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Most unemployment fraud is related to identity theft

Unemployment benefits are a lifeline for those out of work. Yet with so many people applying for benefits, there is a growing number of fraud claims.

It's good news for those out of work that it's easy to apply for unemployment benefits.

“All they need really is two pieces of information:  Your name and date of birth, or your name and Social Security number,” said Michael Skiba, known as Dr. Fraud.

The bad news is that it's easy information for schemers to get. And, for many people, the only reason they're discovered they're victims of unemployment fraud is because they've received a 1099-G form from the state saying they applied for benefits as they prepare to do their taxes. 

“What that means is your identity has been compromised,” Skiba said. 

Unemployment fraud jumped by about 3,600% since the pandemic began last year, according to Texas Workforce Commission (TWC) statistics. This is because of a significant increase in identity theft where perpetrators use information they stole somewhere else to file a claim with TWC. 

The information is real, but the claim is not. TWC reviews every unemployment insurance claim to confirm an applicant’s identity and investigates the claim to confirm benefits or locks down the account and stops payments.

“We are working around the clock to make sure that is prevented,” said Cisco Gamez, a media and public relations specialist with Texas Workforce Commission.

TWC has a high-risk suspicious claim detection tool that looks at all claims when they are first filed. If a claim is deemed high-risk, then the claimant will need to contact TWC’s Office of Investigations to be identified before the claim can be processed. The Commission believes this tool prevented $238 million in fraudulent unemployment claims during 2020.

Fraud is usually identified in two ways: through the TWC’s internal monitoring systems and through tips from employees or employers.

Gamez said fraud is detected in most instances before any funds are paid. If funds do get paid to fraudsters, TWC attempts to recoup the funds by partnering with local law enforcement or uses criminal prosecution.

Here is what to do if you are a victim: Go to the TWC website to report the fraud so you do not get a bill to pay back the money. The there is a button on the website’s homepage titled “Report ID Theft.” 

You can also call the fraud hotline at 1-800-252-3642. Both options are available 24 hours a day, seven days a week. Individuals who report suspected fraud do not always get a call, email or letter after they provide information. TWC will only contact you about your fraud claim if investigators need more information or clarification. If you are a victim of ID theft and got an overpayment notification, reach out to TWC’s Identity Theft unit at IDTTF@twc.state.tx.us.

You also need to take these steps to reclaim your identity:

“Contact you police department in the city in which you reside in and get the incident report. Consult the Federal Trade Commission website. They have some further actions that you can take. You should contact one of the three credit reporting agencies, Equifax, Experian, TransUnion and ask for a fraud alert to be placed on your credit report.”

You should also contact the fraud department of your banking institution. Freeze or close your account, if necessary. Doing so will stop further damage to your identity and pocketbook.

“Usually they’re going to try to get into other areas of your personal life as well to either, you know,  steal money form you directly or put your money on the black market for sale,” said Skiba.

What if you now need those unemployment benefits yourself? No worries.

“If you are a victim of ID Theft, you would still be entitled to your full benefit claim,” Gamez said.

You will need to provide extra documentations to verify your identity. Most claimants can verify their ID using the self-service webpage. You will need to submit:

  • Government ID such as a driver’s license or passport
  • Financial and utility records. You can use credit bureaus and mobile telecom providers and
  • Biometric verification such as a selfie that matches the ID sent from #1

You will not be able to use the self-service webpage if your ID is blurry or shadowed, you have no credit or frozen credit or incorrect credit information, or a phone number not associated with your name. Instead, you will need to use the video call option. You will need:

  • Two forms of ID
  • A smart phone or tablet to take pictures
  • And the ability to join a video call.

Note that successful identification does not automatically mean you will immediately start receiving benefits. If additional eligibility issues remain on the claim, those will need to be investigated before payment is released.