The Colorado Department of Labor and Employment plans to send letters later this month to individuals and employers caught in the massive wave of fraudulent claims for unemployment insurance benefits.
“One letter would go to the victim of the unemployment insurance fraud and the other to the employer,” said Cher Haavind, deputy director of the CDLE, during a call to discuss unemployment fraud on Wednesday with employers. “We hope to have this new system next week.”
The CDLE estimates that 1.2 million fraudulent claims for benefits were registered through the state’s unemployment system, exceeding the slightly less than 1 million valid claims registered since March 2020. Before the pandemic, the state handled less than 100 fraudulent orders per year.
Individuals filing a fraud report generally do not receive a response from the CDLE. One of the purposes of the cards is to provide confirmation. Another even more important goal is to provide official confirmation that the filer has been the victim of identity fraud, a document that can then be used to deal with credit bureaus, creditors, banks and others.
“The letter that the CDLE is going to send is very important for individuals,” said Colorado Deputy Attorney General for Consumer Affairs Steve Kaufmann. “This will allow them to manage the situation more effectively.”
Last summer, the first victims of unemployment fraud were advised to file a police report and obtain a letter stating that they had suffered identity theft. But the wave of crimes, driven by organized groups, is so rampant that local police cannot investigate, let alone prosecute, said Kaufmann. The advice now is not to file a police report.
Instead, victims must report unemployment insurance fraud in a dedicated CDLE web page, which has separate forms for individuals and employers. Employers who receive a claim for benefits they deem suspicious should contact employees to find out if they have actually filed the claim. If the complaint is not legitimate, they are encouraged to file a report of fraud and the employee must also file one.
Kaufmann said individual victims should report the fraud to the three credit bureaus and freeze their accounts to prevent lines of credit from being opened in their names. They must also file their tax returns as soon as possible to prevent fraudsters from entering and claiming tax refunds on their behalf.
“Be vigilant when dealing with this,” he said.
In addition, in the absence of a fraud report submitted to the CDLE, the state does not know how to contact someone who has had their identity stolen and used to make a complaint.
“We have no contact information for victims of identity theft. The contact information we have will be entered by the criminals, ”said Daniel Chase, chief of staff at the CDLE.
The CDLE is also trying to shut down automated processes that can make people feel victimized twice. For example, victims of identity theft may be asked by means of a standard letter to reimburse payments made in their names that go to a scammer’s bank account. Employers are also receiving warnings that they have lost the right to protest false claims, although they have filed a fraud report, which worries them about having to pay higher premiums for unemployment insurance.
The fraud is so widespread that even the CDLE is receiving claims for unemployment insurance made on behalf of its own staff. Increasingly, employers are receiving claims against their accounts on behalf of people they have never heard of.
Using a sporting analogy, scammers are trying to flood the area, flooding small business owners with so many fabricated claims that they raise their hands and stop reporting the fraud.
Since these individuals never worked for the employers in question and there is no record of receiving wages, they will not receive benefits from the state program. But, by showing the lack of wages, they can switch to the federal government Pandemic unemployment assistance program, which is much easier to defraud because the income is declared by themselves.