Labor & Employment / 02.25.2021

Rise of Unemployment Fraud in Ohio, Other States

By Rob Gilmore & Lyndsay Ross

A rise in unemployment fraud in Ohio and other states is the subject of increasing media attention and concern. But what exactly is happening, and what should you do if an unemployment claim was fraudulently filed under your employee’s, or your own, name? After receiving reports of this happening from several of our clients, KJK felt it was of urgent importance to share this information. Below, we break down the problem, the at-risk individuals and the steps you should take if you are affected.

The Problem

Along with other states, Ohio is seeing a stark increase in the number of unemployment claims filed, and many are not legitimate. The Ohio Department of Job and Family Services (ODJFS) announced an alarming increase in initial traditional unemployment claims that “is suspected to be the result of fraudulent activity.” According to ODJFS, some 121,000 traditional unemployment claims have been flagged for potential fraud (out of 1.8 million), along with more than 50% of its 1.4 million claims for Pandemic Unemployment Assistance.

While still unclear how, individuals are having their personal information stolen and used to submit an unemployment claim in their name, though they never receive the money. Individuals could become aware of this issue in various ways. One is that, because unemployment benefits constitute taxable income, they could receive a Form-1099G which reflects never-received benefits. As of Friday, ODJFS said more than 63,000 people have reported receiving such forms for fraudulent claims. Individuals may also receive a letter from ODJFS stating that benefits have been applied for, a US Bank ReliaCard to access those benefits, or notice from an employer inquiring about these benefits.

The At-Risk Individuals

At the present, all the ways in which individuals’ personal information is being stolen is unclear. Unemployment fraud in some states is being perpetuated by individuals who compile a list of real people, then pay databases of hacked information small sums to link that name with a date of birth and social security number. Personal information can also be gleaned through paid memberships for genealogy websites.

Given the above, there is a wide range of potential targets for identity theft. However, some may be more at risk than others. Specifically, an increasing number of individuals reporting this fraud are senior citizens or those who have been out of the workforce for some time. Additionally, those who are or were employed at smaller-sized businesses, who do not have a robust HR department with the abilities to ferret out potentially fraudulent claims, may be more at risk. However, employers are receiving notice of unemployment claims of all kinds, including those allegedly from individuals who currently work for the employer, or who never worked for the employer at all.

The Next Steps Employers Should Take Against Unemployment Fraud

If you learn that an employee is the victim of a fraudulent claim, there are several steps for employers to take:

  • Report the fraud. ODJFS has established a form specifically for employers to report when an employee’s personal information was used to claim unemployment benefits. The form includes a template that must be completed that includes basic personal information about the employee, including their social security number and address.
  • Carefully review and timely respond to Requests for Separation Information from ODJFS. Review all Requests for Separation Information received from ODJFS to confirm whether the individual for whom the information is sought is, in fact, a former employee. Regardless of whether the claim is fraudulent, respond to the Request within 10 business days. If the claim is fraudulent, write “fraud/identify theft” on the form, which will prompt ODJFS to investigate.
  • Provide resources for employees. ODJFS asks employers to share all recommended resources with their employees, which includes employees taking the steps outlined below if a fraudulent claim is filed.

The Next Steps Individuals Should Take Against Unemployment Fraud

If you learn that a fraudulent claim for unemployment benefits was made in your name, there are several steps you should take:

  • Report the fraud. ODJFS has established a secure online form by which individuals can report the fraud. The agency has also established a hotline to report the fraud at (833) 658-0394 that is open Monday – Friday, 8:00 a.m. – 5:00 p.m. Information regarding suspected fraud can also be faxed to ODJFS at (1 + 614) 752-4808.
  • File your taxes accurately. The IRS has issued guidance advising that if you receive a Form-1099G reflecting payments you did not receive, you should contact ODJFS and request a revised form showing you did not receive the benefits. If you cannot receive a corrected form in time, you should still file an accurate tax return that only reports the income you did in fact receive.
  • Take steps to protect your personal information. Check your credit report for inconsistencies. You can place a one-year fraud alert on your credit reports for free by contacting Equifax, Experian, or Trans Union, online or by calling – if you contact any of the three companies, that company is obligated to inform the other two. You can also submit a redaction request, asking public offices to remove certain information from records placed online and forwarding the request to the appropriate agency. Further, you can order a copy of your Personal Earnings and Benefit Estimate Statement from the Social Security Administration by calling (1 + 800) 772-1213, completing an online form, or going to any Social Security office, to determine whether your social security number has been compromised. Numerous other resources from the Ohio Attorney General and the Ohio State Highway Patrol can be found here.

KJK is carefully monitoring the situation and watching for any additional guidance from ODJFS or the IRS. If you, or your employees, are concerned about a potentially fraudulent employment claim, or to learn more about this issue, contact Rob Gilmore (rsg@kjk.com / 216.736.7240) Lyndsay Ross (lmr@kjk.com / 216.736.7201) or any of our Labor & Employment attorneys.

 

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