Risk Alert: The Rise of Unemployment Fraud – What You Need to Know

Over the last year, the US has lost more than $36 billion in unemployment benefits to improper payments, largely from fraud.¹  While the US Department of Labor has responded in kind by increasing the number of investigations by nearly 6 times its usual caseload since the coronavirus pandemic, there are still steps accounting professionals can take on behalf of themselves and their clients to help guard against unemployment fraud.

As this type of fraud requires the impersonator to obtain the personal identifying information (PII) of another person, the most common way thieves secure other people’s unemployment benefits is through identity theft.

To do this, thieves may employ a variety of legal or illegal methods to obtain information, including cyberattacks that penetrate digital data, or phone and in-person scams that entice a victim to reveal their personal information (often in exchange for the promise of a job or a prize)

If you suspect someone has secured your PII and is trying to receive unemployment benefits in your name, we recommend taking the following steps:

1. Be on the lookout for official government mail correspondence. One tell-tale sign you may be a victim of unemployment fraud is receiving a letter at your home or office notifying you of government funds that have been dispersed.
2. Notify your employer that you believe someone is trying to receive unemployment benefits in your name. Your human resource department can monitor government/human resources correspondence received on your behalf.
3. Monitor your credit and check your credit report. Everyone is entitled to one free credit report every 12 months. If someone is using your PII to commit unemployment fraud, they may also try to use it to open new credit accounts or take over existing accounts.
4. Monitor your income. Create an online account with the Social Security Administration to see if anyone was reporting income under your Social Security number before filing an unemployment claim. This is not common, but we recommend this step to help remain safe. Click here to create your online Social Security account.
5. Report suspected fraud to your state workforce commission. Every state has a different reporting process. The index on how to report unemployment fraud, organized by  state, can be found by going to the US Department of Labor website.
6. Follow additional national/state/local reporting procedures for reporting identity theft. Different state and local entities have varying steps for reporting identity theft. Some may require contacting your local police department and obtaining a police report of the theft for your records.
7. Report Nationally. File a complaint with the Federal Trade Commission. The FTC will enter this information into a secure database to aid law enforcement agencies in their investigations.
8. Report to the IRS. Fill out and submit a Form 14039 Identity Theft Affidavit. State departments of revenue may have their own reporting procedures.
9. Monitor your mail. Create an online account with USPS. This allows you to preview your incoming mail, track packages, and manage your mail, and to help catch mail fraud as soon as it happens. Visit the USPS website and choose ‘Informed Delivery’ in the top right corner of the screen.

Identity theft monitoring services, like AICPA-endorsed Aura Identity Guard, can serve as your go-to resource to navigate the confusing and time-consuming process after an identity theft event occurs. While no one is immune to the risk of identity theft, 89% of people experienced a higher quality of life when covered by an identity theft solution than those without one.<sup>2

1</sup> US Department of Labor. “Semiannual Report to Congress.” October 2020.
² Aura Identity Guard & Identity Theft Resource Center. Independent Research. May 2020.