Unemployment Fraud: How it Works and How to Fight It.

Across the nation, identity thieves are exploiting the COVID-19 pandemic by committing Unemployment Benefits Fraud, which is filing for and collecting unemployment benefits fraudulently by using the identity of someone still employed. This type of scam is very difficult to detect. Sometimes the employer is the first one to know that a scam has taken place by receiving a notice of an unemployment claim from employees who are still very much employed.

Let’s take a quick look at how this scam works. It is important to know how to react quickly to minimize the damage.

Fraudulent claims of unemployment are rampant. States’ unemployment offices across the nation have been targeted for fraudulent claims of unemployment even before the pandemic began, but the activity level has drastically increased over the last year to the point that it is the number one type of identity theft issue reported. Fraudsters are counting on the fact that the unemployment office is overwhelmed with claims, and the state is trying to minimize the financial impact of the pandemic on suffering citizens by processing the claims more readily than it might in the past. If criminals flood a particular state with bogus claims, pressure mounts to move documents through the process, and that just makes it easier for fraudulent attempts to get approved.

How unemployment fraud works. The identity thief collects the personal information of an individual, along with the individual’s place of employment, through one or more previous data breach incidents. Unfortunately, this is all too easy. The thief files for unemployment benefits in the state of residence of the individual, impersonating the worker. The thief typically requests that the funds be deposited into a bank account set up for this purpose.