Millions of fraudulent unemployment insurance claims have been filed in the U.S. over the past year, inundating an already overwhelmed system. The majority of the scams target the federal Pandemic Unemployment Assistance (PUA) program created by the Cares Act to aid those who aren’t traditionally eligible for benefits, such as gig workers and the self-employed. That’s largely because, unlike regular state unemployment insurance, PUA applicants don’t need an employer to verify their status.
At least $89 billion in improper payments have been doled out since last year, much of it through fraudulent claims, according to March estimates from a watchdog for the U.S. Department of Labor. The $1.9 trillion American Rescue Plan that Congress passed in March extended PUA benefits through early September, which appears to have triggered a new wave of scams.
At AZA Law, a trial law firm in Houston, five employees received letters in the past month from the Texas Workforce Commission regarding unemployment benefits that they didn’t apply for. Ask around at work, and you may learn that several of your colleagues have also been targeted. Here’s a step-by-step guide on what you should do if you’re one of the unlucky ones.
How do I know if I’m a victim of unemployment fraud?
The surest sign: You received a 1099-G tax form in the mail but didn’t apply for unemployment insurance last year. You should also be concerned if you’re still employed but receive a notice from your employer indicating that they received a request for information about an unemployment claim in your name, or if you get an unexpected letter from your state workforce agency about a claim or payment when you didn’t recently apply for benefits.
Someone is using my information to collect unemployment benefits. What should I do?
Act quickly. You should assume the scammer has access to valuable personal information such as your Social Security number. Notify your employer of the situation and report the identity theft to the state where it occurred. The Labor Department recently created a website that aggregates individual states’ online reporting forms and other useful email addresses and phone numbers.
After reporting the identity theft, you need to go into “protective mode” and “take steps to reduce your risk in all of the other areas because you are vulnerable,” says Eva Velasquez, chief executive officer of the Identity Theft Resource Center, a nonprofit that offers no-cost services to victims of identity crimes.
To deter fraudsters from applying for loans or credit cards in your name, you may choose to request a credit freeze or place a fraud alert on your credit reports. At a minimum, you should monitor your credit reports for signs of suspicious activity or unauthorized lines of credit. While you can typically request just one free credit report per year from each of the main credit bureaus, Equifax, Experian, and TransUnion are offering free weekly credit reports during the pandemic. If you see anything suspicious on your report, the Federal Trade Commission has a dedicated website for identity theft victims.
To help law enforcement, also consider reporting the fraud to the U.S. Department of Justice’s National Center for Disaster Fraud.
What should I do about my taxes?
If you haven’t filed yet and you received a 1099-G form you weren’t expecting or it lists more unemployment benefits than you received, report the fraud to the appropriate state agency and request a corrected 1099-G form. Do not report the incorrect 1099-G information on your tax return. Only report the income you actually received, even if you haven’t received your corrected 1099-G by the time you file your taxes.
If you’ve already filed, don’t panic. Don’t file an amended return but keep an eye on the Internal Revenue Service website regarding next steps.
Is there anything I can do to prevent becoming a victim of unemployment fraud?
“The unfortunate reality is that when it comes to government benefits types of identity theft, and in particular unemployment identity theft, there is not a lot you can do preventatively if your credentials have already been breached,” Velasquez says. More generally, she suggests being mindful of what data you share with whom, practicing good cyber hygiene, and staying vigilant for phishing emails, texts, and calls.
The Justice Department has warned that one way fraudsters are getting access to personal information is through websites designed to mimic those of state unemployment benefit agencies. Fraudsters lure in unsuspecting victims by sending links to the fake sites via text or email. Needless to say, you should not click on unsolicited links. To look up the URL of your state’s unemployment office, visit the U.S. Department of Labor’s CareerOneStop website.
Here’s another way to sort the real from the fake: There’s no cost to file for unemployment insurance. Your state agency will never call to ask you for a debit or credit card to process a claim.
What’s the government doing to crack down on unemployment fraud?
The Office of the Inspector General and the Department of Justice have established a joint task force to tackle the problem. Since the start of the pandemic, more than 140 individuals have been charged and arrested for federal offenses related to unemployment insurance fraud, according to a March report from the OIG.
A majority of state labor departments have also hired cybersecurity firms that are helping sort through claims and identifying fraudulent ones before they’re approved. The stimulus bill signed by former President Donald Trump in December strengthened requirements for documentation and identity verification for PUA. The latest stimulus bill, passed in March of this year, also allocated $2 billion to states to address fraud, equitable access, and timely payment of benefits.
Despite these steps, state offices are overwhelmed, which is why you may not hear back after reporting the fraud. Sandy Howell, director of administration at AZA, the Houston law firm, says she’s had no word from the Texas Workforce Commission. “It would be nice to get some response so we know it has been received,” she says.
Read next: Tax Cheats Are Costing the U.S. $1 Trillion a Year, IRS Estimates