A scam involving unemployment benefits is hitting both statewide and locally.
Law enforcement and the state Department of Labor continue to investigate growing numbers of fraudulent unemployment claims as thousands returned to work this winter, officials said.
Officials at every level of government, including police, attorneys and state or local executives, have reported heightened numbers of fraudulent unemployment cases and are warning residents to remain vigilant against potential attacks. The cases often target New Yorkers involved in past data breaches.
It’s a situation area police agencies say has occurred locally — even at The Daily News.
Johnson Newspaper Corp., which owns The Daily News and Livingston County News, has received multiple unemployment claims since October for workers who were still employed or never filed claims.
Officials are investigating nearly 10 potential fraud cases received since October involving The Daily News and Watertown Daily Times employees.
The company has received reports of two potentially fraudulent claims in the last two weeks.
“What I gathered is, scam artists were signing up for unemployment in other people’s names and having cards sent to their house,” said Matthew Crowder, Johnson Newspaper’s director of finance and human resources. “My guess is they tried to intercept them before the person checked their mail.”
Employers receive a notice from the Labor Department to verify an unemployment claim. The company was not asked to verify claims for at least two employees who each received a letter and debit card for payment of benefits.
“They said, ‘What is this? I didn’t sign up for this. I never signed up,’” Crowder recalled. “The money was supposed to go on that card.”
Other workers went to file for unemployment after losing jobs in the wake of the ongoing COVID-19 pandemic, but could not because a fraudster had already filed and improperly collected benefits in their names.
“Other people who got the cards didn’t know any better, and they have to pay that money back,” Crowder said. “They weren’t supposed to get that money in the first place.”
Johnson Newspaper Corp. owns nine daily and weekly newspapers across upstate New York, including in the north country, the southern Capital Region and Western New York.
The increased instances of fraud are not due to a breach of Labor Department systems, according to Labor Department Director of Communications Deanna Cohen, but may be from previous hacks of other institutions such as banks, insurance companies or former employers.
“If someone is the victim of unemployment insurance fraud, it means their personal information — like their full name, date of birth and Social Security number — has been compromised and used to file a false claim under their name with the (Labor Department),” Cohen said.
Johnson Newspaper Corp. was the victim of a significant cyber attack and breach of company data in early 2019, but personnel files were not impacted.
“That personal information wasn’t believed to be part of the problem,” Crowder said. “I think there is very little chance of that — an infinitesimal chance — of that being part of it, especially when this is happening all over the state.”
The nation’s unemployment rate decreased slightly to 6.3% in January, or by about 10.1 million people, according to the U.S. Bureau of Labor Statistics. But it’s significantly down from a high of 18 million people in April 2020.
About 5.7 million Americans were unemployed, or about 3.5%, in February 2020 just before the pandemic began.
“Unemployment fraud is, sadly, a scourge that we have to fight every day, but it is particularly despicable that criminals would use a global pandemic as cover to attempt to defraud our system,” according to a statement from Labor Department Commissioner Roberta Reardon. “These benefits have been a lifeline for millions of New Yorkers over the last year and every day our Office of Special Investigations is working to protect our system from fraud and abuse.
“Our team is using technology, including artificial intelligence and other sophisticated techniques, to identify fraud as quickly as possible and stop these criminals in their tracks,” she added. “We will continue to work with our law enforcement partners at all levels to bring these thieves to justice.”
The Labor Department has identified more than 425,000 fraudulent unemployment claims since last March, according to statistics from the department Feb. 5. The majority of fraudulent claims were caught before money was improperly paid to residents, according to the department, resulting in more than $5.5 billion in savings.
Labor representatives declined to provide updated figures multiple times over several days, citing ongoing investigations that take several months.
“We cannot give you a specific number as new fraud is being identified every day and we continue to work with financial institutions and law enforcement partners to recover more and more of the funds that were paid to fraudsters,” Cohen said. “These recoveries can take months, but we are committed to clawing back as much money as we can.”
The Labor Department cannot prosecute a New York state resident, and did not have statewide statistics about the number of people criminally charged in relation to unemployment fraud this year or since the pandemic began.
The Labor Department works with the U.S. Department of Labor Office of the Inspector General, Secret Service, FBI, other federal prosecutors, local district attorneys and other partners at the local, state and federal levels to investigate unemployment fraud.
“After cases are referred for prosecution, the state works with law enforcement and prosecutors to hold the criminals accountable,” Cohen said.
Charges depend on each case and the prosecuting agency.
“That depends on the specific circumstances,” she said. “You would have to ask the law enforcement (or) prosecutorial agencies who pursue those cases. The DOL’s role is investigatory.”
Law enforcement across the state have said they first saw increases in fraudulent unemployment cases last spring when thousands of people started working from home at the start of the pandemic.
Some employees returned to in-office work last summer as virus infections stayed low, but returned home in large numbers in late fall or early winter, driving unemployment fraud reports back up.
Police responded to a smattering of unemployment fraud cases before the pandemic began.
