The Biggest Fraud Wave in U.S. History Requires Employee Reassurance This Tax Season

Could a scammer be getting unemployment benefits in your name? Unemployment fraud spiked in 2021 and ProPublica reported it as “biggest fraud wave in U.S. history.” With tax season now underway, organizations will want to continue communicating to their employees the importance of being vigilant about protecting their personal information (especially Social Security numbers) and their identities, practicing smart cybersecurity hygiene, and keeping an eye out for scams that can be an indication of identity theft.

What’s at stake? Unprecedented levels of fraud, identity theft, and their repercussions.

The U.S. Department of Labor’s inspector general estimates that at least $87 billion in fraudulent and improper payments made their way through the system by the time pandemic-linked jobless aid programs expired in September 2021. “The system was the victim of what is one of the largest internet crimes in history, perpetrated against all 50 states at extraordinary levels,” said James Bernsen, a spokesperson for the Texas Workforce Commission.

Identity Theft Linked to Unemployment Benefits

According to the U.S. Bureau of Labor Statistics, U.S. unemployment spiked at an all-time high at 14.8% in April 2020. Along with unemployment, identity theft also surged during the pandemic. The U.S. Department of Labor gives an example of a person who used a Social Security number to file unemployment insurance claims in 40 states, resulting in $222,532 in payments. Much of the unemployment fraud has been linked, not just to individuals, but to organized crime rings that bought identities stolen in past data breaches, according to a CNBC article.

“By the time the fraudster has applied for unemployment insurance, who knows what else they used your identity for,” according to Michele Evermore, a senior policy advisor for unemployment insurance at the U.S. Department of Labor. She says that federal officials and state agencies have clamped down since early 2020, instituting identity verification and other fraud-prevention measures, according to a CNBC article. Evermore says that about $1 billion of benefits issued between July 2020 and June 2021 was due to confirmed fraud, much of it likely due to identity theft.

Be A Resource to Your Employees

Help your employees take proactive steps to protect their identity and personal information against financial harm:

• Make your employees aware of identity theft. For more information about unemployment identity theft, visit the U.S. Department of Labor.
• Keep an eye out for inaccurate 1099-G forms.
  1. If they have received a 1099-G and it has inaccurate figures, report this to the state unemployment agency that issued the 1099-G. Find the appropriate contact via this U.S. Department of Labor (DOL) state directory. The state will issue an amended tax form and update the record with the IRS on your behalf.
  2. The Federal Trade Commission (FTC) recommends reporting the fraud to your state unemployment benefits agency. Find state agencies here.
• Encourage your employees to file taxes early.
• Offer your employees IDX Identity. Advanced monitoring technology can protect your employees’ private data, simply and securely. IDX scans thousands of data points for personal data, going where most credit and dark web scans can’t.

Read HR’s Guide to Protecting Employees to answer questions about how you can better protect your employees and your organization from the repercussions of identity

Government Taking Action; Resources Available

The Office of Inspector General (OIG) “remains committed to meeting the challenges created by the coronavirus (COVID-19) pandemic and assisting DOL and Congress in improving the efficiency and integrity of the Unemployment Insurance (UI) program. Strengthening the UI program to prevent improper payments, including fraud, and to detect and recover improper payments that have been made, is key to ensuring unemployed workers expeditiously receive much-needed benefits, while safeguarding tax dollars allocated for this goal.” The latest DOL-OIG Oversight of the Unemployment Insurance Program report was updated on January 3, 2022.

Additionally, an extensive task force has been organized to counter unemployment insurance fraud. The OIG is a good resource about unemployment benefits scams and how consumers can protect themselves.

Tax-time can be difficult enough. Adding identity theft and possible fraudulent claims in your employees’ names can add to the stress. Offering your employees reassurance and protecting them with IDX Privacy Platform is not only a sound business decision, but it will go a long way in reassuring your employees.