Increase in fraudulent Unemployment claims.

Increase in fraudulent Unemployment claims.

FYI: Many companies are reporting fraudulent unemployment claims again. Read below for more details. In the meantime, it is still important to review your internal protocols for handling and securing PHI. This information should never be stored unencrypted or unprotected. Start by analyzing all of the locations in your company where employee information resides and review the security in place for those items.

As there continues to be an unprecedented number of claims filed for benefits under Unemployment Insurance programs, Massachusetts is among many states that are seeing a new surge of fraudulent claims. In July, the Massachusetts Department of Unemployment Assistance detected 58,000 fraudulent claims, preventing the loss of $158 million. The occurrence of reported incidents from every corner of the country is overwhelming. Here are just a few other cases:

  • Washington State officials found illegitimate payments that ended up totaling $576 million. (The state has recovered $346 million so far.)
  • Rhode Island has paid out $8.6 million in fraudulent unemployment claims since the start of the pandemic.
  • Georgia found more than 130,000 false claims filed in July.
  • Arizona may have been hit with as many as 2 million fraudulent unemployment claims
  • Illinois identified more than 120,000 counts of unemployment insurance fraud in August.
  • Maryland announced 47,000 fraudulent claims had been uncovered in early July.
  • Pennsylvania reported that 10,000 prison inmates filed for benefits across the state.

The Massachusetts Department of Labor worked with state and federal law enforcement to investigate the fraud and hired private account investigators to perform a forensic audit. They have since found evidence that bogus unemployment claims are on the rise once again, and this time the scammers appear to be targeting public employees.

Unemployment insurance fraud schemes involve stealing the identity of a real employee, applying for unemployment insurance benefits under that employee’s name, and diverting unemployment insurance benefit payments to accounts opened fraudulently in the employee’s names but controlled by the cybercriminals. Using stolen identities to steal from the government, is not new. This type of cybercrime has infiltrated programs from student loans and Medicare to other disaster relief programs for years. Unemployment insurance has not really been a target because states have been reducing benefits and tightening access as caseloads had been falling. But “Cybercriminals chase the money”, says Kenny Rounds, CEO of Braver Technology Solutions, and once Congress passed the CARES Act, emergency relief which included the Pandemic Unemployment Assistance program and a temporary $600 weekly supplement — that became the new money target.

Each state has its own process for submitting and processing unemployment claims, but it is important for HR departments to be educated on how to spot and report fraud and to diligently monitor and confirm the legitimacy of each and every claim. HR should promptly review whether the named applicant for unemployment benefits is a current employee (Likely a fraudulent filing) or former employee (the employer should contact the former employee to confirm whether the individual filed a claim for unemployment benefits.) Both HR and the affected employee should work together to file a fraud report and follow the guidance at https://www.mass.gov/info-details/report-unemployment-benefits-fraud.

Make sure to train and educate employees and ask them to exercise caution to protect against identity theft and pay careful attention to communications they receive related to unemployment benefits, especially if they have not applied for benefits. The filing of a fraudulent unemployment claim is a sign that an employee's sensitive personal information is available to cybercriminals. Advise employers to file a report with the FTC, notify the major credit bureaus, review their credit report, request fraud alerts or a credit freeze, and take steps to ensure that their personal information is not used to commit additional fraud.

Every day, your business depends on information technology (IT) to operate. Thank you for letting us be there for you. Braver Technology Solutions | WeMakeITWork@BraverTechnology.com Boston 617.315.8515 | Taunton 508.824.2260 | Providence 401.484.7900