(Last Updated On: December 19, 2022)

Explosion Of Unemployment Fraud In the U.S.

During the Pandemic, the United States is experiencing a Massive upsurge in Unemployment Fraud!

According to the U.S. Secret Service: “Massive Fraud” Against State Unemployment Insurance Programs

A well-organized Nigerian crime ring is exploiting the COVID-19 crisis by committing large-scale fraud against multiple state unemployment insurance programs, with potential losses in the hundreds of millions of dollars, according to a new alert issued by the U.S. Secret Service.

A Real Warning Of Massive Unemployment Fraud!

During the current pandemic, the problem of Unemployment Fraud has exploded.

Scammers are also using other kinds of compromised relationships (from relationship scams) to use identity information from their victims, and even access to financial accounts, to create new fraudulent accounts.

From our SCARS Partner Shannon Slaughter

We have been notified by fraudulent unemployment claim victims that deposit accounts are being opened for the purpose of receiving these benefits.

I suspect it is because state agencies are getting wise to the money mule activity we are used to seeing with this fraud and the fraudsters are now opening deposit accounts in the names of the victims in order to make it look legitimate.

What tips them off is the welcome letter and/or debit card they receive.

I also suspect (no confirmation yet) the fraudsters are transferring the money out via P2P or A2A and that’s why the fraudsters don’t need the debit cards. Fraudsters are currently targeting fintechs and large FIs [financial institutions] to open these accounts.

If you are a victim of a fraudulent unemployment benefit claim, KEEP A CLOSE EYE ON YOUR CREDIT REPORT.

FIs [financial institutions] do not hard hit the credit bureaus anymore for deposit accounts so the only way you will find out is if the account charges off and goes to collection.

I highly recommend placing an alert or freeze on ChexSystems if you have been notified of a fraudulent unemployment claim as it is currently the most widely used product for new customer/member deposit account openings. PLEASE SHARE!

FBI Sees Spike in Fraudulent Unemployment Insurance Claims Filed Using Stolen Identities

The FBI has seen a spike in fraudulent unemployment insurance claims complaints related to the ongoing COVID-19 pandemic involving the use of stolen personally identifiable information (PII).

U.S. citizens from several states have been victimized by criminal actors impersonating the victims and using the victims’ stolen identities to submit fraudulent unemployment insurance claims online. The criminals obtain the stolen identity using a variety of techniques, including the online purchase of stolen PII, previous data breaches, computer intrusions, cold-calling victims while using impersonation scams, email phishing schemes, physical theft of data from individuals or third parties, and from public websites and social media accounts, among other methods. Criminal actors will use third parties or persuade individuals who are victims of other scams or frauds to transfer fraudulent funds to accounts controlled by criminals.

Many victims of identity theft related to unemployment insurance claims do not know they have been targeted until they try to file a claim for unemployment insurance benefits, receive a notification from the state unemployment insurance agency, receive an IRS Form 1099-G showing the benefits collected from unemployment insurance, or get notified by their employer that a claim has been filed while the victim is still employed.

The FBI Advises The Public To Be On The Lookout For The Following Suspicious Activities:

  • Receiving communications regarding unemployment insurance forms when you have not applied for unemployment benefits
  • Unauthorized transactions on your bank or credit card statements related to unemployment benefits
  • Any fees involved in filing or qualifying for unemployment insurance
  • Unsolicited inquires related to unemployment benefits
  • Fictitious websites and social media pages mimicking those of government agencies

Tips On How To Protect Yourself:

  • Be wary of telephone calls and text messages, letters, websites, or emails that require you to provide your personal information or other sensitive information, especially birth dates and Social Security numbers. Be cautious with attachments and embedded links within email, especially from an unknown email sender.
  • Make yourself aware of methods fraudsters are using to obtain PII and how to combat them by following security tips issued by the Cybersecurity and Infrastructure Security Agency, including:
    • Avoiding Social Engineering and Phishing Attacks
    • Protecting Against Malicious Code
    • Preventing and Responding to Identity Theft
  • Monitor your bank accounts on a regular basis and request your credit report at least once a year to look for any fraudulent activity. If you believe you are a victim, review your credit report more frequently.
  • Immediately report unauthorized transactions to your financial institution or credit card provider.
  • If you suspect you are a victim, immediately contact the three major credit bureaus to place a fraud alert on your credit records. Additionally, notify the Internal Revenue Service by filing an Identity Theft Affidavit (IRS Form 14039) through irs.gov or identitytheft.gov.

