Unemployment Fraud 101

With fraudulent unemployment compensation claims on the rise, CBICC members joined a webinar "Unemployment Fraud 101" on August 11. The speakers included?PA State Chamber's Alex Halper, Director of Government Affairs, and?Morefield Communications' Terry Trinidad, vCIO.?Attendees?learned what to do in these situations, what efforts are being taken to curb this new flurry of fraud, and general cyber security best practices.

According to a July 26?ProPublica?article, "How Unemployment Insurance Fraud Exploded During the Pandemic," dark web chat forums that trade tips on how to commit unemployment fraud have been talking about turning their attention to Pennsylvania, where "officials have 'noticed an uptick' in fraudulent claims."?

While the alarms have been sounding for years, decades in some cases, for state unemployment offices to upgrade and protect their old, outdated, and clunky systems, the COVID-19 pandemic put even more stress on these systems with the millions of applicants per week. Additionally, new systems were quickly built to accommodate?those that became eligible, such as 1099 independent contractors that now may access benefits through Pandemic Unemployment Assistance (PUA). Meanwhile, several data breaches at credit card companies and retail stores have flooded the black market with stolen identity information. These factors all contribute to a perfect environment for fraud, now occurring a new scale and rate thanks to bots that automatically fill in applications and chat forums dedicated to sharing tips to for successful applications.

Attendees learned a few things that the fraudsters may be thinking:

• Since benefits are paid at a rate based on the employee's salary, C-suite executives are top-tier targets.
• Since benefits are paid weekly, the criminals are thinking long term. First, apply for benefits. Then, update the profile to change the address/payment method to redirect to where the criminal can access the benefits.
• Importantly, businesses will not be penalized by Pennsylvania for fraudulent claims levied against their companies.

The rate of this fraud is staggering. In Pennsylvania, an?April 2021 press release indicated that 84% of PUA claims were believed to be fraudulent.

In Congress' rush to get benefits out to the millions of recently unemployed people who lost their jobs as a result of COVID, Congress failed to require verification - only self-certification. Now, Pennsylvania is working with ID.me to help curtail the fraud.

So, what should you do if you discover that an unemployment claim has been erroneously filed against you or an employee of your business? Here are some initial steps:

• Although this can be done by mail, the fastest way to do this is in the employer’s portal in the new UC system or through the?SIDES?e-response system.?For those employers who wish to use the new system to respond there are resources online that may be helpful:
• Video tutorials and step-by-step guides -?Resources (pa.gov)
• FAQs -?FAQs (pa.gov)?(scroll down to “Information for Employers”)
• Fill out an online fraud report through UC’s website.
• There are several types of fraud, so they should make sure to report?identity theft fraud.?
• The link to UC’s fraud information page is here:??Report Unemployment Fraud.
• The link to the UC fraud reporting page is here:?https://benefits.uc.pa.gov/vosnet/UI/Investigations/SubmitFraudActivity.aspx.
• PA Fraud Hotline at 800-692-7469.
• Additional steps:
• Contact police in the municipality you resided in at the time the unemployment fraud occurred/benefits in question were paid. A copy of the filed police?report must also be provided to the Office of Unemployment Compensation.
• Start a recovery plan with the Federal Trade Commission by visiting?www.identitytheft.gov.
• Victim should update all of their passwords.
• Place a freeze alert on your credit record with each of the 3 credit bureaus:
• Equifax - 866/349-5191
• Experian - 888/397-3742
• TransUnion - 800/680-7289?
• Order a free credit report at https://www.annualcreditreport.com/index.action (Equifax, Experian, and TransUnion are currently offering free weekly online reports through April 2021)?
• Contact your financial providers (banks, credit card companies, and so on.) to flag irregular transactions

Businesses looking to be proactive about cybersecurity have many resources available:

• Morefield Communications'?IT Security Checklist
• Morefield Communications'?Podcast "Are You Prepared for a Cyber Attack"
• Sept. 15:?Cybersecurity Awareness & Actions Exercise