If laying off employees, conducting work virtually, and traversing the throes of COVID-19 workplace safety isn’t challenging enough, there’s a new tribulation in town – a toxic combination of identity theft and unemployment fraud known as imposter claims.
Chaos begets chaos, and the rise of imposter claims following natural disasters like Hurricane Katrina, the Great Recession of ’08, and the COVID-19 pandemic succinctly illustrates this pattern. When national emergencies lead to unemployment surges, criminals exploit overwhelmed unemployment commissions by using stolen identities to file fraudulent unemployment claims.
“Historically this is extremely common,” said Nicole Korn of Equifax. “They will try to take advantage of the chaos. They obtain social security numbers on the black market, and they just file mass numbers of claims, hoping that some of them will slip through, and they’ll get payments.”
How do imposter claims happen?
According to the FBI, imposter claims go down like this: a criminal, typically part of an organized crime ring, steals an employee’s PII (personally identifiable information) through an assortment of means including previous data breaches, computer intrusions, impersonation scams, email phishing schemes, physical theft of data from individuals or third parties, and from social media accounts — just to name a few.
After stealing the employee’s identity, the scammer then uses their information to fraudulently apply for unemployment benefits.
If the scam goes unnoticed, the scammer can then collect their victim’s unemployment benefits.
“We do see imposter claims all the time, they happen even in normal economic conditions,” Korn said. “But these mass surges tend to happen when there’s a lot of chaos and they’re banking on the fact that there’s going to be so much activity that the employer or the state won’t catch them.”
How are imposter claims discovered?
In the worst-case scenario, employees discover imposter fraud when they file for unemployment and are denied because someone else is already collecting benefits under their social security number.
Fortunately, most imposter claims are stopped before they reach that point.
Whenever an unemployment claim is filed, employers receive notice of the claim and are required to respond. When an employer responds to the claim and says that the employee is still employed, the state then receives that information and pauses the claim to investigate.
Additionally, individuals who file for unemployment are typically sent a letter from the state informing them that they were awarded unemployment benefits.
“What we have found in the pandemic is that they [employees] will get a letter from the state that says ‘you’ve been awarded unemployment benefits, but we need more information,'” Korn said. “And that’s a trigger to the person to say, wait a minute, I didn’t file for unemployment.”
In times of mass unemployment, however, states can become so overwhelmed with claims that they don’t acknowledge employer protests, and fail to pause or investigate claims regardless of “red flags.” In that case, the employer and employee must appeal the claim as described below to be credited the money back.
What should employers do if they learn that an employee is the victim of imposter fraud?
- Alert the employee and inform them of the claim
- Advise the employee to report the incident to https://identitytheft.gov/ which is managed by the Federal Trade Commission
- Advise the employee to report the incident to the state in which the imposter claim was filed using the “Claimant” links below *
ABOUT THE AUTHOR
Lia Tabackman is a freelance journalist, copywriter, and social media strategist based in Richmond, Virginia. Her writing has appeared in the Washington Post, CBS 6 News, the Los Angeles Times, and Arlington Magazine, among others.