Unemployment theft skyrockets amid record number of claims
As most on the unemployment rolls expected to see a reduced weekly payment from Iowa Workforce Development in the first week of August, Webster City resident Larry Blankenship was surprised to see nothing when he checked his bank balance.
As unemployed Americans watched the federal supplement of $600 per week from the CARES Act expire, Blankenship found out that he had also lost his entire weekly payment from the state of Iowa to a faceless thief.
After four months receiving unemployment benefits without a hiccup, the former information technology employee tried to go online to double check that he actually filed his claim.
“I went online, and it wouldn’t let me into my account,” he said, escalating concerns that something was wrong. A phone call later, he learned that his payments were being claimed by a new bank account in California.
Blankenship’s claim is part of a growing problem for Iowa Workforce Development, the state department that administers unemployment insurance. The theft and fraud has gained clout in the state alongside Iowa’s record-breaking numbers of claims, immediately following years of one of the lowest unemployment rates in the country.
To date this calendar year, IWD has confirmed 940 cases of identity theft, according to Deputy Director Ryan West. That figure is nearly nine times larger than the figure for all of 2019 — 105 cases.
If the increase in identity theft cases is any indication, cases of fraud in which applicants make claims to unemployment insurance for which they’re not entitled could see an increase, as well.
In 2019, West said that IWD identified 1,492 cases with claims totaling over $5.9 million. That’s a little over four claims per day, on average.
In the first 80 days of 2020 — just before unemployment claims surged dramatically with the advent of the novel coronavirus — Iowa saw 418 claims, an average of 5.23 claims per day. West said he could not provide figures for the number of fraud cases after March 20.
“This is a historic time. We haven’t seen (unemployment insurance) claims this high, ever,” West said.
And theoretically, he said, the more claims there are, the more opportunity there could be for fraudulent activity and theft.
Capt. Ryan Gruenberg, public information officer for the Fort Dodge Police Department, said that all claims related to unemployment benefit theft or fraud would likely be referred to IWD first.
The Iowa Attorney General’s Office said it has not handled reports regarding unemployment tampering, according to Communications Director Lynn Hicks.
“We do get identity theft reports occasionally, but nothing related to unemployment benefits,” Gruenberg said.
West said that while unemployment insurance fraud and theft is a concern nationally, Iowa is one of a few states with a newly implemented system that helps prevent fraud early on in the claims process.
Upon initial claims, the deputy director said that a series of questions must be answered to confirm one’s identity, such as your last employer. Like most states, applicants must file with their Social Security number.
“That’s a really great starting point,” he said — something that came about with a push to be on a constant lookout for fraud after The Great Recession. “It’s one of those things, unfortunately, that is a constant part of what we’re trying to do.”
Despite the fact that the state’s current system is operating off a computer server that was built in 1973, West said the technology still does “a fantastic job” with the “extremely new” automated modernization that has been implemented to guard against fraudulent behavior.
“This is a historic time and it’s been a really great learning point for us,” West said.
But even with modern technology, it’s unclear to some victims whether their situation should have happened in the first place. Though Blankenship doesn’t quite know how his account was “hacked,” he did see a few obvious signs that the person who refiled his unemployment claim should have been flagged right away.
The person stealing his claim used the wrong date of birth and claimed a different employer than Blankenship’s last one. The last employer the identity thief claimed to work for was one that Blankenship hadn’t worked for in over 20 years. But IWD paid the claim to the new California bank account without asking any more questions, Blankenship said.
“If they didn’t even have the date of birth right, you’d think, ‘Something’s up with this and we need to contact this person,'” Blankenship said as he probed the IWD investigator assigned to his case. “The (investigator’s) response was, ‘So far, there are so many people filing that we just have to take off those security measures.'”
The situation has been especially aggravating for Blankenship when compounded with his pandemic-related unemployment. He has been hunting for a new job for over five months, to no avail — the longest he’s ever been out of work as an adult.
“The people working for the state should have thought about this (situation) as a possibility,” Blankenship said. “It’s like basically leaving the door open and not bothering to lock the door.”
While he hasn’t ascertained the exact mechanics by which his identity was stolen, he has suspicions that his old PIN number, for which he used his wedding date, had something to do with it. The Social Security number used by the identity thief was correct.
From Social Security numbers to a stolen account passwords, the data possibilities to get a foot in the door are endless.
In July, the FBI noted a spike in fraudulent unemployment insurance claims filed using stolen identities through a variety of techniques including data breaches, impersonation scams, data mined from social media and phishing scams that trick users into delivering their information personally.
“Many victims of identity theft related to unemployment insurance claims do not know they have been targeted until they try to file a claim for unemployment insurance benefits, receive a notification from the state unemployment insurance agency, receive an IRS Form 1099-G showing the benefits collected from unemployment insurance, or get notified by their employer that a claim has been filed while the victim is still employed,” the FBI’s national press office said in a July news release.
“Fraud usually comes from other (states) that matriculate through (Iowa) looking for opportunities to steal an individual’s identity and correlate it to (the victim) filing for unemployment insurance,” West said. “We’ve heard some elaborate schemes out there, for sure.”
While Blankenship’s payment will be replaced, it could take up to two months to get the money back with processing delays.
To prevent a stolen uninsurance claim or stop one being fraudulently filed in your name, West said there’s a few things you can do.
If you’re filing weekly claims, keep track of what you’re filing and double check all of your personal information for accuracy on a regular basis, the IWD advises. If you receive your benefits on the IWD’s debit card, be sure not to share it.
“It’s easy to get complacent with this stuff,” West said. “Don’t take it for granted.”
If you have not filed for unemployment insurance and start receiving correspondence indicating you have, save the correspondence and contest the filing immediately. Reports can be made online at IowaWorkforceDevelopment.gov/report-fraud or by calling 866-239-0843.
West also advises victims to sign up for a credit monitoring service to mitigate the damage.