What Employers Should Know About Unemployment Fraud

After the pandemic, the United States saw unemployment rates at an all-time high. The increase in unemployment benefits led to an uptick in unemployment fraud all across the country. Employers are now grasping to deal with the increase in fraud, even as unemployment claims start to dwindle to more normal levels. If you’re an employer, you’re probably wondering what you should know about unemployment fraud going forward. Here’s some of the most important things you should know about unemployment fraud as an employer.

Increase in Funds Means More Scammers

In 2020, the United States issued stay at home orders leaving millions of Americans with no choice but to file for unemployment. With the increase in unemployment funding, many employees were receiving up to an extra $600 every week in unemployment benefits through the CARE Act. The increase in funding caught the attention of scammers who instead saw an opportunity for fraud. In the year of 2020 alone, scammers were able to siphon out over $36 billion dollars from American unemployment benefits, nearly a 3,000% increase since 2019. Scammers preyed on the new options for unemployment, like the pandemic unemployment assistance program (PUA). Although states hired firms to oversee unemployment insurance systems, the defense was not adequate to the number of scammers already stealing employee’s identities.

New Forms of Unemployment Fraud

With the increase emergence of unemployment fraud, there have been various new forms of fraud scammers have been relying on that is worth noting. The various new forms of unemployment fraud that has made its mark include email phishing schemes, purchasing stolen PII, use of PII obtained during prior data breaches, cold call impersonations, and physical attempts to steal personal identification information like dumpster diving.

Email phishing schemes may look like they are coming from reputable companies, but it is actually a scammer looking to obtain personal information. Never click on any links in suspicious emails to avoid coming into contact with scammers. Often, these emails have errors in them like a lack of greeting and spelling errors. Purchasing stolen identities happen on the dark web, a place that the average person does not usually see. Increase your protection from new forms of unemployment fraud by routinely updating passwords, using two-factor authentications, and by shredding papers that contain personal information.

HR is Your First Line of Defense

Your human resources team is your first line of defense against unemployment fraud. HR is responsible for reviewing and approving all unemployment claims, therefore they should be reviewing all claims very carefully in case of fraud. Carefully reviewing all unemployment claims will reduce your overall risk for fraud. HR should first check to see if the claimant is a current employee or former employee, as current employee claimants are usually fraud.

If there is a fraudulent claim expected, HR needs to notify those involved. Employees in HR need to be alert and ready to identify unemployment fraud. Having them trained on the proper procedures to deal with unemployment fraud will allow your company to run smoothly and have outlined actions to take in times of suspected fraud. HR is responsible for monitoring all unemployment claims closely and identifying those at risk for fraud.

Cybersecurity is Your Second Line of Defense 

Now more than ever, employees are accessing sensitive documents at home with the option to work remotely. The pandemic is responsible for the explosion in remote work, which in turn led to an increase in cybercrimes. Strengthening your cyber security both remotely and in office is one of the best defenses against unemployment fraud. Provide virtual private networks (VPNs) for employees working remotely.

You can add another layer of defense by adding multi factor authentication (MFA) to your VPN. With MFN, you are able to secure the network further by asking users for authentication to access the VPN network. Regular training regarding cybersecurity for employees can be beneficial in your defense against unemployment fraud. Employers should be regularly assessing their networks to ensure it is properly protected.

You Have a Role to Play

As an employer, you will receive a notice from state agencies whenever an employee files for unemployment. It is your responsibility to thoroughly review any claims for unemployment and respond to them in a timely manner. The longer you take to respond to unemployment claims, the time frame for fraud grows. Scammers will take advantage of employers who take time to respond to unemployment claims. It is also your responsibility as an employer to properly educate your staff on the security measure of your company.

Many companies have employees sign a paper stating they understand the security measures of your organization and the consequences of breaching them. You need to provide the proper resources for your employees to educate themselves and report fraud. Make sure your employees are reporting fraud to the correct authorities like the National Unemployment Insurance Fraud Task Force. As an employer, you should also be reporting any new employees that join your team so that there are accurate reports regarding who is working at your company.

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