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The Surge in Unemployment Benefits Identity Theft

January 30, 2021

The COVID-19 pandemic has caused severe financial strain as millions continue to face layoffs, furloughs, and reduced hours. This spike in joblessness and hardship led to a record-setting 57 million people filing for unemployment benefits between March and September of 2020. This influx of unemployment filings has also brought on a surge in cases of unemployment benefits identity theft, in which stolen personal information is used to file for unemployment benefits.

Struggling to Curb Fraud

With this wave of new unemployment filings, unemployment offices inundated with an unprecedented caseload are potentially seeing their anti-fraud measures overwhelmed by the volume of filings. Systems struggling to cope with an inordinate number of filings can, in turn, be increasingly susceptible to fraudulent filings—especially as the number of first-time filers mounts. In Kansas, for example, the unemployment system was shut down for the weekend of January 30, 2021 as the state implemented stronger fraud security measures.

One of the major challenges of curbing unemployment benefits identity fraud is the length of time it may go unnoticed. Many people only discover their identity has been stolen for unemployment benefits after a genuine unemployment benefits filing is rejected as a duplicate.

Even when individuals discover they’ve fallen victim to identity fraud, victims may struggle to report and mitigate the effects of the theft as many government agencies and benefits offices face disruptions due to reduced hours, limited availability, and high call volume.

Preventing and Handling Unemployment Benefits Identity Theft

  • If an unemployment claim is rejected, contact the unemployment agency for more information. Rejection due to a duplicate application is a key indicator identity theft has taken place.
  • If unemployment benefits identity theft has taken place:
  • Placing a freeze and alert on credit reports can stop the thief from continuing to use the stolen personal information.
  • Filing reports with the state employment security office, local police department, and FTC (IdentityTheft.gov) creates a record of the identify theft.
  • Scrutinize accounts and credit reports whether identity theft has taken place or not. Early detection can mitigate the damage caused by thieves.
  • Change passwords. Regularly changing and using secure passwords is commonly considered best practice for preventing theft.

While identity theft and benefits disruption can cause undue harm, SDC CPAs advises that practicing caution and good bookkeeping can potentially prevent or mitigate the impact of identity theft.

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