Fraudulent Unemployment Claims on the Rise

Editor's note: This article has been updated to include additional instructions from the Texas Workforce Commission to address suspected fraudulent claims.

Employers should be on the lookout for unemployment benefit claims that were fraudulently filed.

Claims may be in the names of existing employees, former employees, and sometimes those who never even worked for the employer. These claim forms often include frequent errors, including a misspelled name, incorrect social security numbers, and even using maiden names.

HR Services and TASB Risk Management Fund Unemployment Compensation Program members are reporting a receipt of claim forms for existing employees, and upon checking with the employee they find that employee didn’t file a claim or have any knowledge that one had been filed. This practice is rampant and has serious consequences for employers and employees. If not caught, employers could be billed for fraudulent claims where dollars went straight into thieves’ pockets while unknowing victims could be stuck with overpayments they owe back for money they never received.

Reporting Fraud

Obtaining unemployment insurance benefits by misrepresentation is a reportable violation of the Texas Unemployment Compensation Act (TUCA). Individuals and entities should take these claims seriously and report allegations of fraud, waste, and program abuse to the Texas Workforce Commission (TWC) for investigation.

Reports of alleged fraud can be reported 24 hours day, seven days a week to the TWC Fraud and Abuse Hotline (800-252-3642). Information submitted on the Hotline must be as specific as possible. However, the Hotline permits reporting of matters anonymously, if desired.

The TWC is not able to immediately void fraudulent claims as was possible during previous years of high unemployment. TWC representatives offer the following instructions to address suspected fraudulent claims.

Employers:

• Call or email the victim and tell them you received an unemployment claim in their name. Most employees are surprised to learn they’ve been targeted.
• Respond to the TWC form and notify the TWC that the claim involves identity theft. Mark the form indicating the claimant still works for you.

Information You Can Share with Victims:

• Visit the TWC’s online fraud center.
• Click the green “Report ID Fraud” button and follow the instructions.
• Report identity theft to the Federal Trade Commission.
• Consider hiring a commercial fraud monitoring service.
• Check your credit reports.

Identify Theft Concerns

Fraudulent claims may involve identity theft, and employees should be made aware of this possibility so they can take steps to protect personal accounts and credit reporting information. TWC recommends victims of identity theft take the following actions:

• Contact the police department in the city in which you reside and get an incident report and number.
• Consult the Federal Trade Commission website (checklist of further actions is available on this site).
• Contact one of the major three credit reporting agencies, and:
  • Ask that a free fraud alert be placed on your credit report.
  • Ask for a free credit report. You only need to contact one of the three agencies because the law requires the agency to call to contact the other two.
  • If needed, ask to have your credit account frozen.
• If bank or credit union account was compromised, contact the fraud department of each institution. Report the identity theft and, if needed, ask them to close or freeze the compromised account.

If TWC establishes that an individual is an identity theft victim in relation to an unemployment insurance (UI) claim, the individual can obtain identity verification documents by visiting the Texas Workforce Commission UI Fraud Submission portal, available in English and Spanish.

More Information

Employers should carefully review their quarterly statements for suspicious claims. Employees should check their mailboxes and protect their personal information to prevent further damage such as credit cards and loans taken out in their names.

Be aware that some school employees may file for unemployment compensation benefits over the summer if they are not scheduled to work. For these claims, the district is protected by their Letter of Reasonable Assurance or contract status. These claims are not fraudulent but should be protested to the TWC.    

Information on how and where to report fraud is also available on the TWC website.