EMPLOYERS Businesses and Companies BEWARE Unemployment Benfits Claim Fraud 1 1 980x807 1

Government relief surrounding the pandemic has enabled fraud to thrive within the unemployment system. If not monitored closely, it could cost businesses dearly.

Imagine a senior employee at your company informs you about an official notice they received from the Department of Labor. The notice reads, “Your application for unemployment benefits has been approved in connection with your recent layoff.” You are both confused and unsettled because this employee has NOT been laid off. As it turns out, your employee and by extension your business have fallen victim to unemployment fraud.

Employers all over the country are reporting an increase in this and similar schemes that exploit government COVID-19 relief packages. No specific industry or organization is being targeted; the fraud is widespread among many types of employers nationwide. Sophisticated scammers have targeted school employees, first responders, government employees, and retired individuals, among others. It also doesn’t seem to matter where a business or employee is located. Some employees have reported receiving a notice of claims filed in a state, or in multiple states, where they have never worked or lived.

In one of the most common scenarios, scammers gain access to an employees’ personal information and then file a claim on that person’s behalf. They then attempt to steal the Unemployment Relief debit card from the person’s mailbox.



The increase in fraudulent claims is predicted to increase when Congress passes another COVID-19 relief bill to extend and increase Coronavirus funding of Unemployment Benefits.

These schemes can lead to hardships on a large-scale basis:  

  • The increase in fraud has led to millions of dollars in losses.
  • Fraudulent claims filed under an employee’s name may mean difficulty for that employee to obtain valid unemployment benefits in the future.
  • Fraudulent cases contribute to longer claim processing times, a huge burden for those legitimately awaiting unemployment benefits.
  • States are freezing or locking cases for review. California recently froze new claims for two weeks to try to get a handle on the widespread fraud, and Arkansas locked benefits during fraud investigations.
  • Agencies must allocate scarce resources to identify, investigate, and prevent fraud.
  • Fraud and heightened backlogs cloud the collection and reporting of unemployment data, making it difficult to measure actual levels of unemployment.


The best step you can take for your company is to prepare your organization before any such fraudulent claims appear. Educate your workforce about these kinds of problems and encourage them to be alert and aware of the dangers that could be lurking. Some states refer individuals to fraud entities, credit bureaus, or other related agencies. Individuals impacted by suspected fraud are often advised to freeze their credit and get an identity protection service.

Another way to help mitigate successful unemployment claim fraud is to monitor the charges and increases to your unemployment contribution rates. This can help employers identify and stop any ongoing fraudulent claims they otherwise may not have known existed.

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