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Checking For Unemployment Fraud

ByWallstreet Observer

Quick answer

  • Your Social Security number (SSN) is your primary target for unemployment fraud.
  • The IRS and state tax agencies are key places to check for suspicious activity.
  • Look for unexpected tax forms, like a Form 1099-G, in the mail or online.
  • If you suspect fraud, report it immediately to your state’s unemployment agency and the U.S. Department of Labor.
  • Monitor your credit reports for new accounts or inquiries you don’t recognize.

What to check first (before you act)

Your Social Security Number (SSN) and Identity

Unemployment fraud often begins with stolen personal information, most commonly your SSN. This is the foundation for most financial and governmental systems in the U.S. If someone has your SSN, they can potentially open accounts, claim benefits, or file taxes in your name. It’s crucial to be vigilant about protecting your SSN and to monitor for its misuse.

Your Mail and Email

Fraudsters may use your address to receive documentation related to fraudulent claims or benefits. Keep an eye out for any mail or emails that seem out of place, especially those from government agencies or financial institutions you don’t interact with. This could include tax forms, benefit statements, or notices about accounts you didn’t open.

Your Employment Records

If someone claims unemployment benefits in your name, they might try to list a fake employer or claim employment at a company you’ve never worked for. Reviewing your official employment records, like W-2s and pay stubs, can help you identify discrepancies if fraudulent employment is reported.

Your Financial Accounts

While unemployment fraud might not directly impact your bank accounts unless linked to identity theft, it’s a good practice to monitor them regularly. Look for any unusual transactions or activity that doesn’t align with your spending habits. This vigilance can sometimes catch broader identity theft issues stemming from the same source.

Step-by-step (unemployment fraud detection workflow)

1. Monitor Your Mail for Unexpected Tax Forms

  • What to do: Watch for a Form 1099-G (Certain Government Payments) from your state’s unemployment agency. This form reports unemployment benefits paid out, which could be fraudulent if you didn’t claim them.
  • What “good” looks like: You only receive a 1099-G if you actually received unemployment benefits, and the amounts reported are accurate.
  • Common mistake: Discarding or ignoring mail from government agencies.
  • How to avoid it: Open and review all mail from state and federal agencies promptly. If you’re unsure about a document, contact the agency directly.

2. Check Your State’s Unemployment Agency Website

  • What to do: Many states offer online portals where you can log in (or create an account) to view your unemployment claim history. Look for any claims filed under your name that you did not initiate.
  • What “good” looks like: The portal shows no active or past claims filed by anyone other than yourself.
  • Common mistake: Assuming that if you haven’t received a letter, there’s no issue.
  • How to avoid it: Proactively check the official unemployment portal for your state, even if you haven’t received suspicious mail.

3. Review Your Social Security Statement

  • What to do: Visit the Social Security Administration’s website (ssa.gov) to create an account and view your earnings history. Fraudulent unemployment claims, especially those involving fake employment, might show up as incorrect earnings.
  • What “good” looks like: Your earnings history accurately reflects your actual employment and income.
  • Common mistake: Not understanding that fraudulent claims can sometimes impact your Social Security record.
  • How to avoid it: Regularly review your Social Security statement to ensure accuracy.

4. Obtain and Inspect Your Credit Reports

  • What to do: Get free copies of your credit reports from Equifax, Experian, and TransUnion at AnnualCreditReport.com. Look for any new accounts, credit inquiries, or loan applications you don’t recognize.
  • What “good” looks like: Your credit reports show only accounts and inquiries that you have authorized.
  • Common mistake: Waiting until you notice financial problems to check credit reports.
  • How to avoid it: Check your credit reports at least once a year, or more often if you suspect identity theft.

5. Check for Unfamiliar Tax Filings

  • What to do: Access your IRS account online or review any tax documents you receive. Look for tax returns filed under your SSN that you did not file. Fraudsters may try to claim tax refunds.
  • What “good” looks like: Your tax records only show returns you have personally filed.
  • Common mistake: Relying solely on tax preparers to catch fraud.
  • How to avoid it: Understand your tax obligations and review any tax documents for accuracy.

6. Report Suspicious Activity to Your State’s Labor Department

  • What to do: If you find evidence of unemployment fraud, contact your state’s department of labor or unemployment insurance agency immediately. Follow their specific reporting procedures.
  • What “good” looks like: You have filed a formal report with the relevant agency and received confirmation.
  • Common mistake: Delaying reporting the fraud.
  • How to avoid it: Act quickly as soon as you suspect fraud to minimize potential damage.

7. File a Report with the U.S. Department of Labor (DOL)

  • What to do: Report suspected unemployment fraud to the DOL’s Office of Inspector General. This helps them track national trends and investigate widespread fraud schemes.
  • What “good” looks like: You have submitted a report to the DOL.
  • Common mistake: Only reporting to the state agency and not the federal level.
  • How to avoid it: Understand that both state and federal agencies need to be informed for comprehensive action.

8. Consider Filing a Police Report

  • What to do: Depending on the severity and the specific fraud, filing a police report can be beneficial for your records and may be required by some institutions.
  • What “good” looks like: You have a police report number documenting the incident.
  • Common mistake: Not realizing a police report can be valuable documentation.
  • How to avoid it: Consult with your state unemployment agency or a consumer protection expert on whether a police report is recommended.

9. Notify Credit Bureaus of Identity Theft

  • What to do: If you’ve confirmed identity theft related to unemployment fraud, contact each of the three major credit bureaus (Equifax, Experian, TransUnion) to place a fraud alert on your credit file.
  • What “good” looks like: A fraud alert is active on your credit reports, notifying potential lenders of suspicious activity.
  • Common mistake: Forgetting to notify all three credit bureaus.
  • How to avoid it: Contact each bureau individually to ensure comprehensive protection.

10. Consider a Credit Freeze

  • What to do: For stronger protection, you can place a credit freeze (or security freeze) with each credit bureau. This restricts access to your credit report, making it harder for fraudsters to open new accounts.
  • What “good” looks like: Your credit reports are frozen, requiring you to temporarily lift the freeze to allow legitimate credit applications.
  • Common mistake: Not understanding the implications of a credit freeze on your own ability to obtain credit.
  • How to avoid it: Be prepared to temporarily lift the freeze when you need to apply for credit yourself.

What affects your score (plain language)

  • Payment History: Paying bills on time is the biggest factor. Late payments can significantly lower your score.
  • Credit Utilization Ratio: This is the amount of credit you’re using compared to your total available credit. Keeping this low (ideally below 30%) is crucial.
  • Length of Credit History: The longer you’ve had credit accounts open and managed them responsibly, the better it looks.
  • Credit Mix: Having a variety of credit types (like credit cards and installment loans) can be positive, showing you can manage different kinds of debt.
  • New Credit: Opening many new accounts in a short period can temporarily lower your score, as it may signal higher risk.
  • Public Records: Bankruptcies, liens, and judgments can severely damage your score.
  • Information Accuracy: Errors on your credit report, such as incorrect late payments or accounts you don’t recognize, can negatively impact your score.
  • Inquiries: While checking your own credit doesn’t hurt, numerous “hard” inquiries from lenders applying for credit can signal risk.

When you’re trying to improve your credit score, it’s essential to avoid actions that could further harm it. This includes not missing any payments, not maxing out your credit cards, and not applying for credit you don’t truly need. Focus on responsible habits and patience.

Common mistakes (and what happens if you ignore them)

| Mistake | What it causes

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