New form 941

Beware of increased unemployment fraud due to identity theft

COVID-19 has increased the number of unemployed filings and unemployment benefits, resulting in more fraud due to identity theft.

The rise in unemployment filings and the expansion of unemployment benefits as a result of the COVID-19 pandemic have contributed an explosion of fraud across the country. HR departments are responsible to respond quickly to false claims and assist those employees whose personal information has been stolen.

Many employers are receiving notifications of claims for unemployment benefits filed in the name of individuals who remain employed or employees who left the organization years ago. The FBI alerted employers in July about the rise in fraudulent unemployment claims utilizing stolen identity information.

Steps employers should take

  1. Monitor and confirm the legitimacy of all unemployment claim notifications.
  2. Respond as instructed in the notification. Each state has its own process for submitting and processing unemployment claims.
  3. Educate your employees about the spike in fraudulent claims so they can carefully monitor correspondence and bank accounts and take the appropriate steps to avoid becoming a victim of identity theft.
  4. Review IT security. Employers should consult with their IT department to confirm that databases containing employee information have not been compromised.

What if we receive a fraudulent notification?

Notify the impacted employee immediately. The filing of a fraudulent unemployment claim is a sign that an employee’s sensitive personal information is available to criminals. The employee should take the following steps:

  • Notify all three major credit reporting bureaus and request a “fraud alert” on their credit report:
    Equifax TransUnion Experian
    Consumer Fraud Division Fraud Victim Assistance Dept. National Consumer Assist
    800.525.6285 800.680.7289 888.397.3742
    P.O. Box 740241 P.O. Box 6790 P.O. Box 9532
    Atlanta, GA 30374 Fullerton, CA 92834 Allen, TX 75013
    equifax.com transunion.com experian.com
  • Contact banks and credit card companies and follow their advice as to whether to close accounts.
  • Contact the Social Security Administration at 1-800-269-0271. Order a copy of his/her Personal Earnings and Benefit Estimate Statement (PEBES) in order to check the accuracy of his/her work history on file with the SSA.
  • Notify the Internal Revenue Service’s (IRS) fraud hotline at 1-800-908-4490. Request a copy of his/her Wage and Income Transcript from the IRS. Report and dispute any fraudulent earnings listed on the Wage and Income Transcript. Visit the IRS' Identity Theft Central for additional IRS information. Call 1-877-487-2778, between 8:00 a.m.-10:00 p.m., Eastern time.
  • File a report with the Federal Trade Commission.

Report the fraud. Notify both the state unemployment benefits agency and the local police department of the fraud. The U.S. Department of Labor provides employers with resources on how to report unemployment fraud in each state. The State of Kansas has set up a website — ReportFraud.ks.gov — where any fake claims should be reported immediately.

Questions?

For more information, or discuss how to deal with a situation, contact Cindy McSwain using the information below.

Cindy McSwain

Senior Vice President
Outsourcing Services

Cindy McSwain leads AGH’s outsourcing services group. Her team provides payroll, accounting, funds disbursement, controller, and other financial outsourcing services to numerous clients throughout the U.S. Prior to joining the outsourcing group, Cindy served AGH’s audit clients for 10 years, working with a wide range of middle-market, closely held and family-owned organizations.

Her current clients cross many industry sectors, including manufacturing and distribution, restaurants, retailers, medical and not-for-profit. She has participated in numerous SEC filings and public registrations and has experience in mergers and acquisitions. Cindy is a certified public accountant and a member of both the American Institute of Certified Public Accountants and the Kansas Society of Certified Public Accountants.

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