U.S. Sees Spike in Unemployment Fraud

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Act Quickly To Mitigate Risk

By Casey Shinliver

In the wake of the COVID-19 pandemic and with the passage of the CARES Act, many states have seen substantial increases in the number of individuals seeking unemployment insurance benefits.  To eliminate delays and speed up the payment of these benefits, many states loosened the traditionally extensive review process aimed at uncovering fraudulent claims.

As a result of this change in the review process, states are experiencing increased identity theft in the form of unemployment benefit claims.  Perpetrators are attempting to file for unemployment benefits by using the identity of someone else.  Most states report no breaches to their unemployment system.  Instead, scammers are locating personal information through credit card data and personal information breaches to illegally apply for unemployment under false names.

Many businesses across the nation are receiving employer notices requesting unemployment benefits.  Some of the claims request benefits on the owner/operator, exempt employees, and even currently employed individuals.

 

Act Quickly

It’s common for someone to be unaware of these false claims until they’re mailed a determination notice or until you as the employer receives a request to verify someone’s employment status.  Business owners must review all notices received from their state’s Department of Labor regarding the status of an unemployment claim and respond immediately.  This allows you to minimize your unemployment taxes if a former employee is denied benefits.  Responding quickly also helps identify and resolve potential fraudulent attempts more rapidly.  

Reporting Fraud in Kansas

If your business receives a notice, you can report fraudulent activity to the Kansas Department of Labor (KDOL) by:

  1. Visiting KDOL’s website, filling out, and submitting a fraud form.
    • This method provides the required information needed to begin an investigation and automatically generate a police report so fraud can be reported to creditors.
  1. Writing on the paper notice that you are not filing a claim, emailing a copy of the fraudulent claim to fraud@ks.gov, and faxing it to the number provided on the notice.

In addition to the new fraud form mentioned above, a 72-hour hold on all new claims has been implemented so KDOL can verify each claim’s validity. 

After You Report the Fraud

After reporting the fraud, make sure the impacted employee reports the potential identity theft to all three major credit reporting bureaus, their banks and credit card companies, the Social Security Administration, the IRS fraud hotline, and the Federal Trade Commission.

This year has been full of uncertainties making it hard to predict what may come next.  If you’re unsure what to do or have questions, reach out to your Adams Brown advisor for assistance