Friday, 6 August 2021

Unemployment identity theft — or fraudulently applying for unemployment benefits using someone else's personal information — has been around for years.

As millions of Americans relied on enhanced unemployment benefits during the COVID-19 pandemic, cases of unemployment identity theft soared in the U.S.

A report from the Office of Inspector General for the U.S. Department of Labor estimated more than $36 billion of the $360 billion in emergency unemployment benefits provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act had been paid improperly, much of it attributed to fraud.

According to the same report, prior to the pandemic, investigations into unemployment insurance fraud made up 12 percent of the office's case load. After the passage of the CARES Act, investigations into unemployment benefit fraud made up a whopping 70 percent of the office's cases.

This dramatic increase in fraud is partly blamed on the rush to get unemployment benefits to many Americans who desperately needed them, while states were unprepared to handle the volume of claims. And while the states and federal government are working to combat the problem, Americans still remain vulnerable.

How to know if you've been a victim of unemployment identity theft

Most people won't find out they've been a victim of unemployment identity theft until after their information has been used to file a claim. Thieves typically acquire Social Security numbers and other personal information through data breaches and then use the information to apply for benefits online. They rarely have any personal contact with the victim.

Here are some of the ways you might discover your information has been used to file a claim:

  • You file for unemployment benefits and your state agency informs you an application has already been filed in your name.
  • You receive a notice from your state unemployment office confirming receipt of your claim or requesting additional information when you have not filed a claim.
  • You receive tax reporting Form 1099-G from your state unemployment agency showing you've received benefits when you have not applied for or received benefits.
  • You are contacted by your current or previous employer, as they would have received notice from the unemployment agency regarding your claim.

What to do if you have been a victim of unemployment identity theft

If you discover your personal information has been used to apply for unemployment benefits, you need to act quickly. For your protection, if you file your complaint online, keep a digital copy of your complaint. If you contact your state's unemployment agency by phone, write down the date of the call, your case number and the name of the representative to whom you spoke.

  • Report the fraud to your state unemployment agency and your employer.
  • Go to and report the fraud to the Federal Trade Commission (FTC). Once you have filed a report, you will receive free assistance to help you recover from the initial identity theft and protect yourself from additional fraud. Assistance could include free credit reports, credit alerts and credit freezes. The free credit reports will allow you to see if anyone has applied for or opened credit accounts in your name. A credit alert will let you know when someone applies for credit in your name and a freeze will prevent any new credit lines from being opened in your name for a specified amount of time, typically a year.
  • Don't respond to any calls or texts about returning mistaken unemployment benefits. In most cases, the fraudulent applicants will have unemployment benefits sent to a bank account to which they have access. However, sometimes the benefits will actually be sent to an account belonging to the victim. In these cases, the scammers will contact the victim and pretend to be their state agency and request the money be returned. Again, do not respond to any requests of this type. If you do receive benefits you have not applied for, contact your state agency directly.

More ways to protect yourself from unemployment and other identity theft

Never provide personal or financial information to anyone who contacts you by phone, email, mail or text unless you are absolutely certain they are legitimate. Almost without exception, legitimate companies will not ask you to provide personal information via email or text.

In addition, check your credit report often. This is a good idea even if you haven't been a victim. Due to the excess of fraud during the pandemic, the three major credit reporting agencies, Equifax®, TransUnion® and Experian™, are offering concerned consumers free weekly credit reports.

All types of identity theft are on the rise

Most Americans have been aware of the threat of identity theft for years. However, according to numerous reports, these types of crimes have skyrocketed since the beginning of the COVID-19 pandemic, with nearly 50 percent of Americans being affected in 2020. That means that now, more than ever, consumers need to be extra cautious about protecting their information and themselves.

The content provided is for informational purposes only. Neither BBVA USA, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial consultant about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA USA or any of its affiliates.

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