The Department of Labor identified an uptick in unemployment scams shortly after the CARES Act was passed and it included looser requirements for unemployment. In addition, the CARES Act included an enhanced $600 payment per week for claims. Now, that with an enhanced $300 weekly supplement, included in the latest stimulus package, it appears scammers are again trying to file false claims.
“On Dec. 23, I woke up and got a very odd email from my HR department,” said Correy Honza. "Basically, they said, 'We wanted to let you know that somebody has filed unemployment under your name.’”
Honza is a marketing professional in Denver, Colorado who did not lose his job and has been employed with the same company for more than three years. Even more, he is someone who pays for identity theft alerts and protections. Yet, someone was still able to steal his information and file an unemployment claim. His employer immediately responded to the unemployment claim, but before Honza could directly contact the state’s unemployment system, it had already sent him a debit card to access his claimed unemployment benefits.
“They sent me a credit card already with a debit ability to get money and I am like, 'What are you doing?’” exclaimed Honza.
Eventually, he learned the state of Colorado, and almost every state now, has set up a page on its unemployment website with details about how to report this fraud and the necessary steps to take for the theft of your identity.
“So, I went through all those different steps,” said Honza. "I contacted my local police department [and] am going on the IRS website.”
There’s no exact number on how many people have had their identities stolen by these recent scams, but the Department of Labor has identified this number: $36 billion. That is how much money has been illegally syphoned out of the unemployment systems since the start of the pandemic through November.
“There is a huge international fraud ring that is called ‘Scattered Canary’ that is responsible for a lot of it,” said Michele Evermore, a senior researcher and analyst at the National Employment Law Project.
Evermore explained Honza is among the lucky ones who caught the fraud early.
“What is going to happen this month, that is particularly terrifying to me, is that those people whose identities have been stolen will receive a 1099-G that they should have to pay taxes on this money that somebody else took out in their name,” said Evermore. “They may not have known their identity was stolen.”
Most people will learn of it when they receive the 1099-G form in the mail. However, in some cases where scammers changed the addresses on file, a person may not learn of the fraud until they apply for a tax refund and it is withheld. For some, this is a scary thought, but Evermore advises those people not to panic.
“These agencies are setting up communication pathways for people to identify that their identity has been stolen, because this is so prevalent,” said Evermore. “They do want to stop the scammers.”
Most people should be able to resolve the tax and identity issues within a few weeks, after reporting it to their state’s unemployment system and other necessary agencies.
“I am going through what I am going to call a first-world problem, but some other people are going through a lot worse,” Honza explained.
Some, like Honza, worry more about how these scammers are affecting those who actually have lost their jobs.
“In the most recent relief bill, now every single state has to have at least another step of identity verification in order for people to get benefits, and as we know, any hurdle to benefits is going to exclude people,” said Evermore.
At the very least, the requirement is meaning some have to wait longer for benefits they desperately need now to survive.