What Should I Know About Unemployment Fraud?

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As the United States deals with the Coronavirus (COVID-19) pandemic, a startling and disturbing trend is emerging. Reports indicate that there is a significant increase in the number of bogus unemployment claims. With a dramatic increase in the number of the unemployed and a supplement to unemployment benefits from the federal government, scammers are taking advantage.

In the early days of the pandemic, states were slow in getting their unemployment benefits out to those who needed it. However, in recent months, state unemployment agencies have been moving at a faster pace. In addition, given the immediate need for people to receive their benefits, the government lowered the qualifications for those qualifying for benefits. In the past, a person would need to provide a W2 to qualify for benefits. With the pandemic, that requirement has been waived, making it easier for anyone to receive benefits, even those who do not deserve it.

How Scammers Obtain Information

The scams have been coming to light recently, as several employers are receiving notices about their employees requesting unemployment benefits. The problem is those employees are still working. For the employees, this is the first opportunity they have to learn that someone is trying to steal unemployment benefits using their name.

The way scammers are operating is obtaining a person’s name and Social Security information from the so-called dark web and using it to obtain benefits. Although states are now moving more efficiently when it comes to disbursing benefits, fraudsters can still slip through the system undetected.

The personal information of millions of Americans has become available to these scammers because of various data hacks that have taken place over the years. All those stolen Social Security numbers and names have found their way onto the dark web to be utilized by those attempting to cheat the system.

The Equifax Data Hack and Other Breaches

In 2017, Equifax revealed a security breach that may have resulted in up to 143 million people having their Social Security numbers and other data stolen. The company took steps to correct the situation, but it still left millions of customers potentially vulnerable.

Equifax was the most recent victim in a series of prominent data hacks over the past several years. Private companies such as Sony and retail giant Target were the victims of data hacks, as were federal agencies under the Obama administration.

In recent years, steps have been taken at the federal level and within the private sector to enhance the cybersecurity protection for all parties. However, the damage had been done and the information was leaked. Now, some of the stolen data is being used as a means for unscrupulous individuals to take advantage of an already over-burdened system.

States that Have Seen the Most Fraud

According to several published reports, some of the scams have been coming from outside the United States, including a Nigerian-based criminal ring known as Scattered Canary. Other fraudsters have been located within the United States, but not in the same state in which they are filing. Some of the states that have seen evidence of fraudulent activity include North Carolina, Massachusetts, Rhode Island, Oklahoma, Wyoming, and Florida.

Other states have seen even more incidences of fraud, including Arizona, which reported 2.4 million false claims; and Colorado, which reported that 77 percent of all its pandemic unemployment relief claims were fraudulent.

States such as California and Washington State had to shut down their unemployment benefits for two weeks to address the situation. They reinstated their respective programs only when better measures had been put in place to guard against fraud.

Washington had 876,000 imposter claims, which resulted in the theft of approximately $576 million. The state was able to recoup $346 million of that amount.

What Victims Should Do if Their Social Security Number Was Hacked

For those who suspect that they might be the victim of identity fraud, there are a few immediate steps they can take to minimize any damage that might take place to their finances. Some of those steps include the following:

  • Call a consumer rights lawyer at no cost. At Francis Mailman Soumilas, P.C.  we have the experience to assist you with getting the errors removed from your credit reports so that you can get your life back. For more information or a free consultation, please call us at 877-735-8600 or contact us online at consumerlawfirm.com.
  • Call the Federal Trade Commission (FTC). Reporting the situation right away enables law enforcement to begin an investigation. The earlier the FDC can start an investigation, the better the odds of apprehending the criminals.
  • Reach out to credit reporting agencies. Victims of fraud can reach out to the three main credit reporting agencies, Equifax, Experian, and TransUnion, to inform them about the situation so they can flag some of the victim’s expenses.
  • Request a credit freeze. When reaching out to the three agencies, it is wise for a victim to request a credit freeze so that no damage is done to their overall credit score while the situation is still pending.
  • Contact the bank. A victim should organize their different credit cards and bank accounts and contact their bank to put a freeze on each account before someone attempts to access the account or use the credit card.
  • Contact the Social Security Administration. Employers and employees can contact the Social Security Administration to verify that the number they have on file for a worker is the correct one.
  • Speak to unemployment office. Victims should reach out to their local state unemployment office to report any cases of potential fraud.

Contacting consumer rights lawyers in the area is a wise move as well, as they will be able to assist victims with reclaiming their identity and help them attempt to recoup some of their financial losses.

How the Government Helps Prevent Future Fraud

There is no cure-all method to stop fraud. Cyber criminals are clever and are always finding new and unique ways to hack into a system. However, there are ways to increase security to make it that much harder for criminals to infiltrate a system. Many industry experts have argued for the individual state unemployment offices to implement a biometric-based identity verification process.

Those seeking to obtain unemployment benefits must verify their identity. The verification process has four major facets:

  • Photo ID. A government-issued photo identification card will go a long way for a person verifying their identity. It verifies a person’s real-world identity, and artificial intelligence can determine the veracity of the ID card.
  • Real-time selfie. The most effective way to verify a person’s authenticity is to require them to submit a selfie. This puts a face to the name and has a way of discouraging criminals. Those attempting fraud traditionally do not like to show their face while they are committing a crime.
  • Liveness detection. This is an algorithm that studies a picture or a video and determines if the person depicted is a real person or a fake. This technology will verify whether the selfie is real.
  • Ongoing biometric authentication. The final stage would be a second selfie that the system can use to verify the original. If they do not match, the person is clearly not who they are claiming to be.

The Impact a Loss of Unemployment Benefits Has on Victims

For those who are unemployed and have been victimized by these latest scams, the good news is that over time the stolen funds will be returned to the person and the victim bears no responsibility for them whatsoever. The downside is that it will take some time before that process is complete. Because many states, such as California and Washington, are overwhelmed with cases, the process will move slowly. It will, however, move in the correct direction.

In general, an unemployment investigation can range from as short as several weeks to as long as several months, assuming there is not a backlog. The federal government has launched its own investigation as well. In September, the U.S. Department of Labor announced that it was directing $100 million to combat unemployment fraud throughout the country.

For those who are employed and victimized by a scam, they will not lose their unemployment benefits in the future should they need them. However, they might need to verify their identity to the unemployment office to prove that they did not attempt to claim unemployment benefits previously.

Philadelphia Consumer Rights Lawyers at Francis Mailman Soumilas, P.C. Protect Clients from Fraud

If you find yourself the victim of unemployment fraud or have learned that your Social Security number or your identity itself has been stolen, do not let your reputation and hard-earned money disappear. Reach out to the Philadelphia consumer rights lawyers at Francis Mailman Soumilas, P.C.  We have the experience to assist you with getting the errors removed from your credit reports so that you can get your life back. For more information or a free consultation, please call us at 877-735-8600 or contact us online.

From our offices in Philadelphia, Chicago, New York, and San Francisco, we serve clients nationwide.