Far from a pleasant surprise, the check for more than $850 Erin Dixon found recently in her mailbox started a headache that hasn’t gone away.
The payment Dixon got July 8 was for an unemployment insurance claim she hadn’t filed, an erroneous windfall quickly followed by the delivery of a debit card through which claim payments could be accessed, and then a notification from a bank in Ohio that a new account had been opened in her name.
“I am very nervous. I’ve frozen my credit. Now I’m investigating some different ID protection services. In the long run, it’s going to cost me money,” said the 47-year-old Dixon, who works as a technical supervisor for a BK Business Solutions, a Lancaster IT consulting company.
The claim filed in Dixon’s name is of one of a surging number in Lancaster County and across the state that have created extra work for businesses, hassles for employees and worries about hackers having access to personal data. While the sham claims are often quickly discovered, they have been creating genuine puzzlement, along with anxiety about possible longer-term hassles.
“The whole thing is really weird,” Dixon said.
Preventing and reporting
In mid-July, the state Department of Labor & Industry said it had “noticed an uptick” in fraudulent claims for unemployment, a report that came in a press release announcing it was extending its partnership with a private company that provides identity verification for all new claims.
"We take unemployment benefit fraud very seriously at L&I, and we are committed to working with our partners to prevent fraudulent claims and hold those responsible accountable for their actions," Secretary Jennifer Berrier said in a July 19 press release detailing steps to reduce and report fraud.
On Monday, department spokeswoman Sarah Desantis said unemployment compensation fraud is a national issue, pointing to reporting by ProPublica that says fraudsters are buying stolen identities obtained from data leaks outside state governments, then using them to apply for benefits.
“L&I has not been hacked or breached,” she said. “Fraud is an unfortunate byproduct of any disaster – whether natural or manmade – and we have seen the proof of that during the global COVID-19 pandemic.”
DeSantis said the department did not have a tabulation of fraud reports “because of the variety of ways unemployment fraud can be reported.” But she added that since the new UC system went online June 8, the department has prevented approximately $1 billion in state and federal dollars from being paid to fraudsters. During that same period, the state has paid out $1.5 billion in benefits, DeSantis said.
The department encourages employees to vigilant about guarding their personal information while being on the lookout for payments or correspondence about a claim they haven’t made. Fraud can be reported by clicking “Report Fraud” on the UC Benefits website or by calling the fraud hotline at 1-800-692-7469. Victims should also file a police report to include with their report of a fraud.
Dixon followed all those steps, voiding the check and punching holes in the debit card before mailing them back to the department via certified letter. She also filed an online report of fraud and a police report.
After getting a notice that her certified letter was delivered, Dixon hasn’t received any other confirmation that her fraud report was received, let alone that the fraud was corrected.
Similarly, Dixon’s boss said he was also waiting to hear anything back from the department after reporting the “notice of claim” filed for Dixon was not authentic. He adds that the original email about Dixon’s claim went to his junk mail folder, where he only looked after Dixon told him about it.
While looking in the junk mail folder, Barry Kready said he discovered emails warning about fraudulent claims as well as a report of a new claim for another employee, which that employee hadn’t opened.
“What I haven’t quite figured out is, ‘What is the scammers’ play?” Kready said. “If they were able to get in to Erin’s account and they basically said I’m filing for unemployment, the check and the debit card went to her house. So how does that help a scammer?”
Time waster, hassle maker
For both employees and employers, a new vigilance is required protect against new fraudulent claims, along with the patience to deal with a bureaucracy that can be slow to respond to any kind of inquiries.
“The manpower behind that is a burden. And the (Unemployment Compensation) system itself has been taxed as well, (affecting) response times. It’s just kind of preying on something that is already overburdened,” said Leslie Wireback, president of the Lancaster Society for Human Resource Management, who owns her own consulting firm.
If money is actually paid out it could potentially boost the premiums employers pay to help cover unemployment claims, although a few claims are unlikely to make much of a difference.
When a business starts paying wages, it also begins paying unemployment insurance equal to 3.7% of wages. Premiums can rise to more than 10% based on factors that include an employee’s risk of losing their job and the company’s history of workers going on unemployment.
Even if employees don’t accept money for a sham claim, the fact that money was sent out could potentially make them liable for paying tax on the money, Wireback said. Getting tax liability rescinded could itself mean frustrations dealing with a large bureaucracy, she said.
In Dixon’s case, the fictitious claim was followed by the opening of a bank account in her name, a troubling escalation.
“Now that Erin’s had somebody open up a bank account with her Social Security number, I think it goes beyond just trying to get the direct deposit funds from her account,” said Kready, owner of BK Business Solutions where two of the seven employees had fake claims filed in their names. “It would be great to uncover what exactly happened.”
Fraud reports surge
While the state Department of Labor & Industry didn’t have statistics on fraud reports in Lancaster County, local police departments and businesses have been seeing a spike.
The Northern Lancaster County Regional Police Department, which covers East Petersburg and Clay, Penn and Warwick Townships, said Sunday it got 126 reports of fraudulent activity since June 1. And in the first two weeks of July, the Ephrata police department said it received 45 reports of fraud, including 14 on one day.
On Friday, the Lancaster Chamber asked its members if they had received fraudulent claims, and by Monday it had heard from 42 firms who said they received some 320 bogus claims, according to chamber Vice President Heather Valudes.
The reports to the chamber came from a wide range of companies, including manufacturing, business services, non-profits and senior care, with a trend toward higher-salaried employees being targeted, Valudes said.
Last week, the Lancaster Chamber also signed a July 22 letter from two dozen business groups around Pennsylvania asking state officials to take “immediate and necessary steps to stop the rampant Unemployment Compensation (UC) fraud being perpetrated against Pennsylvania’s citizens.”
The letter to Berrier, Attorney General Josh Shapiro, Auditor General Tim DeFoor, Secretary of Revenue C. Daniel Hassell and Treasurer Stacy Garrity asked for a multi-agency task force to investigate, new anti-fraud procedures, an audit of the way claims are handled and an accounting of the money that went to false claims.
“Employers across our Commonwealth are desperate for employees and are offering unprecedented wages. Now is the appropriate time to reinstitute more rigorous checks to ensure these claims are not fraudulent,” the letter said. “These fraudulent claims are a huge burden, and the new UC system makes it difficult for someone to delete or alter a fraudulent claim.”