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Pandemic-centric unemployment benefits have led to a dramatic increase in fraudulent unemployment insurance claims.
The majority of fraudulent claims began in April of 2020 when the U.S. Department of Labor (DOL) issued an updated Pandemic Unemployment Assistance (PUA). PUA allowed many people who were previously unable to apply for unemployment benefits to apply. This was accomplished by allowing different forms of paperwork to prove there was cause for unemployment benefits, including self-certification of salary for people who did not receive traditional paystubs (such as contract workers or gig workers). While PUA allowed people who receive non-traditional payment to receive unemployment benefits, it also opened the door to fraudulent activity, as the PUA program had fewer requirements to establish a work and income history.
With unemployment insurance fraud on the rise, it’s hard to know exactly what can be done to help prevent identity theft and save employees from the stress that comes with it. How can employers best assist their employees in combating unemployment insurance fraud?
“Employers must promptly respond to and carefully scrutinize information requests for unemployment benefits, as most states require approval,” said Elliot Dinkin, president and CEO of Cowden Associates, a business management consultant headquartered in Pittsburgh. “In addition, new hire details should also be completed in a timely manner. “We also suggest that employers openly communicate information about fraud and how employees can monitor these matters and even offer identify protection referrals for anti-theft. With remote working, (employers should) implore employees to add additional cybersecurity.”
Awareness is also a crucial part in combating fraud, Dinkin noted. Being aware of the potential risks and signs of fraud means that employees can actively look for fraudulent activity instead of being completely blindsided by fraudulent claims.
“Employees should monitor their credit activity to see if any cards or accounts have been opened or credit checks requested in their names,” said Dinkin.
Veronica Bach, human resources manager and benefits specialist at WorldatWork, said the best way for employers to help prevent fraud is to offer identity theft resources as a part of their benefits package and to ensure that employees are educated and informed about these protective resources.
“I would recommend employers offer a voluntary benefit to staff for identity theft,” Bach said. “It’s no cost to the employer, 100% employee paid, but they get better rates than going it alone. WorldatWork for example, uses IDShield with LegalShield. They are flexible on enrollment, so if an issue arises, coverage can be implemented immediately. In addition, they should notify their employee immediately so they can take action.”
By offering these programs, employees now have an outside team of specialists who will be able to assist in combating identity theft. This means the employee will be able to immediately consult professionals who help in identity recovery efforts.
“Ideally, I would advise employees enroll in some form of identity theft protection for themselves and their dependents,” Bach said. “It’s much easier to sort out if it’s already in place. In addition, it typically offers insurance for losses and is detected before too much damage can be done. However, if they have no coverage, all is not lost as you can typically sign up for ID theft protection pretty quickly and a team of people can assist in restoring your identity.”
Ultimately, there is no 100% effective way to completely safeguard against unemployment fraud. As long as there are benefits available to those in hard times, there will always be those willing to exploit the system and others to receive benefits. However, employers can help curb the success of fraudulent claims by being proactive in reviewing and reporting claims, making sure there are programs available to protect employee’s identities and making sure employees are aware of these programs.
“We educate staff while offering solutions to be proactive,” Bach said. “For example, we provide regular reminders that through their employer, they can opt into ID theft protection at a discounted rate. However, I have found it’s most often reactive. Folks sign up because they or someone close to them had ID theft in the past. If they didn’t, they think it can’t happen to them and then it does."
About the Author
Kayley Ocker is a writing and editing intern for WorldatWork.