need to remember you have done this this, as it will also limit your personal ability to apply for credit. Luckily, it is as easy as a phone call to each of the three agencies to both freeze and unfreeze your credit.