What to Do if You're the Target of Unemployment Fraud

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Unemployment fraud has ramped up during the pandemic. Here's how to spot it -- and address it.

In the course of the coronavirus pandemic, millions of jobs have been lost. And while there's been relief available for the jobless in the form of boosted and extended unemployment benefits, there's also been a notable uptick in fraud as a result.

In fact, the U.S. Department of Labor estimates that unemployment-related fraud has cost the government more than $63 billion since March of 2020. Criminals, through the years, have grown increasingly adept at accessing personal data, so they can file jobless claims on other people's behalf and divert benefits to their own bank accounts. Given that many states have outdated unemployment systems, identifying these fraudsters is often a challenge.

But unemployment fraud doesn't just cheat the government out of money -- it also prevents individuals from getting the benefits they need to stay afloat. If you've fallen victim to unemployment fraud, here's what you need to do.

Find out if you've been a victim

Many people don't discover they've fallen victim to unemployment fraud until they go online to file a claim and are denied due to an existing claim already being in the system under their Social Security number. Other times, that fraud is discovered when a notice alluding to a claim arrives in the mail but the recipient of that notice never filed one.

Now that tax season is underway, states are also issuing 1099-G forms, which summarize unemployment income for the year (in this case, 2020). If you get one of these forms but haven't seen a dime of unemployment benefits hit your bank account, you know you've been scammed.

Fight back

If you discover that you're a victim of unemployment fraud, the first thing you should do is contact your state unemployment office to report it. You may need to repeat this process in multiple states if you discover claims in your name in different locations. You should also contact your current employer (if you're still working) or your former employer (if you're out of a job) and make them aware of the situation.

Next, you should go to the Federal Trade Commission's website and report the fraud there. And also, file a complaint with the U.S. Department of Justice's National Center for Disaster Fraud by completing an online NCDF Disaster Complaint Form, or by calling 866-720-5721.

Additionally, be sure to reach out to the three major credit bureaus -- Experian, Equifax, and TransUnion -- and put a fraud alert on your account. You may want to freeze your credit as well so a criminal can't get away with opening another account, like a credit card, in your name.

Finally, if you know you've been victimized, ask the IRS to issue you an Identity Protection PIN, which is a special code you can enter when you file your tax return. That could, in turn, help prevent a criminal from filing a return in your name and attempting to steal your tax refund.

If you've received a 1099-G that's incorrect due to fraud, it pays to hold off on filing your taxes until an amended one is sent to you. If that doesn't happen by the recently-extended May 17 tax-filing deadline, you can request an extension, which will give you until October 15 to file your return. That'll allow for more time to get the matter sorted out, and so the IRS doesn't demand that you pay taxes on unemployment benefits you never actually received.

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