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Unemployment Fraud Spikes with COVID-19 Unemployment Fraud Spikes with COVID-19

Unemployment Fraud Spikes with COVID-19

Along with a spike in COVID-19 related cyber-attacks, we are also seeing a spike in fraudulent unemployment claims. Many companies have had to make tough decisions to furlough staff, lay off staff, or significantly reduce hours. In many cases, these employees become eligible for unemployment compensation. This unprecedented high volume of unemployment claims activity—coming in the midst of the confusion caused by COVID-19 disruptions—has created yet another opportunity for fraudsters and cyber-criminals to profit from previously stolen identities.

Since the start of the COVID-19 pandemic, the FBI has reported a large increase in fraudulent unemployment insurance complaints involving the use of stolen personally identifiable information (PII).[i] Federal authorities also have uncovered plots by international organized crime rings to file fraudulent unemployment claims in hopes of collecting unemployment payouts from states.[ii] The high volume of applicants, coupled with the pressure on governments and companies to process claims quickly, has led to relaxed verification standards, which can make it easier to commit this type of fraud.

Many victims of identity theft related to unemployment insurance do not know they have been criminalized until they try to file a legitimate unemployment claim and are denied. In other situations, a victim may receive notification from the state unemployment insurance agency, receive an IRS Form 1099-G showing paid benefits, or may be notified by his or her employer that a claim has been filed while the victim is still employed.

Remain Vigilant, Take Action Quickly

Individuals should be vigilant in watching for clues they are being scammed. Unsolicited inquiries related to unemployment benefits, communications regarding unemployment claims when you have not applied for unemployment, and links to fictitious websites and social media pages mimicking those of government agencies are some of the many indicators of concern of which you should be alert.[iii] For more information on similar COVID-19 scams, please check out our articles Be Wary of Coronavirus Scams and Protect Your Health (And Your Data): 6 Tips for Remote Working as COVID-19 Spreads. If you believe you have been a victim of identity theft related to a fraudulent unemployment claim, it pays to act quickly and report the fraud to your employer’s human resources department, local law enforcement, state unemployment insurance agencies, the IRS, and credit bureaus as appropriate. The longer you take, the more difficult it may be to undo the damage to your identity and to your finances.

Tips to Protect Yourself

Businesses and individuals must train to recognize and reduce the impact of potential scams. The FBI provides some guidance that offers a good, but basic starting point:
  • Be wary of telephone calls and text messages, letters, websites, or emails that require you to provide your personal information or other sensitive information, especially birth dates and Social Security numbers.
  • Be cautious with attachments and embedded links within emails, especially from an unknown email sender.
  • Monitor your bank accounts on a regular basis and request your credit report at least once a year to look for any fraudulent activity. If you believe you are a victim, review your credit report more frequently.
  • Immediately report unauthorized transactions to your financial institution or credit card provider.
  • If you suspect you are a victim, immediately contact the three major credit bureaus to place a fraud alert on your credit records. Additionally, notify the Internal Revenue Service by filing an Identity Theft Affidavit (IRS Form 14039) through or[iv]
In addition, we strongly recommend that every company and individual follow basic cybersecurity steps such as using strong passwords and multi-factor authentication on email and bank accounts, staying clear of dubious internet sites and pirated software that may provide criminals an easy route into your accounts or system, keeping sensitive data off social media and other vulnerable networks, and using encryption to protect your data, especially when stored on computers or cloud services.

Please contact Guillermo Christensen, Bill Barath, or Rachel Spiker for more information. Guillermo is a partner in our Data Security and Privacy and White Collar Defense Groups. Bill is a partner in our Labor and Employment group. Rachel is an associate in the Data Security and Privacy Group. Visit our Coronavirus (COVID-19) Resource Center to speak with a member of our Coronavirus Task Force if you have additional questions about how the virus could impact your workplace.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.
[ii] The New York Times, Feds Suspect Vast Fraud Network is Targeting U.S. Unemployment Systems, May 16, 2020, available at
[iii] List provided within FBI’s Press Release. FBI National Press Office, Press Release, July 6, 2020, available at
[iv] Id.
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