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New IdentityTheft Scam

A fraudulent unemployment insurance claim may appear legitimate, as this one does, with all the accurate information for the state Department of Labor, but it may have been filed by a scammer who obtained personal information through a data breach.
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A woman from Saranac Lake received a letter from the state Department of Labor telling her she had unemployment insurance money to collect — and then another and another. All of them looked very official.

The woman, whom the Enterprise is not naming to protect her from retribution, said the phone numbers, postage and the Key Bank debit card she got all seemed legitimate. But the letters inside telling her she had unemployment insurance to collect did not make any sense. She’s retired.

“I thought, ‘Maybe New York state is really losing it,’” she said.

The letters were persistent, and some required more personal information, like her full Social Security number.

She was “panicked” and worried how fraudsters got her information.

When she learned about the fraud scheme through a family member, she reported it to New York State Police. She had to fill out a lot of paperwork with the police and DOL, and froze her credit to prevent anyone from applying for credit in her name.

How it works

Fraudsters are targeting New Yorkers to steal unemployment payments in their names.

People who are employed or retired are getting official mail telling them they are entitled to unemployment insurance money from the state Department of Labor, but they never applied for it.

The paperwork from the DOL is real; the money the papers ask the targets to claim is not.

Someone, usually in an overseas fraud network, has filed for unemployment benefits in the target’s name. If the paperwork is filled out, the scammer will siphon off the money from the state.

Using basic information obtained through data leaks from retail, banking and health insurance companies — even employers — scammers collect names, addresses and the last four digits of Social Security numbers. That’s all they need to apply for unemployment insurance in the target’s name. Then, when the target fills out the paperwork, the scammer changes the mailing address and reroute the payments to their own bank accounts.

Sometimes scammers even send out debit cards preloaded with money, asking the targets to activate and start using them.

Oftentimes, these forms are not filled out or are reported to authorities, but fraudsters rely on quantity and persistence. A few successful scams can net them a substantial financial haul.

In successful scams, the fraudulent payments can become a nightmare for people who have been working while also unknowingly sending unemployment payments in their name to someone in another country. States discover the fraud and want their money back. When the targets fill out their income taxes, the 1099-G form reporting unemployment insurance income would be inaccurate without them knowing it.

A fraud pandemic

Many types of fraud are common nowadays, with criminals finding vulnerabilities wherever they can. Unemployment fraud has become rampant this year as the COVID-19 pandemic put millions of Americans out of work.

The state and federal government have also sweetened the pot with additional money for the unemployed during the pandemic.

Traudsters are taking advantage of unemployment staff burdened by the pandemic and unprepared to process so many claims.

“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,” New York DOL Commissioner Roberta Reardon said in a statement.

She described unemployment benefits as a “lifeline” for millions of New Yorkers.

The U.S. Department of Labor’s inspector general estimated in a November 2020 report that fraudsters had stolen about $36 billion nationwide in the past year.

Pandemic unemployment fraud was first discovered in Washington in May 2020 and quickly spread around the nation. As certain states became harder to steal benefits from, fraudsters moved on to new ones. New York has been targeted for months, but efforts have ramped up recently.

“We have seen a huge increase in these over the past several weeks,” New York State Police Troop B spokesperson Trooper Jennifer Fleishman wrote in an email. “The first report of these happening in our troop was in June 2020. Since then, we have approximately 228 cases of these DOL Identity theft cases troopwide.” Troop B covers the northern New York counties of Essex, Franklin, Clinton and St. Lawrence, as well as northern Hamilton County.

The DOL reports it has paid out around $74.4 billion to approximately 4.4 million New Yorkers during the pandemic. In that time it also identified more than 521,000 fraudulent unemployment benefit claims, stopping an estimated $6.4 billion in benefits fraud.

Investigating

New York’s DOL Office of Special Investigations is working with local and state law enforcement, as well as the federal Secret Service and other states to investigate and prosecute these cases.

“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,” New York DOL Comissioner Reardon said.

According to the DOL, if fraud is reported, most cases can be stopped before the first dollar is paid.

But State Police say investigating cases like these and making arrests is very difficult.

“Many times we find the suspects are foreign and these don’t originate on domestic land. I don’t believe we will ever stop the fraudsters and scammers per se,” Fleishman wrote. “But I do think education is the best method.

“It seems often times like these scammers are steps ahead of law enforcement, and they are,” she continued. “We need to help people out there learn to protect themselves and we can teach what to look out for.”

State employees are particularly at risk to be targets.

“These letters appear to be sent mainly to those who are/were working for some branch of New York State,” Fleishman wrote.

Attacks have also targeted several New York workplaces en masse, likely stemming from data breaches of their employees’ information. The Syracuse City School District had around 150 such fraud attempts last summer, and Johnson Newspaper Corp., which owns the Watertown Daily Times, Malone Telegram and other papers, reported several instances over the winter.

Domestic fraudsters are easier to catch. One New York man, Elvin German, of the Bronx, was charged with using 250 stolen identities to take $1.4 million in false claims from the state. Investigators found his fraud because he used the same IP address and security question for many of these claims.

The answer to the question was the name of his dog, Benji, and when investigators raided his home, along with a computer stocked with stolen information they found a dog with a collar that read “Benji.”

Reporting

State Police say fake Pandemic Unemployment Assistance claims should be reported to local police, an employer (if employed) and the state Department of Labor.

The DOL suggests targets should report the fraud to its investigators at on.ny.gov/uifraud. It will then shut down the claim and not pay out benefits.

Reports to State Police are turned over to the DOL to investigate.

The woman from Saranac Lake suggested walking to the state DOL office on St. Bernard Street and speaking with someone there, if talking over the phone or online seems uncomfortable.

The state has introduced new steps to the screening process to weed out ineligible or fraudulent claims, including checks by multiple state agencies.

The state is also now working with the company ID.me to stop fraud and get legitimate claims fulfilled faster. This introduced a multi-factor authentication process in which applicants securely submit more information — including a photo driver’s license, passport or selfie — to verify their identity.

The DOL has added a new fraud prevention page at https://dol.ny.gov/report-fraud.

It also suggests checking out identitytheft.gov for other protective measures like changing passwords, getting a free fraud alert on accounts, getting a free credit report and reporting the identity theft to the Federal Trade Commission.

Fleishman also suggested monitoring credit and various accounts to ensure no suspicious activity is occurring.

The DOL can be contacted online at https://on.ny.gov/31EQPeG, by phone at 888-598-2077 or by mail at NYSDOL Office of Special Investigations, Building #12 – Room 576, W. Averell Harriman Campus, Albany, NY 12240.

Fleishman said State Police are still seeing reports of other types of scams, too — “phishing scams, catfishing scams, and at times, scammers calling and identifying themselves as being with some government or police agency and demanding money or the victim will be arrested.”

She said a tip-off for a lot of these being fake is that the scammers will make demands or get angry with the victim, and that they will ask money to be wired, or money cards purchased and sent.

While fraudsters are not often caught, the people who help them sometimes are. Known as money “mules” these people help fraudsters launder money internationally and in last year the federal government has charged over 2,000 of them.

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Source: on 2021-04-08 23:56:15

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