The state has paid more than $65 billion in benefits to more than 4 million New Yorkers since March.
“Compare this to California, which reported paying $11.4 billion in fraudulent claims — 10% of that paid out — with another 17% under investigation,” Cohen said. “We have a track record of stopping fraud in New York, and we will continue to do what we need to do to protect this lifeline for unemployed New Yorkers.”
Cohen added that unemployment fraud existed before the pandemic and is a battle plaguing all U.S. states and territories.
“It is a constant threat, and criminals often use times of crisis — like this pandemic — to strike,” she said. “Every state is fighting fraud.”
The Labor Department referred more unemployment fraud cases to federal prosecutors between March and August 2020 than the department handled in the last decade combined.
“You cannot stop criminals from fraudulently applying for mortgages, credits cards, unemployment benefits, et cetera,” according to Cohen. “However, we can catch the fraud before a single cent is paid and the vast majority of fraudulent claims have been caught before a single cent is paid on the claim.”
The Labor Department launched a public service announcement campaign in August 2020 to dissuade additional identity theft and false claims. The campaign, which continues indefinitely, was produced in-house with the department’s own video and graphics team, Cohen said.
“We have been proactively sharing the (public service announcement) and other messaging on social media and with the media,” she said.
Any person who receives a document about unemployment benefits from the Labor Department but did not file a claim should immediately file a report with the department at on.ny.gov/uifraud.
The department recommends New Yorkers take proactive steps to protect against identity theft, including regularly changing passwords and logins for online accounts, especially banks; placing a free fraud alert on their account with one of the three credit bureaus, Experian, TransUnion and Equifax; getting a free credit report from annualcreditreport.com; and reporting the identity theft to the Federal Trade Commission and their local police department.
The Batavia City Police Department has received reports of fraudulent unemployment claims, though the department doesn’t keep track of them specifically based on the pandemic, said Sgt. Marc Lawrence.
There’s no specific police call for unemployment fraud, which could involve many categories such as theft, identity theft, or scheme to defraud, he said. But the department has received four fraud and two identity theft complaints involving some kind of unemployment fraud since Jan. 1.
What do city police usually advise people when they call to make an identity theft report?
“Typically, the Batavia Police Department will take all necessary information to document it on our behalf,” Lawrence said. “If there is any substance of evidentiary nature we will investigate the report.
“However, generally, identity theft cases are done online and the resources that the Batavia Police Department have for online investigations is extremely limited,” he continued. “Have a copy of all the bank statements that show the fraudulent transactions — when and where they took place, any information where they were requested to provide information or forms that were sent to them containing fraudulent information. With those forms, officers and detectives can complete the appropriate investigation and if necessary request further assistance from agencies that may be more suited to conduct the investigation.”
City police provide victims with information on identity theft and refer them to the federal website, IC3.gov, to report the incident as well. Any of the unemployment fraud cases have been referred to the New York State Department of Labor — Office of Special Investigations.
Lawrence said people may also call a Department of Labor hotline at 1 (888) 598-2077 or report it by mail to NYS Department of Labor, Office of Special Investigations Bldg 12 — Room 200, W. Averell Harriman Campus, Albany, NY 12240.
The situation likewise extends beyond police.
Executive Director Jay Lazarony of the GLOW Workforce Development Board said the employment and training offices in each of the GLOW counties have gotten calls from people reporting suspicious claims.
“Mostly it’s that they received a claim and they know they haven’t filed one because they’re still working,” he said. “I would doubt they’re the ones receiving the money (from the state). We are getting them and the minute we get them we are referring them.
“I think we started seeing them within the first three months of the pandemic,” he said. “I don’t know if they were fraud claims or just suspicious behavior.”
GLOW-area customers that have been hit with fraudulent claims are directed to the Department of Labor website or hotline, or to report by mail.
Chief Deputy Joseph Graff of the Genesee County Sheriff’s Office Investigation Division said the office has taken 17 identity theft reports since Jan. 22.
“Since March 2020, we have taken about 60 complaints related to identity theft,” Graff said. “I would say that a large percentage of those are related to fraudulent unemployment benefit claims.” But it would be difficult to determine he exact percentage from unemployment fraud. Like the City of Batavia, the Sheriff’s Office works with the state Department of Labor.
Identity theft cases are challenging and success varies depending on the type of case, Graff said.
“Instances where a local connection exists, such as person’s ID or credit card is used to make a purchase at a local store, are generally more likely to be resolved,” he said. “However, in other investigations, the intent of suspects to use the anonymity of the internet and technology can make determining a viable suspect difficult.”
To report an identity theft complaint, to the county Sheriff’s Office, the victim should contact dispatch (585) 343-5000.
And the truth remains: to be a victim of unemployment fraud — or any such fraud — is a violation.
“We have found that sometimes the victim receives a letter in the mail from DOL or their Human Resources notifies them of the claim,” said Wyoming County Sheriff Greg Rudolph, whose department is likewise investigating cases. ”The loss of personal information like that is intimidating.”