If you believe you have been a victim of identity theft related to fraudulent unemployment insurance claims, report the fraud to law enforcement, state unemployment insurance agencies, the IRS, credit bureaus, and your employer’s human resources department. The FBI encourages victims to report fraudulent or any suspicious activities to the Internet Crime Complaint Center at ic3.gov. You may consult identitytheft.gov for help in reporting and recovering from identity theft.

U.S. Secret Services ties explosion in Unemployment Fraud to Nigerian criminal cartel!

A well-organized Nigerian crime ring is exploiting the COVID-19 crisis by committing large-scale fraud against multiple state unemployment insurance programs, with potential losses in the hundreds of millions of dollars, according to a new alert issued by the U.S. Secret Service.

 “a substantial amount of the fraudulent benefits submitted have used PII from first responders, government personnel and school employees.”

“It is assumed the fraud ring behind this possesses a substantial PII database to submit the volume of applications observed thus far,” the Secret Service warned. “The primary state targeted so far is Washington, although there is also evidence of attacks in North Carolina, Massachusetts, Rhode Island, Oklahoma, Wyoming and Florida.”

The Secret Service indicates that the fraud network is believed to consist of hundred of “mules,” a term used to describe willing or unwitting individuals who are recruited to help launder the proceeds of fraudulent financial transactions.

“In the state of Washington, individuals residing out-of-state are receiving multiple ACH deposits from the State of Washington Unemployment Benefits Program, all in different individuals’ names with no connection to the account holder”.

The Secret Service suggests the crime ring is operating in much the same way as crooks who specialize in filing fraudulent income tax refund requests with the states and the U.S. Internal Revenue Service (IRS), a problem that costs the states and the U.S. Treasury hundreds of millions of dollars in revenue each year.

In those schemes, the scammers typically recruit people — often victims of online romance scams or those who also are out of work and looking for any source of income — to receive direct deposits from the fraudulent transactions, and then forward the bulk of the illicit funds to the perpetrators.

Unemployment Scams to Watch Out For

According to Experian:

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Identity thieves are exploiting the COVID-19 pandemic in a new way: by collecting unemployment benefits meant for others. Con artists have always exploited crises, offering “help” as an excuse to trick victims into giving up cash or personal information. Fraudsters started capitalizing on the COVID-19 pandemic in this way almost as soon as the health crisis began.

More recently, amid pandemic-related work slowdowns and layoffs, fraudsters have taken a new criminal tack, submitting bogus unemployment benefit claims and collecting payments intended to help Americans who found themselves without work in the wake of the crisis.

No matter whether you’re one of the 13.6 million nationwide out of work as of August, or you’re still employed and hoping to stay in a job, identity thieves could be attempting to claim unemployment benefits in your name, using personal information they’ve tricked you into revealing or that they’ve gotten through other means.

This Identity Theft Method Can Be Difficult to Detect

Collecting unemployment benefits by impersonating workers is a new spin on the crime of identity theft. Historically, ID thieves have used personal information (names, addresses, Social Security numbers, and more) to take out loans or open new credit card accounts in victims’ names. These bogus loans and credit accounts appear on your credit report and can be spotted relatively quickly using credit monitoring services. Unemployment scams, on the other hand, are harder to detect. According to the FBI, many victims discover them only after one of the following events occurs:

  • They apply for unemployment and learn there’s already an open claim in their name.
  • They receive a form 1099-G listing unemployment income that’s subject to federal income tax.
  • They receive notice from their state unemployment office confirming that a claim has been filed.
  • They receive notice from their employer that someone has filed for unemployment in their name.
  • Unemployment scammers typically arrange for benefits payments to be deposited into bank accounts they’ve set up. If they do so, unless you file for unemployment yourself and uncover the conflict, it can be extremely difficult to detect the activity.

More rarely, claims filed by scammers result in you receiving an unexpected benefits check, direct deposit, or debit card (whichever payment method is preferred in your state). In that scenario, the scammer may contact you by phone or email, posing as your state labor department and instructing you to “correct the error” by transferring funds to them. Do not respond to any inbound requests to correct surprise unemployment payments; instead, call your state’s unemployment office to report the incorrect payment. Follow their instructions for making any repayments and make sure they look into the possibility of unauthorized filing activity in your name.

If you’ve experienced unemployment benefits fraud, it could mean your personal information has been exposed and is being used in other ways. Consider checking for other forms of identity theft as well.

