Unemployment Compensation Fraud
During the COVID-19 pandemic, the number of fraudulent unemployment compensation claims has been on the rise, and since Pennsylvania implemented a new online UC filing system in June 2021, incidents of fraud have mushroomed. So much so that it has gotten the attention of state lawmakers, who in July demanded that a number of state officials look into how to curb the fraud.
“The widespread fraud impacting Pennsylvania residents has reached an absolutely unacceptable level,” state Rep. Jim Struzzi, R-Indiana, said, a day after he and 50 other lawmakers sent a letter to a group of state officials. “It is with great concern that we ask you and your agencies to take prompt and decisive action in stemming the overwhelming wave of fraudulent UC claims that have adversely affected our constituents, both employees and employers,” the group wrote to state Attorney General Josh Shapiro, Labor & Industry Secretary Jennifer Berrier, Revenue Secretary C. Daniel Hassell, Auditor General Tim DeFoor, and Treasurer Stacy Garrity.
Since the launch of the new filing website, the state has implemented ID Me, a more secure digital identity verification, in an attempt to get a handle on the problem.
In July, Indiana Borough Police Sgt. Eric Slovinsky reported between 25 and 30 reports of fraudulent filings in a two-week period alone, according to a report in The Indiana Gazette, the daily newspaper in Indiana, Pa.
Andy Kuzneski, president of Kuzneski Insurance Group in Indiana, was one of them. He said he was alerted to the scam when he received a check in the mail for unemployment compensation. He did report the fraud and has been working to get the matter cleared up. But when a company human resources representative called the state police, as instructed by Labor and Industry, she was told the police do not handle these complaints because of the high volume and referred her to L&I.
Could You Be a Target?
Many fraudulent claims involve business owners who, for several reasons, may be less likely to catch on to the scheme. With a larger volume of mail, business owners don't always pay attention to nondescript envelopes such as the ones sent by L&I. With a lot of balls to juggle, some simply don't take the time to report the fraud or call the police.
Typically, scammers will apply for benefits using the employer's name and Social Security number and date of birth. Once the claim is approved, a paper check or U.S. Bank card (used like a debit card) is sent to the business address. If the fraud is not discovered in time, the scammer can request a change of address from L&I and report a lost card to redirect the payments to a different address.
What You Can Do
First, report the fraud online at www.uc.pa.gov or by calling the PA Fraud Hotline at 1-800-692-7469. L&I has specific links on its site for those who have received money via paper check, debit card or direct deposit.
Individuals should write "void" on the check and return it certified to:
Pennsylvania Treasury Department
651 Boas Street
Room 400 L&I Building
Harrisburg, PA 17120
Repayments of direct deposit UC benefits should be sent to:
Department of Labor and Industry
651 Boas St, Room 500
Harrisburg, PA 17121
Payments must be made by personal check, cashier's check, certified check, or money order to the “PA UC Fund."
In both cases, include a brief signed statement with the reason you are returning the check and include your printed name, address, last four of your Social Security number, phone number and email address.
The department advises that, as the employer, you should respond to the claim notices, but that the individual affected should use the “Report Fraud” link on its website to file a report. On the paperwork, explain that the employee was not laid off and the claim is fraudulent. Keep copies for your records. If you speak with anyone, keep a record of who you spoke with and when.
If a payment has already been made on the claim, payments will continue every week until a staff member is able to deny the claim. Ultimately, you will not be charged for benefits paid to fraudulent, identity theft-related claims. Once benefits are denied, an overpayment will be set up, which credits your account.
In addition, Kuzneski pointed out that businesses can protect themselves from identity theft by purchasing insurance such as Allstate’s Identity Protection (Info Armor), which assists in monitoring and protecting your employees' credit. For more information, visit www.infoarmor.com or call 1-800-789-2720.
If you are a victim of ID theft, you may want to set a credit freeze at the following: