Unemployment fraud: How to tell if you are a victim—and what to do about it

Unemployment fraud is a serious issue in the United States. Over the past year, as a record number of Americans applied for jobless benefits, fraudulent claims for aid skyrocketed. A recent Allstate Identity Protection internal analysis concluded unemployment fraud cases have risen by over 400 percent in the first three months of 2021.¹

Financially speaking, that may amount to tens of billions of dollars in illegal payouts — so far. In California alone, fraudulent claims reached $11 billion.²

If you get hit by a fraudulent claim and someone illegally receives funds in your name, rest easy — we work to resolve identity theft. However, we recommend everyone stay alert to unemployment fraud, and we’ve compiled a few ways you can do just that.

Here’s how to help catch the problem sooner and monitor for claims made in your name.

What is unemployment fraud?

Let’s start with the basics: Just as thieves use stolen personally identifiable information like Social Security numbers to open credit cards or apply for loans, they may also use it to illegally claim jobless benefits. But while irregular credit activity might immediately trigger an alert, unemployment fraud activity is different. Victims may not know it happened until weeks or months later, when they receive inaccurate tax documents or get a call from their employer.

How to detect unemployment fraud

Fortunately, there are things you can do to find out if someone made a claim for unemployment benefits in your name.

• Pay close attention to the tax documents you receive. If you claimed unemployment, confirm that the amount on your 1099G form is accurate. If you claimed no benefits and still get a 1099G, that may mean you’re the victim of fraud.

• Check on your Social Security number. Contact the Social Security Administration online or by phone (800-269-0271) to set up an account if you haven’t already. Then check your yearly earnings report to see if anyone has been using your Social Security number for employment. The website’s “Earnings Record” tab should give you access to the report.

• Keep an eye on your mail for anything that appears to be from a government agency. If it’s related to an unemployment claim or a payment you never filed for or received, report it. This includes unexpected payments or debit cards and could be from any state.

What to do if you think you’re a victim of unemployment fraud

If you have reason to believe that your personal information may have been compromised, there are a few key ways to address an incident. Here’s a breakdown:

• Report fraud to the correct parties. Notify the state agency that issued the benefits as well as your current or former employer and the National Center for Disaster Fraud. That way they can monitor your situation more closely and improve security measures to guard against additional fraud.

• Notify the Department of Labor. File a claim — an official complaint that provides details of the alleged fraud — with the U.S. Department of Labor’s Office of the Inspector General Hotline. If they find there is cause for an investigation, they will launch one on your behalf.

• Contact the HR department of your former company. Ask them to be on the lookout for claims made in your name and to notify you immediately.

What’s next?

To help reduce future unemployment fraud, states and the federal government are instituting new safeguards and improving existing ones. But it’s still important to be vigilant and prepared. Knowing what’s possible and how to respond may give you a huge advantage — not to mention peace of mind.