unemployment benefits fraud

According to the New York State Department of Labor, over 425,000 fraudulent unemployment benefit claims have been identified during the Covid-19 pandemic. 

Legitimate claims coming in to the system fuel this type of fraud as states across the nation rush to get benefits out as soon as possible.

While fraudsters may use the names of deceased people to file for benefits, they also engage in identity theft to submit bogus claims. This activity began back in March and April of 2020 as the number of individuals applying for unemployment benefits increased dramatically due to the pandemic. During normal times, people file their claims in person at a local unemployment office. Due to Covid-19, applications could be filed online, opening up a huge opportunity for scammers and illegitimate claims.

Every year, usually starting in late January to early February, most of us receive a number of tax forms: from our banks and investment companies, and our mortgage holder, among other institutions. They show us what we’ve received in interest, social security benefits, dividends, what we’ve paid in mortgage interest, and so on. Sometimes, we don’t even open these statements until we’re ready to work on our tax returns.

Federal tax form 1099-G, which reports unemployment insurance benefits, pandemic unemployment assistance, and extended benefits, will come to you in the mail as with your other tax forms. If you’ve received this form but never filed for any assistance, it’s likely you’re a victim of identity theft. But you will need to prove that the form is incorrect. Otherwise, the IRS will expect to receive taxes due from these payments to your name. (That extra $600 of unemployment benefits is also taxable.)
What should you do if you’ve erroneously received a 1099-G?

1.Immediately contact the NY State Department of Labor to report UI Benefits Fraud. You can do so online at: labor.ny.gov/agencyinfo/report-fraud.shtm or call 888-598-2077.

2. Alert your bank and other financial institutions you work with to make sure there haven’t been any other transactions made in your name.

3. File a report and complaint with the Federal Office of Inspector General via their online form (recommended) www.oig.dhs.gov/hotline or call 1-800-323-8603.

4. Go to the Federal Trade Commission’s website, www.consumer.ftc.gov, and complete the identity theft affidavit.

In addition to the above actions, it would be prudent to review your credit reports and place a fraud alert on your accounts with the three credit bureaus (Experian, TransUnion and Equifax). More advice for distinguishing and avoiding fraud can be found on the New York State Attorney General’s website (ag.ny.gov/consumer-frauds/resource-center).

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