I Didn’t Claim Unemployment Insurance….Why Did I Receive This Card?

A notice from the Department of Labor arrived last week saying that I had filed for unemployment, which is weird, because I had not fired myself! After making sure I was, in fact, still part of my team, I discovered what was going on.  There has been a rash of fraudulent unemployment insurance claims around the country and it seems I am now entangled in them.

It happened to me as an employer and as employee, it happened to my teammates as employees, it happened to my colleague’s mother and to my wife, it happened to my clients: it’s happening everywhere. Not only are the consequences bothersome to correct, but we’re the lucky ones.  This is just a hassle for us, but it’s real life for millions of Americans who count on the insurance. The criminals perpetrating these acts are causing further pain for those who need it at the worst time possible.

Unemployment Insurance Is Not A New Program, Why Has It Become The Biggest Fraud Target?

cares act funds flow chart

Source: Howmuch.net

Unemployment Insurance, and Unemployment Insurance Fraud, are not a new phenomenon. But the CARES Act in 2020 was designed to help as many people as fast as possible during one of the worst global pandemics of all time.  Unemployment Insurance got a “boost” from the CARES Act in the form of “Pandemic Unemployment Assistance” or PUA.  This not only increased the amount of relief for unemployment claimants, but also broadened the definition of who could claim unemployment.  Previously self-employed individuals, gig workers, freelancers, part-time employees, and contractors did not qualify for unemployment, but the PUA opened up the program to these groups as well.  Despite the good intent, criminals quickly used this newfound loophole to concoct schemes and steal more money.  Of the $560B in relief allocated to individuals, $260B was intended for extra unemployment benefits. Combined with an overstrained government office just trying to keep up, this proved to be a target-rich environment for criminals.

How Many People Have Been Affected?  How Much of the $260B Has Landed In The Wrong Hands?

The Department of Labor believes $36B dollars have been lost to fraudulent unemployment claims in the last year as of January 5th according to CNBC. As the CARES Act and others were updated during the national fight against COVID, the budget for additional unemployment insurance ballooned another $100B, to $360B in total, and the confirmed fraud loss now equals 10% of all payments.  The count is not over yet either.  With 8 million recipients on file as of December 2020 it will take years to figure out how much aid fell into the wrong hands.  State agencies still believe that 35%-40% of all new applications are fraudulent.  But the good news is that this type of fraud is going to get tougher with new measures instituted with the most recent relief package. Now applicants must provide confirmation of their identity and job status in order to qualify.  That may result in a delay of benefits, but the new measures should help to close the flood gates and prevent our tax dollars from landing in the wrong hands.

How Do I Know If It Has Happened To Me?  What Do I Do If It Has?

You are your own best defense when it comes to protecting your identity, credit, and status.  We monitor our life insurance, our property insurance, and our health insurance, but we are slow to invest in insuring our identities.  We must face the fact that no matter how well we think we have kept our private information out of the hands of the public, it exists in websites and databases outside of our control.  The major data breaches of the past decade have potentially touched most consumers. That is our new normal.

I would encourage you to sign up for a credit monitoring service or at the very least, get your free credit report and monitor your activity yourself.  If you don’t intend to apply for new credit in the near future, consider “freezing” your credit by contacting each of the three reporting agencies. This may help secure your credit, but it may not help with unemployment fraud.

If you learn that someone is trying to claim a benefit with your identity, alert the Colorado Department of Labor immediately.  Don’t be surprised if you don’t hear anything back from them quickly as, they are dealing with thousands of claims every week.  If you get the VISA debit card loaded with your benefit payment, don’t use it! Instead, go to the card website and cancel it. Also be sure to monitor your bank accounts and mail for additional discrepancies.

We have put together a helpful Identity Theft response document with websites, phone numbers and a checklist of what to do should you be affected. Please have a look and contact me if you have questions.

It is an unfortunate reality.  Our country, and the world, have been upended in so many ways this past year. Substantial legislation designed to help many has unfortunately been targeted by those looking to make a quick buck. Unemployment Insurance is a helpful tool in keeping our communities and economy healthy, but we need to play a part in making sure that we protect ourselves and our tax dollars from being misused.

David Morrison

David Morrison

David uses Values Based Financial Planning to align your financial choices with your most important goals and your most deeply held values. He has a comprehensive process to consolidate, coordinate and simplify your financial life in a way that brings you more confidence and clarity about your future. Learn more about David here.

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