How Fraudsters Exploit the Rise in Unemployment

The credentials used by unemployment scammers are basically the same ones cybercriminals target through a host of tried-and-true techniques aimed at fooling victims into giving up their personal information. Data obtained through social manipulation, theft, or from another fraudster can be used to file unemployment claims, but the FBI reports that thieves have also come up with some fresh approaches that exploit the rise in unemployment, such as:

  • Email or phone solicitations concerning your unemployment forms when you haven’t applied for unemployment benefits. Once you’ve filed an unemployment claim, it’s possible you’ll receive follow-up questions about information you’ve submitted, but if you receive a “follow-up” when you haven’t filed, there are two potential problems:
    • The follow-up is from a legitimate government agency, responding to a claim someone else has filed a claim in your name; or
    • The inquiry is from a scammer trying to get you to give up information they’d need to file a bogus unemployment claim.
  • Services that purport to help you file for unemployment. Filing for unemployment benefits is something you must do individually, and if you need assistance doing so, you should contact your local unemployment office. Companies that claim to help with the process and possibly charge fees to do so are simply after your money and/or your personal information. They won’t do anything for you that you couldn’t do yourself for free.
  • Bogus websites or social media accounts that resemble those of unemployment agencies. Links to these bogus outlets may be shared via legitimate-looking emails or in the form of official-looking memes or image files. Double-check all URLs for appropriate “.gov” extensions. If you do wish to contact a specific agency, directly visit your state or municipality’s main government homepage, rather than clicking stray links.
  • Unauthorized transactions on your bank or credit card statements attributed to unemployment agencies, services, or benefits.

What to Do if You’re a Victim of Unemployment Fraud

If you discover that a bogus unemployment claim has been filed in your name, do the following immediately:

  • Notify your local unemployment agency. If the fraud comes to light as you apply for unemployment, the agency will already be notified. If your employer notifies you of a bogus claim, enlist your human resources department to assist with pursuing the false claim—but make sure you also notify the unemployment agency yourself.
  • Inform the IRS by filing an Identity Theft Affidavit (IRS Form 14039) with the IRS or through the Federal Trade Commission’s identity theft website, IdentityTheft.gov, where you can also find information on cleaning up the damage identity theft can cause.
  • If you suspect unemployment fraud is connected to email or bogus websites or social media accounts, file a report at the FBI Internet Crime Complaint Center.

Can an Unemployment Scam Affect Your Credit?

Neither your income nor its source—including unemployment benefits issued to you or those collected by criminals in your name—appear on your credit reports, so it cannot influence your credit score.

There’s a major way an unemployment benefits scam can affect your credit indirectly, however: If you apply for unemployment and criminals have already filed a claim in your name, there will likely be a delay in your ability to collect your benefits. (Staff at your local unemployment office—likely overworked with the high volume of COVID-19-related claims—will need to investigate, close the bogus account, and so on.) You’ll eventually get the benefits to which you’re entitled, but if you miss any debt payments before that happens, that could have a significant negative effect on your credit score. Seeking COVID-19-related payment relief from your creditors could help prevent delinquencies from being reported on your credit reports and hurting your scores.

Also, note that criminals who have enough of your personal information to file a false unemployment claim likely have the credentials they’d need to open new credit accounts in the future. It’s therefore critical to continue checking your credit reports for unexplained activity (reports of credit inquiries you can’t identify, new accounts you didn’t open, and so on). It’s also worth considering using a credit monitoring service (such as the one Experian offers for free) and taking other steps such as placing a fraud alert on your credit report. A fraud alert will ask creditors to confirm your identity before processing loan applications made in your name.

The Bottom Line

The uptick in fraud associated with COVID-19 and the related surge in unemployment compounds an already stressful and difficult situation. Just as the pandemic will run its course, so, too, will this economic downturn and the spate of crime it has encouraged. If criminals have meddled with your unemployment claims, know that those issues will be resolved in time. In the meantime, apply as needed for payment relief from your creditors, keep a close eye on your credit reports, and when you get the benefits you deserve, use them to bridge the gap to better times.

Explosion Of Unemployment Fraud In the U.S. 1
The Problem with Money Mules - a SCARS Infographic

Did You Receive Money From A Scammer, Or Give A Scammer Access To Your Accounts?

You may have become a Money Mule. This is a crime!

You may have been involved in money laundering or aiding and abetting transnational criminals. Do not try to hide from this – this is serious, and if you are discovered (and you will be) then you might be prosecuted.

You should report these crimes to your local police – however, we strongly recommend that you speak with a Criminal Defense Attorney immediately. You have no time to waste. You cannot avoid this, do it today!

SCARS is not a law firm and we are not attorneys. The information we provide is for educational purposes only. See additional disclaimer below.

To find a criminal defense attorney in the United States visit FindLaw here: Criminal Law – FindLaw  For other countries look for your local directory of criminal defense attorneys or solicitors.

