March 15, 2021

The State Unemployment Fraud Explosion and How to Respond

By Frank Suponcic, Partner, Valuation, Forensic and Litigation Advisory Services

The State Unemployment Fraud Explosion and How to Respond Investigations, Forensic Accounting & Integrity Services

Unemployment fraud — resulting from the unprecedented volume of pandemic-affected business closures displacing millions of workers — has become a national issue.  It began in earnest last May and has since gained out-of-control momentum. 

Tens of billions of dollars have been fraudulently obtained by fraudsters exploiting states’ unemployment systems, many from overseas.  Ohio, for example, identified $330 million in fraudulently paid benefits – 100,000 claims in December alone — while at the same time the state’s web portal logged 70,000 reports of identity theft.

Victims of unemployment benefits fraud include Ohio’s governor, his wife, Ohio’s lieutenant governor… and me!  Thieves have gone so far as to use the identities of recently deceased individuals in an effort to file fraudulent claims.  We have seen cases where one’s personal identifying information has been used to file unemployment claims in multiple states.

In most states, all a fraudster needs to file an unemployment claim is a real person, the date of birth and social security number.  Due to some very high-profile database breaches over the years, resulting in millions of U.S. consumers’ personal identifying information being compromised, fraudsters can buy this information on the dark web easily and cheaply.  If the fraudster needs any more information, chances are they will look on your social media or pay a few more dollars to purchase it from sites such as Family Tree Now or TruthFinder.

How Do You Know You Are a Victim?

  • You may receive a 1099-G for unemployment compensation.
  • You may have received a U.S. bank card loaded with unemployment benefits.
  • You may receive a determination letter from the state unemployment department confirming your application for unemployment benefits and providing you a temporary PIN number for your unemployment account.
  • You may be notified that you failed a security verification process in order to process your unemployment claim.
  • Your current employer may notify you, or a former employer may inquire, to determine if you filed an unemployment claim.  If they do not alert you, you may wish to alert them!
  • You may apply for unemployment benefits only to be rejected since someone else has already filed an unemployment claim in your name.

What to Do If You Are a Victim Unemployment Fraud

  1. Report the fraud to your state’s unemployment office as soon as possible. Most states created portals to handle the volume of fraudulent notifications.  In Ohio, victims should go to www.unemploymenthelp.ohio.gov or call (833) 658-0394 or 1-800-686-1555.
  2. File a police report with the police department in your residence city.
  3. Freeze your credit. While that may seem extreme, the fact someone applied for unemployment benefits using your name should tell you a fraudster has a lot of your essential personal identifying information that they can use to commit other financial crimes and potentially wreck your good credit along the way.
  4. Securely and meticulously review all three of your credit reports on www.annualcreditreport.com. You are entitled to one free credit report from each of the three reporting bureaus annually.

The rush of fraudulent unemployment claims has only highlighted what we have known for quite some time.  A lot of our personal identifying information is “out there” and accessible. The pandemic and resulting opportunity to file fraudulent unemployment claims has only highlighted our vulnerability. 

As always, if we can assist you with any forensic, litigation support or identity theft matter, please call Frank Suponcic at (440) 459-5700 or via email at frank.suponcic@marcumllp.com.