The latest reports are historically grim: nearly 40 million Americans have been thrown out of work due to the COVID-19 pandemic.
For the tens of millions of newly jobless, state unemployment insurance benefits are a lifeline that helps them keep the lights on and provide food for their families.
Unfortunately, to add salt to the wounds of the newly unemployed, circumstances are ripe for identity thieves. The combination of billions of dollars in federal stimulus money flowing in to state unemployment funds and tens of millions of new claimants has created a once-in-a-lifetime opportunity for identity thieves seeking to steal those benefits.
According to the Secret Service and multiple media reports, organized rings of criminals are working to siphon off unemployment insurance payments, potentially worth hundreds of millions of dollars, intended for workers laid off due to the COVID-19 pandemic. In the state of Washington, for example, scammers reportedly made off with unemployment benefits worth nearly $1.6 million in a single month. This scam is reportedly even affecting consumers who have not yet lost their jobs.
How the scam works
Identity thieves use databases of personal information (likely obtained via data breaches) to create phony accounts on state unemployment insurance office websites. Once they successfully create an account, they have the benefits direct-deposited into a bank account controlled by the scammer or an accomplice. The scammer then uses the deposited funds to purchase untraceable bitcoins, gift cards, or money orders. Those purchases are often performed by so-called “money mules” who may themselves be ensnared in a romance fraud or work-from-home scheme run by the scammers.
If you’ve recently become unemployed, the following steps can help you reduce your risk of becoming a victim of this scam:
- Log on and create a profile on your state unemployment office’s website as soon as you are laid off. This will reduce the window of opportunity for scammers to create fake profiles in your name and steal your unemployment benefits. For information on your state’s unemployment insurance benefits and instructions on how to file a claim, click here.
- If you have already created a profile with your state unemployment office, log in and verify that no one has filed a claim in your name. If you’ve used a password on your profile that you’ve used on other accounts, change your password to something unique that you haven't already used elsewhere.
- If you receive communication that someone else has applied for unemployment benefits in your name or your unemployment benefits claim was denied because someone else already applied, file a fraud complaint with your state’s unemployment office promptly. The U.S. Department of Labor maintains a list of state unemployment fraud hotlines at this link.
- Put a credit freeze on your credit report with the three major credit reporting bureaus (Experian, Equifax, and TransUnion). If identity thieves have the personal information necessary to steal your unemployment benefits, they likely also have the information they need to take out credit or engage in other criminal activity. A credit freeze will prevent anyone from accessing your credit file until you unfreeze it with a PIN. For more information on credit freezes, refer to this FAQ from the Federal Trade Commission.
- If you’re looking for work, beware of online ads or unsolicited email and text offers to participate in work-from-home job opportunities. Common schemes involve offers to be a mystery shopper, payment processing agent, money transfer agent, or other similar jobs where you are asked to allow deposits to be made to your personal bank account. These jobs don’t exist and participating in one (even unwittingly) could land you in legal trouble.
If you’ve been affected by an unemployment benefits fraud or any other coronavirus-related scam, we want to hear from you! By filing a complaint at Fraud.org via our secure online complaint form, you can help law enforcement bring scammers to justice. We share complaints with our network of nearly 200 law enforcement and consumer protection agency partners who can and do put fraudsters behind bars.