Identity Thieves Drain Unemployment Benefit Funds

Makarand writes "According to a News.com.com article, the defrauding of state government unemployment benefit programs is the most underpublicized identity theft crime and the states are not doing much about it. Identity thieves are using stolen social security numbers to file false unemployment claims and collecting benefits because the states have no systems in place to deter fraud. In fact, it is easier to convert stolen identity data into money by filing false unemployment claims than going after the credit card companies." From the article: "File a false unemployment claim and you can receive $400 per week for 26 weeks. Do it for 100 Social Security numbers and you've made a quick $1.04 million. It's tough to make crime pay much better than that."

Comments

Easier the other way...

[TripMaster Monkey]

From TFA:

An unemployment claim that is fraudulently made on a stolen Social Security number would be easier to detect if there were a national database of stolen Social Security numbers.

With all the theft of personal information in the news lately, and considering that a large percentage of this stolen information was Social Security numbers, it might be easier to compile a national database of Social Security numbers that haven't been stolen. ^_^

Seriously, though, this is just yet another good argument to ditch the Social Security number system entirely...it's clearly not working. Essentially, with just one number, you have a system where the SSN is both the public and the private part of the ID, and as any security professional can tell you, that simply is not a workable model.

Re:Easier the other way...

[BenEnglishAtHome]

I disagree. In early 2001, someone impersonating me used my stolen credit card number to fly all over the west coast for a couple of weeks. They had to show up in person to take the flights and the fact that they weren't me didn't seem to cause them much trouble.

Check for actual unemployment?

[moz25]

To which extent do they actually check that the person is in fact unemployed? Certainly, a person-to-person talk should take place before they hand over money just like that? Perhaps this is a bigger problem in their system as identity theft appears to be one of many ways to exploit that system.

Re:Check for actual unemployment?

[Kintanon]

I don't see how this kind of fraud is even possible. In Georgia in order to receive unemployment benefits you have to have been laid off, which they verify with your employer, or have a letter of seperation from your employer, and the employer has to not dispute the unemployment claim. Then you have to provide weekly updates to the unemployment office or they stop sending you money. In addition you had to have made at least a certain amount of money during the period you were employed in order to qualify, also verified with your employer and with your tax records.
So really, I'd LOVE to know how this is done, because I couldn't even get legitimate unemployment when I was out of work.

Kintanon

Re:Easy to fix

[ZephyrXero]

Life's not that simple. For every person ripping off the unemployment system there are 9 others who actually need it. Well, that is unless this new type the article talks about takes off...Maybe people will actually start to enforce proper management of the system?

Victims?

[Peyna]

When the author referred to the victims of this crime as being the government agencies and not the taxpayers, I stopped reading.

Software probably can solve this

[Jurph]

It seems like it would be trivial to scan a database for recurring addresses -- sure, there might be four people in a two-bedroom apartment collecting unemployment. But fifty? A hundred? Send an investigator out to talk to anyone living at an address with more than (e.g.) six registered names. If nothing else, he can interview all six of the people and see if there's a systemic problem keeping them from getting work in an area.

Two things bother me about the article, however:

1) The person calling our attention to this problem is a software vendor. He runs a payroll software firm, and probably has some financial interest in fraud-detection software. If nothing else, his byline contains an advertisement for his company.

2) He doesn't really present any evidence for the problem other than hearsay from an official in Washington State. Neither of them presents any real numbers.

I think it's wise to prevent this problem, and shore up any weakness to this exploit that may exist, but it's also important to be sure that a problem exists before demanding that the state take action.