Unemployment Fraud

by Craig Wolfson, Esq. 


Unemployment fraud in New York and throughout the nation has reached dramatically high levels during the Covid-19 pandemic. Over the last year, the Federal Department of Labor estimates that over $63 billion dollars has been improperly paid out due to fraud.

In 2020, approximately $550 billion was spent on unemployment aid for those out of work, compared to an average of $32 billion over the last five years.  Many states have struggled to keep up with this extraordinary unemployment demand.  They are faced with an overwhelming number of claims, new and everchanging rules and statutes, and outdated computer systems.   

Everyone should be on alert for unemployment fraud.   In most cases, individuals do not know that they are victims of unemployment fraud until it is too late.  The unemployment fraud is typically discovered by the victim when they receive benefitsrelated paperwork in the mail, are alerted via a call from their employer, or when they make a legitimate claim for unemployment which is denied.  

Many people are only discovering now in the heart of tax season that they are victims of unemployment fraud.  States are required to provide a 1099-G form which reports income from unemployment benefits.  Victims are receiving these forms in the mail, and ofttimes from multiple states.  In other cases, victims are learning about the fraud after they file their federal income taxes, and are contacted by the IRS because they did not report all of their income due to the bogus claim. 

To protect yourself and your family from unemployment fraud, you should be extra vigilant regarding any suspicious calls, mailings, emails, or social media requests.  These may be attempts to gather personal information to help a criminal file a false claim.  Alternatively, this may be evidence of an ongoing fraud.  Be especially cautious about any correspondence promising early or fast unemployment benefits, or any requests for personal information to open a new account in your name.   

Should you find yourself a victim of unemployment fraud, there are several steps you should take.  The fraud should be reported to the unemployment office of each state where you were a victim.   You are urged to promptly advise your employer or former employer.  There are other Federal and local departments/agencies to alert as well  You are encouraged to monitor your credit reports, update your passwords, utilize two factor authentication, and file your taxes as soon as possible. 

Wolfson and Klein-Wolfson, PLLC, a Syosset, New York law practice, can assist with you with managing unemployment fraud matters.  We handle all types of labor and employment law cases for both employees and employers, and can help you navigate the stressful process of unemployment fraud.   

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