Fraudulent Unemployment Insurance Claims Are Breaking Records in New York State


Employers and Employees Need to Be Vigilant and Know How to Respond
 

New York employers and employees should be aware that the New York State Department of Labor (NYSDOL) has seen a massive increase in the number of fraudulent unemployment insurance (UI) claims filed since the COVID-19 pandemic began last March. Cyber criminals are seeking to cash in on the additional UI benefits that have been made available by the federal government and the extended length of time during which those benefits may be collected.

According to a recent article in Newsday, the NYSDOL has identified 425,000 fraudulent claims valuing nearly $5.5 billion during this 10-month period. These claims have been filed using personal information that was likely stolen during past data breaches of large banks and other financial institutions. The NYSDOL is working with state and federal law enforcement to identify and prosecute the responsible parties. This problem is not unique to New York – every state has experienced an increase in fraudulent UI claims over the past year.

Employers should be concerned because they do not want these fraudulent claims to count against their experience rating which could result in an increase in their payroll taxes. Therefore, employers should carefully review any information that they receive from the NYSDOL regarding UI claims to confirm that all the information (particularly any employee contact information) is correct and that the employee in question is entitled to benefits. If you are unsure, you should follow up with the employee directly as it is possible that the employee has filed a claim due to loss of other employment. Employers can report UI fraud to the NYSDOL here.

Employees should be concerned because if someone has filed a UI claim in their name it means that the fraudster has their personal information – including their birthdate, address, and social security number, and could use this information for other types of identity theft. Moreover, if the fraudulent claim for UI benefits is approved and funds are paid out, those payments may limit the employee’s ability to file a bona fide claim for benefits in the future. In addition, the employee may receive a bill from the IRS for the income taxes due on the benefits paid out on the fraudulent claim.

Employees who receive a UI claim determination letter but have not filed for benefits, or who otherwise learn that a fraudulent UI claim has been filed in their name, are advised to take the following steps:
  1. Report the fraudulent claim to the NYSDOL here.
  2. Report identity theft to the Federal Trade Commission here.
  3. Check their credit reports for any suspicious activity and consider credit freezing and monitoring options offered by the three major credit reporting agencies: Experian, TransUnion and Equifax.
  4. File a police report for identity theft.

For more information about UI fraud, please read the blog post from our strategic partner, Integras Intelligence, Inc., which can be accessed here.

If you have questions unemployment insurance fraud, or any other HR matter, please contact us at 631-794-7400 or [email protected].