With unemployment still a major issue in the United States as COVID-19 measures make non-essential, in-person activity an impossibility, many states are still boasting high unemployment numbers. In Arizona, the unemployment rate is resting at around eight percent (8%) – just shy of 300,000 people out of work.

And with so many people relying on unemployment to stay afloat, there’s also been an unfortunate spike in unemployment fraud.

What Is Unemployment Fraud?

Unemployment Fraud, a.k.a. Unemployment Insurance Fraud is the act of providing false or inaccurate information on your unemployment claim with the intention of committing fraud. Unemployment fraud is also commonly linked to identity theft, which occurs when someone fraudulently uses another person’s identification in order to make purchases, file taxes, apply for loans, and more. Identity fraud and unemployment fraud can be committed simultaneously if an individual steals the personal information of another individual in order to file for unemployment.

It’s important to take a closer look at exactly what qualifies as unemployment fraud and what repercussions exist for those who commit this crime.

For starters, unemployment fraud is felony and, for the most part, is prosecuted on a federal level. That means higher fines and more extreme punishments. In the state of Arizona, the Arizona Department of Economic Security is responsible for auditing unemployment insurance claims and, should they detect intentionally falsified information (in order to increase benefits), they may take civil or criminal actions against the responsible individual.

But what if you’re not the one committing fraud?

Unemployment Fraud Red Flags

As previously mentioned, unemployment fraud is often closely related to identity theft; this is often due to the fact that social security numbers are used in the application process for unemployment; therefore, making the entire process more difficult if you’ve had your identity stolen.

There are a few key indicators to look out for if you suspect your identity is being used to commit unemployment fraud.

For starters, if you’ve received letters, forms, or other communications regarding unemployment insurance you did not apply for, this is definitely a red flag. If you receive government notices or other forms regarding applications you did not submit yourself, it’s possible you may be the victim of identity theft. Make sure to follow-up with the indicated office or notify the proper authorities of the suspicious activity.

Similarly, if you are charged with any fees related to the filing of unemployment insurance forms, this may be a sign of unemployment fraud. If you notice any unusual activity occurring in your bank statements (or credit card statements), flag those unauthorized transactions and report the odd behavior to your bank and to the relevant government offices.

Finally, in this ever-growing digital world, it’s important to be careful if online phishing schemes that are designed to steal your personal information. Make sure all sites you navigate to are legitimate (government websites should have a URL that ends in .gov) and all social media messages and accounts are legitimate. Do not click on links from senders you don’t know.

COVID-19 and Unemployment Fraud

NBC News reported unemployment aid totaling more than $1 billion may be at risk due to unemployment fraud. And, as the coronavirus pandemic continues to sweep through the country, the number of fraud cases are only expected to rise. In Arizona alone, the state may have been hit with up to 2 million fraudulent cases of unemployment claims; a truly staggering number.

As a result, the U.S. government is taking active steps to identify and punish unemployment fraud as well as to prevent future fraudulent claims from being made. Currently, more than 500 investigations have been opened in 40 states throughout the U.S.

Business owners can also take an active part in preventing unemployment fraud. Be alert and report any suspicious activity you notice, such as employees submitting for unemployment benefits when they are actively employed. If it does become necessary, the safest way for employees to submit for unemployment is directly through the FTC.

What Is the Impact of Unemployment Fraud?

Due to the unusually high number of unemployment claims as a result of COVID-19, state unemployment offices are experiencing significant backlogs; this is only made worse by the addition of false claims that delay legitimate claims from being approved.

In an attempt to combat the rise in fraudulent claims, the U.S. government has designated $100 million to fund fraud investigations throughout the country. Part of this $100 million will also go toward identity verification tools in order to make the system itself more secure.

Some states are taking more serious action against unemployment fraud as well. Arizona announced it would be expanding its staff in order to monitor and combat fraudulent claims.

However, even with the increase in monitoring and protections, unemployment fraud is a rising issue and it’s one that can have a very serious effect on those who fall victim. While individuals whose unemployment money is stolen will have that money returned to them (pending a full investigation), this can be a very time consuming process, and for individuals who are out of work and relying on that income, the outcome can be detrimental.

And this doesn’t only affect unemployed Americans; it can have a very real, negative affect on employed Americans too. Should the need arise for an individual who is currently employed to file for unemployment in the future, and if their information has already been stolen, they may be unable to receive unemployment money for five months or more.

Victim of Unemployment Fraud? Here Is What You Should Do

First and foremost, make sure you report the fraud to your state’s unemployment office. Because the investigative process can be a long one, the earlier you can get started, the better. Be proactive about your situation and keep a close eye on your bank and credit card statements. Do not wire money to an individual or office claiming to be with unemployment services. You will never be charged by the DES for unemployment insurance or related services. If you receive a request for personal information, make sure it is from a legitimate DES representative.

For citizens of Arizona, the Arizona Department of Economic Security has an online form you can fill out if you believe you are the victim of fraud. Other states have similar programs in place, so make sure you do your research and submit a report of the suspected fraud.

If you’re being investigated for unemployment fraud or think you may be a victim, reach out to an attorney who specializes in the field and learn about your options. It is important to be educated on the law and the steps available to you. An experienced lawyer will be highly familiar with the process and can help you make decisions that best benefit you and your particular situation.