Unemployment Fraud Investigations Are Underway: Potential Delays in Receipt of Benefits May Be Ahead

The COVID-19 pandemic has been a time of uncertainty and vulnerability for millions of Americans. As our nation’s unemployment rate continues to rise due to COVID-19, so does the number of reported cases of unemployment fraud.

On May 22nd, the U.S. Bureau of Labor Statistics (BLS) released its State Employment and Unemployment Summary for April 2020. The summary shows a national unemployment rate of 14.7% and a hike of 10.3 percentage points for the month. Additionally, the summary showed that all but one New England state fell among the reported states with “new series high unemployment rates” for April 2020, and all New England states fell among those with “statistically significant unemployment rate changes from March 2020 to April 2020.” 

At 7.9% for April 2020, Connecticut showed the lowest New England unemployment rate. Maine’s unemployment rate was 10.6% for the month, Massachusetts was 15.1%, Vermont was 15.6%, New Hampshire was 16.3%, and Rhode Island was 17%.

As of Wednesday, May 27th, the Maine Department of Labor (MDOL) announced it was investigating at least 1,000 reports of fraudulent unemployment claims and had already intercepted 2,200 fraudulent claims before they were processed. The MDOL also announced that benefits in Maine would pause for a two-day period for further investigation. 

“The Maine Department of Labor takes its responsibility to uphold the integrity of the unemployment program very seriously,” said MDOL Commissioner Laura Fortman. The MDOL website notes an apology for any delays in payment, but says the delay “is a necessary step to ensure payments are being paid accurately.” 

News Center Maine provided live streaming of the May 27th COVID-19 briefing led by Governor Janet Mills. In the briefing, the Governor was asked about the pause in benefits for Mainers. She expressed her concerns about fraudulent claims made by “organized criminals.” Mills also stated “I do not want millions and millions of dollars of this trust fund to go out the door to the fraudsters who are preying upon people and businesses all across this country; the result might well be denial of unemployment claims for all the wrong reasons.”  

In Massachusetts, a recent review of 150,000 unemployment claims brought back roughly 5,000 cases that warranted a higher level of review or fraud investigation. “Once we get news and knowledge from federal authorities and others that there’s a large nationwide scam going on here, we need to do everything we can, as quickly as we can, to make sure that we’re not paying money out to criminals and that we are paying money out to people who are legitimately eligible for the benefit,” said Massachusetts Governor Charlie Baker.

Unemployment fraud isn’t just an issue local to New England. The State of Washington has reportedly recovered $300 million in fraudulent unemployment benefits issued during the COVID-19 pandemic. And some unemployment recipients in Michigan have gotten “Stop Payment” notices, as the State works through identity verification measures to prevent fraud.

Avoiding Unemployment Scams

It has been widely reported that these aren’t “run of the mill” fraudulent acts. These cases are largely the work of sophisticated scamming networks. Here are some tips for avoiding scams.

Only use official websites – When you file for unemployment, as well as when filing weekly claims and other functions, make absolutely sure you are on the official Department of Labor website for your state. For Maine, all unemployment functions can be performed here. Avoid outside agencies that claim to assist with filing your unemployment claims. 

Be wary of calls, texts, and emails – Solicitation is not a function of any state Department of Labor. If you receive unsolicited calls, texts, or emails regarding your employment status or unemployment claims, it’s best not to respond. And definitely don’t give out any personal information. And never click on links within unsolicited emails and text messages.

Never pay a “filing fee” or “apply” for a direct deposit card – There is no fee associated with filing for unemployment. Any requests for fees of this type or requests to wire money are fraudulent. Some states may use direct deposit cards to issue benefits, but you will never receive a call, text, or email request to “apply” for such a card from your state’s DOL. 

Never mail or email personal documents – Birth certificates, Social Security cards, and driver’s licenses are never required to be mailed or uploaded to state DOLs for unemployment purposes. Do not send or upload copies in response to a requesting party, even if they claim to be associated with a governmental entity. 

Being Cautious & Staying Vigilant 

Taking extra precautions in safe-guarding your personal information and reporting known instances of fraud are critical. For Mainers, the MDOL urges anyone believing a false claim has been filed in their name to report it at maine.gov/unemployment/idtheft/. If you reside outside of Maine, visit your state’s official unemployment website for information on reporting fraud.

 

by David Jean, CPA, CCIFP, CExP