Unemployment Fraud – What You Need to Know
At our Weekly Webinar on July 20th, unemployment compensation expert, Judy Snyder discussed the unprecedented rise, nationally, in fraudulent Unemployment Claims and what preventative steps organizations should be taking.
Over the course of 2020 and 2021, billions of dollars in pandemic benefits have been stolen due to unemployment fraud. While all employees in Pennsylvania are vulnerable to these fraudulent claims, this is particularly true for C-level employees because they are high earners. Fraudsters tend to avoid making unemployment claims for lower-level employees because they are more likely to already have a claim open in their names.
The question here is how and why does this happen?
According to Snyder, fraud generally occurs in three ways:
- Data breaches
- False representation of Claimant Identity
- Targeted cyber-attacks to dated UI systems
Luckily, Snyder reveals that there are warning signs organizations can use to detect fraudulent claims:
- Receiving paperwork/notice for employee who is fully employed
- Receiving paperwork/notice for an employee who never worked for the Company
- Receiving paperwork for the person who processes these claims
- Employee receiving an IRS Form 1099-G for UI benefits received
You have identified fraud in your organization, now what?
According to Snyder, there are steps both that both employers and employees should take once fraud has been identified.
What Employers Should Do:
- Thoroughly review each claim for potential fraud
- Address UI claims individually with impacted employees
- Notify the State Agency regarding the fraudulent filing
- Appeal all charges to insure employer costs/tax rates not adversely affected
- Respond to UI wage audits and state calls
- Audit benefit charge statements to make sure credits have been received
What Employees Should Do:
- Contact state unemployment agency and follow proper fraud reporting procedures
- Contact all three major Credit Bureaus to freeze their credit
- Notify their bank
- Notify law enforcement
MFA for NJ, MD, and Federal PUA
According to Snyder, New Jersey and Maryland both utilize outside vendors to provide identity verification and fraudulent detection. Specifically, Maryland uses LexisNexis, while New Jersey and the Federal PUA benefits system use ID.me. Regardless of the system, LexisNexis and ID.me both require claimants to verify their identity by uploading these three items:
- Driver’s license
- State ID
- Passport or Passport Card
MFA for PA
According to Snyder, Pennsylvania replaced their old system on June 8, 2021, with a new system that uses single sign-on. Unfortunately, the older system was more secure and could not be hacked as easily as the new one. Pennsylvania is currently working on a multi-factor, virtual indentation; however, it is not yet complete. Because of this, employees must be careful, especially if they receive a debit card in the mail that they did not apply for.
What to Expect Moving Forward
At the end of her discussion, Snyder explained that she has become an unemployment cop on top of performing her typical day-to-day HR duties. Although unemployment is going down, fraud continues to grow exponentially. With Pennsylvania’s system still under construction, we are not yet out of the woods. However, employees and employers can take these steps to secure themselves against fraudsters.