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Unemployment Fraud Is Ramping Up, and It’s Getting Creative

vitaliy_sokol on Deposit Photos

The Biden administration’s recent $1.9 trillion economic stimulus package aims to propel the U.S. economy back to its former strength. Among other things, the package allocated money to fight back against unemployment fraud, which has become a massive problem for those waiting on their benefits.

A $63 billion problem

Over the past year, unemployment claims have been rife with fraud, with over $63 billion of improper payments sent out. As a result, states have expanded their security systems to help identify false claims. But valid claims are still piling up. The backlog is so severe that only 11 states meet the federal standard of paying out 87% of approved claims within 21 days

For example, Ohio has identified nearly 230,000 reports of identity theft in unemployment claims since mid-January.

Kristin Richards, acting director of the Illinois Department of Employee Security, calls it a “tug of war.” 

“We have this public pressure to move quickly with benefits while at the same time having to really fight fraudsters and make sure that we are being good stewards of benefit programs.” 

Scammers are getting smarter 

As the pandemic and lockdowns drag on, fraudsters are getting more creative. Some even use 3D printed face masks to pose as claimants in state-required video chats. 

“The greed of individuals can overtake them, and they can take advantage of these situations,” says Howard Arp of the Government Accountability Office. 

But don’t worry – if you lose your benefits to fraud, you won’t be accountable for those lost funds. And you will see that money eventually, but it won’t be quick. If an unemployment claim is misidentified as fraudulent, a resolution is a lengthy process. It can take weeks to get those benefits. 

How to protect yourself 

  1. Keep your personal information safe and private. 
  2. Beware of email and social media scams
  3. Don’t click on links or attachments from senders you don’t trust. 

State officials continue to work with law enforcement to develop stronger identity-verification procedures and crack down on scammers. The latest stimulus bill includes $2 billion to address unemployment fraud. This money will also go toward achieving equitable access and timely payment of benefits across the board. 

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