Millions of Americans have had to file for unemployment over the last year, thanks to the pandemic. The toll COVID took on the economy has caused widespread joblessness and financial hardships for many, many people.
While concerning, the explosion of unemployment claims isn’t exactly surprising. Nearly every state has had to shut down businesses, schools and other mainstays at one point or another to help slow the spread of the virus. Unemployment has been extremely important in helping people who are out of work when jobs are hard to come by.
While unemployment payments are a lifeline for many Americans right now, they’re also targets for criminals looking to commit fraud. There has been a huge influx of fraudulent unemployment claims in recent months. The FBI even warned about rampant unemployment fraud several months ago. By the end of 2020, criminals were paid as much as $36 billion for fraudulent unemployment claims. Here’s how they’re pulling it off.
How scammers use your name to steal benefits
Scammers have been shockingly successful at filing fraudulent unemployment claims in other people’s names recently. Over the last year, scammers have successfully filed fraudulent unemployment claims in all 50 states.
So how are they pulling it off? They’re stealing thousands of identities to siphon millions upon millions from unemployment funds in every state. It’s surprisingly easy to file fraudulent unemployment claims if you have access to some basic information about someone else.
In many cases, scammers behind these fraudulent claims are overseas. A recent USA Today report pinpointed a crime ring in Nigeria behind many fraudulent claims. This group, dubbed “Scattered Canary,” is responsible for lifting millions from unemployment. Other international crime rings, including organized criminals in China and Ghana, have also been targeting the U.S. unemployment system.
To get access to your personal information, these international scammers:
- Pay about $2 in cryptocurrency on the Dark Web to get your Social Security number.
- Search family tree databases like FamilyTreeNow or sites like TruthFinder, which offer the identifying factors they’d need to get through a security verification (i.e., your mother’s maiden name).
Once basic recon is done on your information, scammers file hundreds of unemployment requests in your name. All it takes is one Gmail address to file these claims, so while the research component may take a while, the actual filing process is pretty simple.
It works at a staggeringly high rate, too. About one in six fraudulent unemployment claims are successful. The money garnered from these claims is then laundered by mules — who are often people living in America.
To launder the money, mules run payments through peer-to-peer payment apps like Venmo, PayPal or Green Dot before moving funds to organized crime rings. Other laundering methods utilize gift cards to “clean” the money they’re siphoning from unemployment.
When state unemployment offices finally pinpoint these types of fraudulent claims, it often falls on the person whose identity was stolen to clean up the mess. This means you’re stuck filing police reports, freezing credit reports, putting fraud alerts on your accounts and stuck with a ton of other laborious tasks.
The best way to keep that from happening is to take proactive steps to protect yourself from identity theft. Here’s how you can do that.
How to protect yourself from this type of identity theft
Not only do criminals filing fraudulent unemployment claims deplete funds needed by out-of-work people filing legitimate claims, but they’re also putting you at risk of having your identity used for other financial crimes. If one of these crime rings pays for your information, you’re at risk of some serious issues.
To avoid becoming a victim, you should work to keep your identity safe. This includes checking your credit report for any erroneous accounts or suspicious activity and combing through bank statements regularly. You should also check your other accounts — like your credit card and bank card transactions — to help pinpoint any fraud.
It would be best if you also use two-factor authentication whenever possible. This will make it difficult for criminals to hack into your accounts and get access to your information.