Best Practices for Identifying, Combating Unemployment Fraud
After dealing with the COVID-19 pandemic for more than a year, we’ve seen a meteoric rise in unemployment compensation claims. As new jobless benefits programs come into play, fraud has become major problem with cost estimates ranging in the hundreds of billions of dollars. So, how can you and your company and employees prevent and respond to potential unemployment fraud?
Recognizing Fraud’s Red Flags
Unexpected communications. If you or your employee receives communications from an unemployment agency (e.g., the New Hampshire Department of Employment Security or the Massachusetts Department of Unemployment Assistance) that you aren’t expecting, don’t disregard it as junk. Instead, take the time to review and report it if it’s potentially fraudulent. Some red flags include (1) the name on the notice is slightly misspelled, (2) the Social Security number is off, or (3) the notice uses a previous legal name.
Unauthorized transactions. Unauthorized transactions on your accounts (personal or business) can relate to fraudulent unemployment benefits. Make sure you and your employees develop a habit of frequently and consistently checking your accounts and credit cards. In this age of information, it can be easy to forget about an account. If possible, enable push or e-mail notifications for when (1) credit cards are used or (2) money is withdrawn or deposited in your accounts. That way, you’ll receive instant notice if a fraudulent transaction has been made.
Fees for benefits. Unemployment agencies won’t charge claimants to apply for benefits. If you, an employee, or a former employee is being asked to pay for a jobless benefits application, you should report the incident immediately.
Fictitious websites. Some fraudulent actors may even develop fictitious websites mimicking an unemployment agency or government portal. Always be mindful of the websites and contacts you make online. Government websites will end with “.gov” and should be secure, meaning they’ll start with “https://”.
Responding to Fraudulent Transactions
First, report any unauthorized transactions to your financial institution or credit card provider.
Second, contact the three major credit bureaus (Equifax, Experian, and TransUnion) to let them know about potential identity theft. They can then put a fraud alert on your credit records.
Third, file an identity theft affidavit with the IRS (Form 14039). You also can request an identity protection PIN, a six-digit number that prevents someone else from filing a tax return using your Social Security number. You must be able to prove your identity, and the PIN lasts for only 1 year.
Fourth, file a nonemergency report with your local police department. Don’t call 911. Local police may not actively investigate your potential unemployment fraud, but it’s still a good step because it establishes a record of the potential fraud you can provide to creditors.
Fifth, change all of your passwords. It may not be apparent where or how your data were breached, so it’s important to cover all of your bases.
Sixth, follow the steps described at www.identitytheft.gov.
Finally, if you are an employer, notify employees who might be victims so they can take all necessary precautions. And train them on how to identify potential fraud.
Reporting What You’ve Found
You can report unemployment fraud to:
- S. Department of Labor’s (DOL) Office of the Inspector General, online reporting formor hotline phone numbers, 202-693-6999 or 800-347-3756;
- S. Department of Justice’s National Center for Disaster Fraud, online complaint formor hotline phone number, 866-720-5721; or
- New Hampshire Employment Security, online reporting formor hotline phone, 800-852-3400, ext. 84016.
If your potential unemployment fraud deals with another state’s workforce agency, the DOL has a fraud reporting directory for all states on its website.
Article courtesy of content partner BLR. The author, Abbygale Martinen, is an attorney with Sheehan Phinney Bass & Green PA in Manchester, New Hampshire.