Explosion Of Unemployment Fraud In the U.S. 2
Explosion Of Unemployment Fraud In the U.S. 3

Widespread Unemployment Fraud Strikes During the Pandemic: Steps for Individuals and Businesses

According to IDWATCHDOG.com (an Experian Company)

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According to reports, a widespread unemployment benefits scam is affecting tens of thousands of individuals, slowing the delivery of legitimate claims and costing states hundreds of millions of dollars. Learn how both individuals and businesses can help better detect and protect against unemployment fraud.

How the Unemployment Benefits Scam Works

According to a US Secret Service memo, this wave of unemployment fraud is likely being executed by a well-organized crime ring that appears to have extensive records of personally identifiable information taken during previous cyber hacks. The scammers are reportedly filing fraudulent unemployment claims on behalf of unsuspecting victims using stolen Social Security numbers and other information.

In many cases, fraudulent unemployment payments are deposited into bank accounts controlled by the scammers. However, if payments are sent to the victim’s legitimate bank account instead, the criminals may continue the scam. Fraudsters may contact the victim by phone, email or text message and impersonate an unemployment official, telling the victim that the payment was made in error in an attempt to get them to transfer the funds.

Employed or Not: Anyone Can Be a Victim

According to the Internet Theft Resource Center (ITRC), anyone can be a victim, and individuals with and without a current position have been impacted. Both public and private employers have identified suspicious claims filed on behalf of employees who still held their jobs. In one case, Western Washington University stated that 410 of its 2,463-person staff had been targeted by the scam.

Employed victims may learn of the fraud when their employer asks why they have applied for jobless benefits. A victim who is currently unemployed may find out about the crime when they apply for unemployment themselves and state labor officials notify them that someone is already collecting unemployment using their identity.

Some states have begun adopting measures in the hopes of reducing unemployment fraud, such as reviewing past applications and delaying payments. According to reports, applicants of unemployment benefits have reported delays and challenges in getting applications approved.

Unsuspecting Victims Could Be Lured as “Money Mules”

Experts say that a substantial number of money mules may be helping facilitate these crimes. Money mules are individuals asked to receive funds in their personal bank account and then “process” funds via wire transfer, mail, or money service. They may be lured in by quick-money job offers or online romance scams.

The FBI advises individuals to better protect themselves by refusing to send or receive money on behalf of individuals and businesses for which they are not responsible, and to be wary of online job postings and messages promising easy money for little to no effort.

If You Think You Have Been a Victim of Unemployment Benefits Fraud

The FTC advises individuals to act quickly if they suspect unemployment fraud.

  • Report the fraud – Report suspected unemployment fraud to your employer, the state unemployment benefits agency, and the FTC at IdentityTheft.gov. It’s a good idea to keep a record of the communication.
  • Better protect your credit – Consider locking your credit report or placing a one-year fraud alert, an extended fraud alert, or credit freeze, which can make it more difficult for an identity thief to open new accounts in the victim’s name.
  • Regularly review credit reports – Check your credit report for unrecognized activity which could be a sign of potential fraud.

How Employers Can Help Better Protect Their Employees

The FTC advises businesses to respond quickly to any suspicious unemployment claims and help support employees.

  • Notify the workforce – Ask employees to report fraudulent benefits claims to HR, and ask HR to notify employees about any suspicious claims that the company receives.
  • Report fraudulent activity – Depending on the state, the state unemployment benefits agency may require a fraud report from the employer, the employee, or both. Provide the employee with a copy of any documentation of the company’s report.
  • Refer employees to the FTC at IdentityTheft.gov – A fraudulent unemployment claim means that the employees’ information is likely exposed, which could put them at risk for further harm. Employees can report the identity theft to the FTC at IdentityTheft.gov.
  • Conduct a cybersecurity checkup – Consider doing a check-up on the company’s cyber defenses. The FTC provides a guide for Cybersecurity for Small Business.



SCARS the Society of Citizens Against Relationship Scams Incorporated

By the SCARS™ Editorial Team
Society of Citizens Against Relationship Scams Inc.

A Worldwide Crime Victims Assistance & Crime Prevention Nonprofit Organization Headquartered In Miami Florida USA & Monterrey NL Mexico, with Partners In More Than 60 Countries
To Learn More, Volunteer, or Donate Visit: www.AgainstScams.org
Contact Us: Contact@AgainstScams.org

TAGS: SCARS, Information About Scams, Anti-Scam, Scams, Scammers, Fraudsters, Cybercrime, Crybercriminals, Romance Scams, Scam Victims, Online Fraud, Online Crime Is Real Crime, Scam Avoidance, Unemployment Fraud, Money Mules, Account Access, Criminal, Money Laundering, Financial Responsibility