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How to fight unemployment insurance fraud

Unemployment insurance fraud — also called UI fraud or unemployment benefits fraud — is nothing new. Arguably it goes back to the origin of unemployment benefits.

But over the last two years, the rate of unemployment benefits fraud has exploded. As a result, millions of people are now dealing with the impact of identity theft and fraud.

how to fight unemployment


As with any threat, it’s important to understand how UI fraud happens, how to keep your personal information from falling prey to it, and what to do if you become a victim.

Unemployment insurance fraud happens when someone knowingly collects benefits by providing false or inaccurate information when filing a claim. Instances can include:

  • Returning to work but continuing to collect unemployment benefits.
  • Working a part-time or temporary job without reporting those earnings when filing claims.
  • Withholding information or providing false information when filing claims, including using personal data obtained through identity theft.

Unemployment benefits fraud is punishable by law and may be a state or federal offense. Violators who are caught face serious consequences and penalties.

Escalation during the pandemic

As a response to the economic turmoil caused by the COVID-19 pandemic, programs providing unemployment benefits were expanded, and eligibility requirements were adjusted under the federal CARES Act.

State unemployment departments were overwhelmed with an influx of claims, struggled to navigate new rules using outdated systems, and ultimately had difficulty keeping up. This created conditions ripe for fraud.

The U.S. Department of Labor’s Office of Inspector General has estimated that more than $87 billion had been paid out improperly through fraud or errors as of September 2021, though ultimately that number could turn out to be much higher once all instances are uncovered. And that figure doesn’t include additional fraud that was caught by state unemployment departments before payments were distributed.

The Department of Labor has now established the National Unemployment Insurance Fraud Task Force and directed millions of dollars to investigations and creating new identity verification tools. But nevertheless, millions of Americans are left navigating the process of identity restoration and regaining financial health after becoming fraud victims.

Unfortunately, most people don’t find out they are victims of UI fraud until the damage has been done. People typically find out that they are victims of fraud when:

  • They receive paperwork in the mail that shows benefits they didn’t apply for, including Form 1099-G, which is used to report income from unemployment benefits.
  • Their employer or a past employer calls, saying an unemployment claim has been filed under their name.
  • They try to file a legitimate claim and are subsequently denied.

In addition, many taxpayers learn they are victims of fraud only after they file their federal tax returns and are alerted by the IRS that they didn’t report all of their income. Some retired Americans find out they are fraud victims after the U.S. Social Security Administration alerts them that their benefits are being reduced.

Although victims of UI fraud are not responsible for the benefits stolen in their name, they do experience delays in receiving legitimate benefits, are at risk of additional fraud, and have to cope with the impact mostly on their own. The process of reporting and recovering from fraud is neither quick nor easy — and an investigation can take weeks or even months!

If you are a victim of unemployment insurance fraud, start by doing the following:

  • Report the fraud to your employer and your state’s unemployment office. If false claims were made in more than one state, you’ll need to contact each state individually. Document all case and confirmation numbers as well as the names of people you speak to at the unemployment office. Alert your employer if it is not already aware of the situation.
  • File a complaint with the Federal Trade Commission. Visit the FTC’s identity theft website,, to file a report and get information on additional best practices. The commission’s site may also provide tools to help you pull credit reports and close fraudulent credit accounts opened in your name.
  • Contact each of the three major credit reporting agencies. Contact Equifax, Experian and TransUnion to place a fraud alert on your account and freeze your credit. A fraud alert requires any company trying to open new credit in your name to first verify your identity. A credit freeze prevents anyone, including you, from opening new credit in your name until the freeze is lifted. These steps can help deter further fraud and minimize damage to your financial health.

Following these steps is only the beginning. Recovering your identity and rebuilding your financial health after fraud is a long process.

Help protect yourself

You should also take steps to protect yourself on an ongoing basis:

  • Regularly check your credit reports and financial statements.
  • Watch for suspicious mail, phone calls, emails or social media requests.
  • Look for warning signs such as offers from individuals or organizations promising faster unemployment benefits, requests from people offering money in exchange for personal information, or letters or emails indicating that new accounts or unemployment insurance benefit claims have been initiated in your name.
  • Practice good digital hygiene by updating passwords, using two-factor authentication and avoiding oversharing information online or responding to suspicious requests.
  • File your taxes promptly. Filing taxes becomes more difficult once a criminal does so in your name. Obtaining an IRS identity protection PIN can help keep that from happening.
  • Only report legitimate income on your taxes. The state should issue an updated 1099-G once a fraud report is filed.

To help protect yourself, consider enrolling in an identity theft protection plan from Securus ID. Plans include identity theft education and protection as well as comprehensive recovery services. Visit to enroll or learn more.


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