New Twist on Identity Theft: Filing for Unemployment Benefits

Over the years we have written about the increasing threat of identity theft.  Malware, phishing, and social engineering are just some of the ways that individuals are targeted and identities were stolen.  Criminals are nothing if not creative.  During this pandemic, they have come up with a plethora of ways to take advantage of the chaos and tap into and divert the enormous flow of money.  By using information from data breaches, scammers are filing unemployment insurance claims and reaping the benefits.  In our former home state of Vermont, the Department of Labor’s online unemployment benefit registration system was shut down recently when 90% of the initial claims were fraudulent*.

Data breaches are like gold mines for criminals because they harvest your name, address, social security number, and other personal information.  Notable corporate breaches include Facebook (540 million users), Marriott International (500 million), Yahoo (3 billion), First American Corp (885 million), and Equifax (163 million).  However, federal and state governmental agencies have also had their share of intrusions: National Archives and Records Admin (76 million), South Carolina Government (6.4 million), US Office of Personnel Management (21.5 million), and US Voter Database (191 million).  And the list goes on and on.

What can you do to protect yourself?

1. Never give sensitive personal or financial information over email. Trusted institutions such as Schwab will not ask for your personal information via email.  Use a secure portal or encryption to send documents that contain sensitive information. Unsure?  Call us!

2. Take your time and think. Most phishing emails are requests that are urgent and require “immediate action”.  This is your tip-off.  If you are not sure, double-check the request by calling the firm directly.  Proceed with caution – some of these are highly sophisticated and look legitimate.

3. Beware of greed. If the offer seems too good to be true it probably is.  Offers of free trips and electronics are tempting but rarely are genuine.

4. Keep your emotions in check. Crooks often use current events to get individuals to donate to the worthy cause of the day.  Be sure that you know where the funds are going and who you are sending it to before you Venmo the money!

5. You’re not paranoid- they are out to get you. Be suspicious when you receive unsolicited requests for password resets, updates to your account, etc.  Most, if not all, of these are bogus.  Don’t click on links.

If you have already been a victim of identity fraud, what should you do next?

1. Report the fraud. If you receive notice that someone tried to claim unemployment with your information report it immediately to the unemployment agency in your state, to your employer, and to the US Department of Justice’s National Center for Disaster Fraud (https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form).

Institute a credit freeze or fraud alert with the 3 credit agencies-TransUnion, Experian, and Equifax. A credit freeze is the most secure method as it protects you against someone opening new accounts in your name.  We also recommend getting a copy of your current credit report to check for suspicious activity.   You can visit AnnualCreditReport.com for your copy each year.

  • TransUnion (888-909-8872) https://www.transunion.com/credit-help
  • Experian (888-397-3742) https://www.experian.com/help/
  • Equifax (800-685-1111) https://www.equifax.com/personal/credit-report-services/

3. Tax filing complications. If you received an IRS Form 1099-G with your Social Security number on it but did not collect unemployment benefits, you must notify your state unemployment agency to request a revised form correcting this before you file your taxes. Be aware that criminals may also use your personal information to try to intercept your tax return and refund. If this happens, you may receive a rejection of your tax filing.  The IRS has issued guidance on how to proceed in this case:


4. Call us to notify. We view account withdrawals daily for our clients and will monitor closely for anything suspicious, including requests for wire transfers and unusual withdrawals.

5. Report any potential breach to your bank, credit union, and custodians (such as Schwab). They have fraud departments in place and will walk you through the process. We recommend using a two-factor authentication process when logging in to Schwab and other financial websites.

6. Add voice ID. Consider activating voice ID for your Schwab account as a security measure when you call in.  The team at Schwab Alliance makes the enrollment process easy (800-515-2157).  Voice biometrics technology identifies your unique voice, just like a fingerprint.

7. Check your accounts regularly. Look at your monthly statements for all of your financial accounts and question anything you don’t recognize.