The coronavirus pandemic has presented numerous challenges for business owners and irreversibly changed the workplace. Unfortunately, every crisis brings with it people who see misfortune as an opportunity to profit.
Over the past year, many employers and their employees have been victims of fraudulent unemployment insurance (UI) claims or know a colleague who’s a victim. UI fraud respects neither rank nor position. One member of the Colorado Department of Labor and Employment (CDLE), which includes the Division of Unemployment Insurance, was a victim. Several Employers Council employees also were victims of UI fraud, including yours truly.
What’s the scope of UI fraud, how do you know if you or your employees have been victimized and what steps should employers take to address fraud?
First, this is not only a Colorado issue. Fraud has been reported in every state. By October, the U.S. Postal Service had opened investigations in 40 states for misuse of the mails to commit UI fraud. While the sources of information used to commit UI fraud aren’t known, the CDLE believes Colorado frauds are largely the result of a massive Experian data breach. In addition, Equifax reported a data breach in 2017 that affected up to 174.9 million consumers worldwide.
Colorado had six UI fraud investigators before 2020. The CDLE investigated only 86 instances of fraud in 2019. From 2020 to the present, the CDLE has flagged more than
1 million applications for unemployment benefits as potentially fraudulent, more than six times the 150,000 persons validly receiving UI benefits in Colorado at the end of January 2021.
Second, victims could experience a variety of fraud schemes. Some victims have received a Reliacard — a U.S. Bank Visa debit card used to access UI benefits — in someone else’s name. Victims also could receive unexpected correspondence from the CDLE Division of Unemployment Insurance. Letters might be addressed to the victim or another name at the victim’s address. Some victims have reported unauthorized withdrawals from their bank accounts. Some victims might not know they’re the subject of UI fraud until they receive a Form 1099-G
reporting unemployment insurance income they didn’t receive. Finally, some victims might discover fraud only when they discover a 2020 tax return was filed in their name by someone else.
How should employers and employees respond to suspected fraud? Here are seven suggestions:
Do NOT respond to telephone calls or emails purporting to be from the CDLE ordering repayment and directing victims to send wires, gift cards or checks. The CDLE corresponds by mail.
Employers should check each request for job separation information it receives to make sure it’s valid. Don’t delay in opening correspondence from the CDLE so you and the agency can investigate suspected fraud as soon as possible.
Because the Division of Unemployment Insurance is processing thousands of claims right now, the division recommends continuing to respond to requests for job separation even for claims that could be fraudulent — when the employer questions the amount of wages reported by the division or potential benefits for which the employer could be liable. Reporting a possible fraud doesn’t relieve the employer from responding to claims in a timely manner.
Employees who receive fraudulent Reliacards must notify U.S. Bank directly to cancel fraudulent debit cards.
Employees should monitor reports from the three consumer credit bureaus and put a fraud alert on their names and Social Security numbers.
Employees should monitor their bank accounts for unauthorized withdrawals.
Victims should report UI fraud at the CDLE website. Should employers wish to do so, they may report frauds on behalf of their employees. The online reporting tool has a drop-down menu to indicate who’s filing the report.
There is one faint ray of sunshine here. The CDLE has put together an excellent webpage on UI fraud at https://cdle.colorado.gov/fraud-prevention. The webpage provides information on responding to fraud claims and links to accomplish each of the tasks recommended above.
Of course, Employers Council members may call the Employers Council any time for assistance in handling UI matters, including responding to claims, UI hearings and appealing decisions.