In the wake of the pandemic, the government expanded jobless benefits — and states were soon flooded with fraudulent unemployment claims filed by criminals using stolen personal information. If you work in human resources, it’s important to carefully look over the unemployment claims you receive. If anything is incorrect — say, the name used on the form is someone who is still an active employee — it may signal fraud. Any suspected fraud should be reported to the designated state agency by both the employer and the employee.

Across the country, a steep rise in unemployment fraud is making headlines — and raising red flags in human resource departments. Here at Allstate Identity Protection, we’re seeing the impact: in the first two months of 2021, 68% of our new identity theft cases involved unemployment claims. 

Unemployment fraud happens when a criminal knowingly uses false information to claim unemployment benefits. When the fraud involves stolen personal information, it’s an identity crime. 

In the wake of the pandemic, the government offered enhanced jobless benefits — and criminals flooded the system with fraudulent claims, vacuuming up more than $36 billion in unemployment payments intended for out-of-work Americans. 

If you work in human resources, there’s a chance some of those bogus claims could land on your desk. Catching and reporting them is key. If a criminal posing as a former employee manages to collect payments, your company’s unemployment insurance tax rate may go up. 

Let’s take a look at what you can do to handle unemployment fraud at your company — and how offering an identity protection benefit like ours can help employees better protect themselves in the future.

Tell your team about the rise in unemployment fraud

In some cases, employees will find out about the fraud themselves, when the government issues them a 1099-G tax form for benefits they never applied for or received. 

Consider sending a company-wide alert so that your team knows about the spike in unemployment fraud. Then they can be on the lookout —  and they’ll know to loop you in if something comes up.

Monitor claims carefully

In other cases, the employer will discover the fraud. 

The steps for submitting and processing unemployment claims vary by state. But in general, when a former or furloughed employee files for unemployment insurance, your company should receive a notification from the agency responsible for administering these benefits in your state. 

It’s important for employers to carefully verify all the details on these documents, including names, dates of employment, and wages. 

If anything is incorrect — like, say, the name used on the form is someone who is still an active employee — it may signal fraud.

Report the fraud

If you suspect a worker has fallen victim to unemployment fraud, let them know right away. 

From there, both you as the employer and the impacted employee should immediately report the fraud to the designated state agency. For more details on how to do this, see the Department of Justice’s state-by-state guide to reporting unemployment insurance fraud. In some cases, the victim may also choose to file a police report. 

Note that it’s important to report the fraud right away. If too much time lapses, the state may think the claim is valid and start making payments. 

You’ll know the issue is resolved when the state notifies you and your employee that the case has been closed — often within 30 to 60 days.

Help employees protect their identities 

Once the case is closed, the story may not be over. 

Unfortunately, unemployment fraud can indicate a larger issue with the victim’s identity. 

If a criminal is able to file a fraudulent unemployment report on someone’s behalf, what else might they do with those same details? 

For many victims, self-remediating fraud becomes a distraction from other things — including responsibilities at work. Last year alone, Americans spent 113 million hours resolving identity theft. By default, a lot of that untangling happens during business hours, when government agencies like the IRS are open. 

Offering an identity protection benefit like ours can help. 

Our identity-monitoring alerts help employees pay attention to what’s happening with their information. If fraud does surface, our U.S.-based customer care team fully manages the recovery process, staying on the case until each member’s identity is returned to pre-theft status. 

Our restoration specialists can even take on limited power of attorney in order to file paperwork and make phone calls on a victim’s behalf. 

These are unprecedented times, with unprecedented challenges. If your employees get hit by unemployment fraud — or any type of identity theft, for that matter — we’ll be there to help them fight back.