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.

Tell me about it

[Winckle]

This Malda guy next door has been unemployed for so long I don't think he's ever gonna get a job.

Unemployment rate?

[Ironsides]

I wonder how much this kind of fraud contributes to artificially(?) raising the unemployment rate. Maybe it's quite a bit lower than the reported rate due to the fraud?

Re:Unemployment rate?

[Lumpy]

They should not count because they are in a class of people that either will not accept the jobs that are available or have no useful skills for the current market.

are you really that stupid???

I know of several people that desperately are looking for a job and have been for 2 years now. The fast food places will not hire them because they know that the employee will leave the second they get a real job, and other "lesser" jobs use the "overqualified" mumbojumbo. there are tens of thousands willing to fill the need, how about the moron HR and managers actually hiring these people?

My Fiancee has a pile of rejection letters, that Masters degree of hers has lost her more jobs than anything else.

I told her to start lying and tailor the resume for the position she applies for. funny how removing the masters degree from her resume increased call-backs for interviews significantly.

Many people that run out their unemployment are not in your ivory tower republican definition. I strongly suggest you get out and actually meat real people before you pile them all in the same bucket marked "useless"

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?

[Kohath]

They should just privatize the system. It's insurance. Does an insurance company just hand over money without checking to see if the claim is legit?

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?

Ah, but are they really thieves?

[Anonymous Coward]

They are only copying someone's identity after all. The original person still has their identity, so it can't be considered "theft" :D

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.

Re:Quick?!?

[GreyyGuy]

If you have a faster way to make $1.04 million, please feel free to share it ;)

how can it be that easy?

[MattW]

In Texas, when someone files an unemployment claim, their employers within their "eligibility window" - ie, those they worked for the last X months (18? 24?) get notices. If their unemployment claim is granted (which requires they have been terminated not-for-cause, or that they quit for very specific few reasons, like harrassment), it is "debited" to the employer, and the employer's unemployment tax rate may go up as a result.

I can't imagine how they manage to file unemployment claims without the employers knowing and going to the person and saying, "What the heck? You're still employed." The jig would be up pretty quick. In Texas, the first phone interview includes a call to the employer(s) and takes place within days of the filing, probably before the first check is paid.

Since the unemployment fund is paid into through payroll deductions linked to the SSN, by the employer, I don't see how this could succeed, at least in Texas.

Unemployment Rate is Unaffected

[tabdelgawad]

Since I'd rather not mod down incorrect responses to your question, I'll just post an answer. Short answer is 'No'. Long answer follows.

The unemployment rate is calculated by the Bureau of Labor Statistics based on two *surveys*, a household survey and an establishment (business) survey, with the household survey being used for the unemployment percentage, currently 5.1%. Basically, A person is considered 'unemployed' if they don't have a job *AND* they are looking for one. If they're not working but not looking, they don't count (removed from the both the numerator and denominator of the unemployed % because they're not considered part of the labor force). See here for more details

http://www.bls.gov/news.release/empsit.tn.htm

Specifically, "The unemployment data derived from the household survey in no way depend upon the eligibility for or receipt of unemployment insurance benefits".

Occasionally, the news will report on new initial unemployment claims filed as another indicator of the job market, and those numbers would be affected by fraudulent claims, but that's the extent of it.

BAD ADVICE Re:abuse of SSN

[spoonyfork]

Advise for everyone: start using fake SSNs and DOBs whenever possible

Good god someone MOD PARENT DOWN. Your advice is credit fraud which could get someone who has the fake SSN in trouble... as well yourself. Besides, if you provide correct information everywhere else you could have multiple SSNs tagged to your credit report which is evidence of fraud. BAD ADVICE, DO NOT DO THIS. If you don't want to provide your real SSN/DoB then don't give it out.