The Real Thing, Sadly

By Debra Levy

So I heard about this happening to a reader, then another, and I thought “well this might be a thing.” Then I heard about it a few more times, and then it happened to us, so I did some research. And yes, it’s a very big thing.

The “thing” in question is the benefits provided by your state’s unemployment insurance program to phony claimants. Fraud is running rampant through most of these state programs. In fact, the Department of Labor estimates that at least $63 billion in improper payments, much of it fraud, have been made since COVID hit last year. What is
particularly insidious is that most of this fraud includes identity theft.

Take the case of the small, Midwestern commercial glazing contractor who called me and said I could use his story but not his name. He’d received a Notice of Benefit filing from the state for a former employee who’d been gone for three years—and who had quit. He couldn’t reach the former employee and had serious doubts he’d filed. Then he got a notice for another employee—and then one on himself. “We are both still working here,” he said wryly, “and proving this to the State has been an ordeal.”

In addition to the dollars lost, this type of fraud is challenging for a number of reasons. First, it involves identity theft in that someone is masquerading as a current or former employee in order to get these benefits. Usually these false identities are assumed with false addresses, so it takes quite a while for everyone to learn they have been victims, if they ever do at all. Bloomberg reports that a firm hired by the state of Nevada to track down this fraud found more than 1,700 different claims going to the same single home address.

Second, getting it corrected requires almost a full-time job. State unemployment agencies are so over-burdened right now that it is difficult to even report fraud, let alone get an acknowledgement and correction.

Third, the program is so lucrative that it keeps inviting more fraud. Those getting state benefits are also often eligible for the additional federal unemployment benefits. The federal government recently launched a website to report such fraud, located at www.dol.gov/fraud.

Particularly insidious is when the scam goes across state lines, it is even harder to unravel as it involves multiple jurisdictions. That is what our company experienced. The innocent-looking notice came in the mail from the West Virginia Office of Unemployment. It told us a former employee had filed for benefits in West Virginia and that our domicile,
the Commonwealth of Virginia, was notified. Only problem was the person named had never worked for us.

While there is little you can do to stop this from happening, there are some steps you can take to mitigate the consequences. First, educate your employees on keeping their identities private. Ask them to let you know if they receive any unusual requests for information, address- or password- changes from state unemployment agencies. Second, check that your company’s contact information is correct with your state unemployment agency. Change your password frequently. Third, review correspondence from that agency immediately. Fourth, check your quarterly and other reviews carefully, as well.

Staying safe in the pandemic has taken on a whole new meaning with these scams.

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