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A recent trend in fraudulent unemployment schemes has seen an uptick, as criminals use an unsuspecting person’s personal information to collect unemployment benefits. The problem has become so widespread that many federal and state agencies are working to combat the scams. The Department of Labor is reporting a large increase in this scam this spring, and the U.S. Department of Justice has set up a task force to combat it.

  • Victims of fraud may be both those who have actually filed for unemployment as well as those who have not filed for unemployment. In other words, anyone can become a victim.2
  • Across the country, fraudsters have taken advantage of the increase in pandemic-related unemployment claims, and have filed more than $200 billion in claims using stolen identities.
  • Like many scams, the fraudulent unemployment schemes use an unsuspecting person’s personal information to collect unemployment benefits.
  • Organized crime rings have been using data stolen or purchased from past data breaches, usually those occurring in previous years and unrelated to unemployment fraud. These stolen identities allow criminals to fraudulently collect benefits across multiple states.3
  • Those committing fraud often get unemployment benefits using more than one person’s identity, which can cause activity to spike in certain regions.4

Signs you may be a victim:


  • Many people only find out unemployment identity theft has occurred is when they receive something in the mail, such as a payment or state issued 1099-G tax form (typically used to report unemployment compensation) that’s incorrect or for benefits not received or applied for. The form itself may be from a state in which you do not live or did not file for benefits.5
  • While you are still employed, your employer may notify you indicating that they received a request for information about an unemployment claim in your name.
  • Taxpayers might also learn of fraud, or attempted fraud, in their name when they file their annual taxes. For instance, the IRS might alert you after you file that you didn’t claim all of your income from 2020, when you actually did. This could be a sign that someone has received unemployment benefits in your name.6

How to protect yourself:


  • Stay informed through news reports about what’s going on with the pandemic, various fraud issues, and tax matters, particularly during tax season as there are other well-known tax scams going on. Staying informed increases the chance that when something feels suspicious, you’ll recognize it as questionable.
  • Never send personal information or documents to unverified sites or in response to requests from those on social media sites.
  • Sign up for identity theft protection, which can send timely notifications about questionable activity on your credit report through credit monitoring services.


What to do if you are targeted:


  • Report fraud immediately. If you receive any kind of suspicious material, either in the mail or digitally, report it to your state’s Department of Labor (fraud reporting offices by state).7
  • Tell your employer and state unemployment agency about the fraudulent claim and file a complaint with the Federal Trade Commission (FTC) at or call 877-ID-THEFT.
  • Contact the three credit bureaus (Equifax, Experian and TransUnion) to freeze your credit. It’s the best way you can protect against having new accounts opened in your name. Visit the Credit Freeze page on the Federal Trade Commission (FTC) website. After, monitor your credit reports carefully and frequently and close any fraudulent accounts opened in your name.8
  • Report unemployment identity theft that occurred during the COVID-19 pandemic to the U.S. Department of Justice’s National Center for Disaster Fraud. This center helps law enforcement stop future unemployment identity theft. Filing a report with this agency also notifies the U.S. Department of Labor’s Office of Inspector General.9


    By being alert to suspicious activity and staying aware of scams, you can help protect your identity from harmful actions.



    1. Department of Justice

    2, 4, 6, 8. CNBC

    3, 5, 7, 9. Department of Labor

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    Erica Dalton

    Merchants Insurance Group

    Merchants Insurance Group sells its products through a network of more than 1,000 independent insurance agents in Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, and Vermont. We sell our products through independent insurance agents because we believe they provide value to policyholders through their broad range of products and their insurance expertise.