Two weeks ago I became one of 350,000 Illinois residents who had a fraudulent unemployment claim filed in their name. That is nearly one claim for every 20 adults working in Illinois. With millions of Americans unemployed during the pandemic, the CARES act providing supplemental benefits and the Pandemic Unemployment Assistance (PUA) available to independent contractors and gig workers who are not eligible for state unemployment assistance, it didn’t take long for criminals to target overwhelmed state unemployment filing systems. Imposters assume the identity of an innocent person, and make a claim for unemployment benefits in that person’s name. It does not matter if that innocent person is still employed; the massive workload placed on state unemployment programs means that the benefit may be paid out to the criminal before the fraud is discovered.
Fraudulent unemployment claims are often filed for retroactive payments dating back several months to ensure a large initial payment so thousands of dollars may be paid before the fraud is identified. The cost to taxpayers is significant. Scott Dahl, the inspector general for the U.S. Labor Department, estimated that these crimes could total as much as $26 billion according to a report in the Wall Street Journal on 6/3/2020. In response the Department of Labor in September 2020 announced $100 million of funding in fraud prevention, which may have prevented some claims, but not enough. According to a government watchdog report in late November the massive national unemployment fraud swindles were still overstating the jobless numbers.
Aside from the financial cost to the economy, the targeted individual will face the inconvenience caused, and the time expended in rectifying the fraud.
Everyone should be on the alert for this particular fraud whether they are working or retired. Here are some FAQs:
If I have not already been targeted in unemployment fraud, and am currently employed, how will I discover if someone has filed a fraudulent unemployment report in my name?
Your employer should be aware before you are, as employers receive direct notification of unemployment claims by mail, or, if they have registered for an online account with their local department of employment security, by email, which is more reliable and faster than the mail. An employer should immediately notify their employees of the fraudulent unemployment claim. Employers are only given about ten days to respond to the initial notice, and so they must act quickly or else the initial unemployment claim will be paid, sometimes containing the back payments for claims filed retroactively. If the employer does not respond promptly and the initial benefits were paid, the employee may have to prove they were not the recipient of the funds.
Unemployment benefits are paid through a debit card mailed to the address used in the fraudulent filing, so the innocent person is unaware of what has happened. Using the legitimate address of an employee alerts them to the fraud, –especially if they receive a debit card for unemployment benefits and are still working. Amazingly this does happen, showing that not all swindlers are smart. (For more on that be sure to read the last paragraph of this Chartwell Bulletin.)
How is a fraudulent unemployment claim filed?
A social security number, driver’s license number and most recent job history is usually all that is needed to file a claim. Lists containing social security numbers are readily available on the “dark web,” or though illegal access to recent applications for credit or mortgage refinancing. Driver’s license numbers for many states follow numbering protocols based upon the name and date of birth, making it very easy to calculate the drivers license number with programs found on the web.
What should I do if I am a victim of unemployment fraud?
1. Your insurance policy may offer you complimentary credit counseling. See our Chartwell Bulletin which we wrote in response to the Equifax Data Breach and summarizes the coverages available from AIG, Berkley One, Chubb, Cincinnati Insurance and PURE.
2. Immediately check your credit reports. Anyone can get a free credit report via www.annualcreditreport.com This is the official site of the three major credit reporting bureaus (Equifax, Experian and Trans Union) that are required by the Fair Credit Reporting Act (FCRA) to provide a free copy of a credit report, by request, once every 12 months. I had my three credit reports in about five minutes. If you want the extra protection of credit monitoring subscribe only to the services offered by the three credit bureaus and not from a third party which only adds another point of vulnerability to your personal information if the third party is hacked.
3. File a police report with your local police station. The police may consider this low priority and be too overwhelmed to investigate. However, you will receive a report of the filing, and this is important documentation for you to have in case you are ever required to prove that you were the victim of identity fraud.
4. File an identity theft report with the Federal Trade Commission (FTC). You will receive an identify theft report and can register for an account where the information will be stored. The site also offers checklists and sample letters for consumers depending on the type of identify theft.
What prudent loss avoidance measures should everyone take, whether or not their identity has been stolen?
- Freeze your credit or put a fraud alert on your credit record with the three credit bureaus, Equifax, Experian and Trans Union. A fraud alert is an alternative to a credit freeze and attaches a notice to your credit report notifying creditors such as mortgage lenders, credit card companies, and landlords that they should verify your identity with a phone number that you provide on your fraud alert. The credit company is required to notify the other two credit companies so you only need to file the fraud alert with one company. The fraud alert remains on your credit report only for a year – so remember to keep track of the expiration date. There is an Active Duty fraud alert for military service members who will be away. Victims of fraud are permitted to apply for an extended fraud alert which lasts 7 years. A police report and other documentation must be submitted.
If you don’t have an immediate need for new credit, a credit freeze is probably the safer option, there are no time limits and removing a credit freeze is very easy. Putting a credit freeze on your record is surprisingly easy to do. I froze my credit from all three credit bureaus in about ten minutes. You must set up a user name and password. (This is another opportunity to recommend a password manager like Lastpass, Dashlane or Keeper) A word of caution – the credit freeze may take a few weeks before it is fully effective.
Here are the links to place fraud alerts or credit freezes with the three credit bureaus:
- File for a PIN number with the IRS to ensure that no one can file a fraudulent tax return on your behalf . Scammers will file the return early to try to obtain a tax refund. Obtaining the IRS PIN was more time consuming than filing the credit freeze.
An Identity Protection PIN (IP PIN) is a six-digit number that prevents someone else from filing a tax return using your Social Security number. Spouses and dependents are eligible for an IP PIN if they can pass the identity proofing process. Don’t confuse this IRS PIN with the PIN to electronically file your tax payments on the Electronic Federal Tax Payment System EFTPS.
An IRS IP PIN is valid for one calendar year and you must obtain a new IP PIN each year.
The IP PIN tool is generally unavailable mid-November through mid-January each year.
You must first register for an account with the IRS
Then apply for the PIN
We conclude this Chartwell Bulletin with some humor. If our discussion about fraud had you imagining a Hollywood script, or perhaps a rap video here is a true story. A Hollywood based rapper posted a music video to YouTube in which he held up stacks of pre-loaded debit cards and flashed envelopes from the California’s unemployment department: “You gotta sell cocaine, I just file a claim.” attracted over 90,000 views by the time it caught the attention of the FBI. An investigation revealed that Nuke Bizzle’s YouTube may have been his own personal documentary illustrating how he allegedly stole identities which netted him $1.2 million. In short order Fontrell Antonio Baines aka Nuke Bizzle was arrested and is awaiting trial in Los Angeles.
Chartwell Bulletins are produced by Chartwell Insurance Services an independent insurance broker specializing in the personal asset protection of successful individuals. Chartwell Bulletins address issues of general interest and since coverages vary by company and by state should not be taken as an interpretation of a particular policy or advice on any individual situation.
A representative of Chartwell Insurance Services will be pleased to discuss your personal insurance program including family protection coverages. Contact us at 312-645-1200, email your Chartwell representative or firstname.lastname@example.org