by Edwin Quinabo
While unemployment benefits have kept millions of Americans from falling through the cracks to poverty, the government’s emergency response to help workers have also fallen prey to widespread fraud.
The US Department of Labor Office of Inspector General estimates $62 billion could have been distributed improperly and a significant portion could be under fraudulent circumstances.
Unemployment fraud traditionally happens in two ways: by a claimant making false claims of working status to collect unemployment benefits; or by employers who misclassify employees as independent contractors or neglect to report all wages paid and to pay payroll taxes.
But recently, there are many new ways unemployment fraud is committed. There is fraud when someone uses another person’s identity to collect a claim or someone files a claim against a company he hasn’t worked for.
There have been some reports by employers who have been notified of claims from past employees whose names were stolen to file a fraudulent claim. Some retired employees have received notice that their unemployment benefits have been approved without them filing a claim.
Federal Trade Commission (FTC) attorney Seena Gressin, an identity theft and fraud prevention expert, said even people’s names who haven’t lost a job have been used to make false claims.
HRs are encouraged to monitor claims because fraudulent claims not caught could raise employer’s state tax premium, unnecessarily.
Unemployment fraud hurts the government, other valid claimants, and companies-employers.
“Fraud is affecting tens of thousands of people, slowing the delivery of benefits to people in real need, and costing states hundreds of millions of dollars,” said Gressin.
UI fraud offense is considered a felony and a convicted individual could face jail time up to 6 years, charged thousands of dollars in fines, forced to repay unemployment benefits, plus interest and penalties.
Some common examples of fraud by claimants:
*Failure to report employment: Some individuals who legally qualify for unemployment insurance will get another job, not report income from their new job and still collect unemployment from the job they lost initially.
*Not look for a job while collecting unemployment. An individual receiving unemployment benefits must actively look for employment in order to continue receiving benefits. Some individuals will list down places they’ve applied for work without having sought employment there.
*Submitting false information about income
High tech scams committed by professional criminals
The FBI has been warning the public and states of various high-tech scams criminals have been using to get people’s identity to be used in fraudulent claims.
“The criminals obtain the stolen identity using a variety of techniques, including the online purchase of stolen personally identifiable information, previous data breaches, computer intrusions, cold-calling victims while using impersonation scams, e‑mail phishing schemes, physical theft of data from individuals or third parties, and from public websites and social media accounts, among other methods,” the agency said.
The Hawaii Department of Labor and Industrial Relations issued a press release warning residents about attempts to file fraudulent claims.
“Multiple states have been victimized by fraudulent claims filed as part of a nationwide scam organized by a cybercrime gang that is believed to have obtained personal information through previous nationwide data breaches,” DLIR said. “The U.S. Secret Service issued a national alert about this international crime ring committing fraud against state unemployment programs.”
In just the first quarter of 2020, DILR estimates nearly $16 million in Pandemic Unemployment Assistance benefits in Hawaii may have been lost to fraud and identity theft.
DILR was able to block $95 million in fraudulent unemployment claims.
“Unfortunately, bad actors including organized crime continue to attack the program designed to support our vulnerable residents during the Covid-19 pandemic,” said DLIR Deputy Director Anne Perreira-Eustaquio in a statement.
“We are working with the U.S. DOL inspector general and the Hawaii Department of the Attorney General to find those perpetrating fraud and will prosecute to the fullest extent of the law.”
Anyone who suspects a claim was fraudulently filed in their name should contact the Hawaii Unemployment Insurance Division at 808-586-8947.
by Edwin Quinabo