What is happening?

The rise in unemployment filings and the expansion of jobless benefits in the ongoing COVID-19 pandemic have enabled an increase of fraud across the country. Your Human Resources department has a responsibility to respond quickly to fraudulent unemployment claims and assist employees whose personal information may have been compromised.

Across several states, employers are receiving notifications of claims for unemployment benefits filed in the name of individuals who remain employed or employees who left the organization or retired years ago.

The criminals obtain the stolen identity using a variety of techniques, including:

• The online purchase of stolen personally identifiable information
• Previous data breaches
• Computer intrusions
• Cold-calling victims while using impersonation scams
• E‑mail phishing schemes
• Physical theft of data from individuals or third parties
• Public websites and social media accounts

The scams involve filing claims for benefits using the names and personal information of people who have not lost their jobs through lay off, voluntary or involuntary termination. Most people learn they are affected when they get a notice from their state unemployment benefits office or their employer about their “supposed” application for benefits. The notice will say that you have been severed from employment.  By then, the benefits may have been paid to an account in the criminals’ control.

What Employers Should Do

Due to the surge in fraudulent unemployment claims, it is important for Human Resources to diligently monitor and confirm the legitimacy of claims. Don’t just file the information you receive from the DOL, look at it very carefully.

The following are actions employers can take to prevent fraudulent unemployment claims from being paid:

• Be alert. Let employees know about the increase in fraudulent claims and identity theft and ask them to immediately report any unexpected correspondence from the State.
• Notify employees quickly. Review whether the named applicant for unemployment benefits is a current or former employee. If it is a current employee, then the claim is likely fraudulent. If it is a former employee, the employer should contact the former employee to confirm whether the individual filed a claim for unemployment benefits.
• Report the fraud. Both Human Resources and the affected employee should work together to quickly notify both the state unemployment benefits agency and local police department of the fraud.
• Address identity theft. The filing of a fraudulent unemployment claim is a sign that an employee’s sensitive personal information is available to criminals. If identity theft is a concern, employers should direct employees to:
  • File a report with the FTC – visit identitytheft.gov to report the crime to the FTC and get step-by-step recovery help
  • Notify the major credit bureaus
  • Review their credit report
  • Request fraud alerts or a credit freeze
• Review IT security. Employers should consult with their IT department to confirm that databases containing employee information have not been compromised.
• Review Quarterly Form B187Q.  This form reports the unemployment benefits charged to an Employer’s rating account. Report any fraudulent claims present on the report immediately to the State of NJ Department of Labor and Workforce Development; Bureau of Benefit Payment Control. Unreported fraudulent claims will have a direct impact on future unemployment contribution rates.

Additional Resources

• Form IDT-100 – NJ Division of Taxation Identity Theft Declaration
  • Complete and submit this form if you are an actual or potential victim of identity theft and you would like the New Jersey Division of Taxation to mark your account to identify any questionable activity
• Equifax Extended Fraud Alert Request Form
  • To place an extended fraud alert on your Equifax credit report, please send – via U.S. Mail – a valid police or law enforcement agency report or a Federal Trade Commission Identity Theft Report. In addition, please provide a photocopy of one item from each of the categories below in order to verify your identification and address. The item you select from the “Identity” category must contain your Social Security number and the item you select from the “Address” category must contain your current mailing address.
    • Identity         
      • Social Security card
      • Pay stub with Social Security number
      • W2 or 1099 form
    • Address
      • Driver’s license or state ID card
      • Rental lease agreement/house deed
      • Pay stub with address
      • Utility bill (gas, electric, water, cable, residential telephone bill)

Contact us at solutions@mercadien.com or 609-689-9700 if you have questions or need further assistance.

DISCLAIMER: This advisory resource is for general information purposes only. It does not constitute business or tax advice and may not be used and relied upon as a substitute for business or tax advice regarding a specific issue or problem. Advice should be obtained from a qualified accountant, tax practitioner or attorney licensed to practice in the jurisdiction where that advice is sought.