Increased Unemployment Insurance Fraud Noted on COVID-19 Claims

March 24, 2021 Update: If you feel your identity has been stolen as a result of unemployment fraud, the U.S. Department Of Labor has created this new website with steps for Reporting Unemployment Identity Theft. 

The U.S. is Seeing a Spike in Fraudulent Unemployment Claims

As millions of Americans file for unemployment due to coronavirus disease 2019 (COVID-19), the government has a stark warning. The increased need and the new opportunity for self-employed individuals to file for unemployment insurance under the Coronavirus Aid, Relief, and Economic Security (CARES) Act has contributed to a fertile environment for fraudsters. As a result, the Department of Labor (DOL) issued a fraud alert for consumers nationwide to be aware of the increased unemployment insurance fraud. 

They are having to juggle unprecedented claim volume with the time needed to validate claims -- and quickly deliver benefits.  

For Employers: If you Receive a Fraudulent Claim...

If you are an employer, understand that a claim is fraudulent if the person filing is:

• not the correct employee
• or if your organization still actively employs them

The Equifax Claims Management team recommends that organizations inform affected employees and encourage them to follow the steps below.

1. For claims made by individuals who are not employees of your organization, still respond to the claim by the state deadline
2. Advise the state of the facts in the claim response
3. Follow the state-specific procedures for reporting fraudulent claims using the Department of Labor’s employer fraud contact information

If an Employee Receives Tax Form 1099-G

Employees may detect unemployment insurance fraud if they have never filed an unemployment claim but suddenly see emails or actual physical mail from the state unemployment division. They may even receive a tax form, such as a 1099-G. This is an IRS form that the state may file when they have paid unemployment benefits to an employee. It is important the employee report a possible incident of fraud immediately to the appropriate agencies. 

The Equifax Workforce Solutions Fraud Guide can be an important resource for you if an employee or former employee reaches out about suspected fraud.  It provides valuable links to the appropriate agencies where fraud can be reported. 

For Employees: If you Suspect you are a Victim of Unemployment Fraud...

Workers who find themselves the victim of unemployment insurance fraud can follow the below steps. These steps are for the impacted individual only (not the employer). That's because only the employee will be able to provide the necessary information. 

• First, report the incident to https://identitytheft.gov/ which is managed by the Federal Trade Commission.
• Second, contact his/her local police department and file a report (when possible).
• Finally, report the incident to the state in which the impostor claim was filed. The Equifax Unemployment Claims Management team has compiled a state-by-state guide for quick reference.

For additional resources about unemployment claims for employers, read Tips for Interpreting the New Unemployment Landscape.  Additionally, download a playback of our recent webinar, New Unemployment Claim and SUI Tax Updates - What Employers Need to Know to Prepare.

The information in this blog post is for general guidance and informational purposes and is not intended to convey specific tax or legal advice.