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."

Easier the other way...

[TripMaster Monkey (862126)]

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 (449670)]

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.

Executive summary

[phoenix321 (734987)]

To clear my less-than-perfect post a bit:

Stolen passwords or cards can be retired, while compromised biometric data will haunt you forever.

Tell me about it

[Winckle (870180)]

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 (739422)]

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?

Unemployment Rate is Unaffected

[tabdelgawad (590061)]

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 [bls.gov]

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.

Re:Unemployment rate?

[daVinci1980 (73174)]

No, that's absolutely not what the unemployment rate represents.

Unemployed persons (Current Population Survey)
Persons aged 16 years and older who had no employment during the reference week, were available for work, except for temporary illness, and had made specific efforts to find employment sometime during the 4-week period ending with the reference week. Persons who were waiting to be recalled to a job from which they had been laid off need not have been looking for work to be classified as unemployed.

(From the Bureau of Labor and Statistics Glossary [bls.gov])

Reaching the end of your benefits has absolutely nothing to do with whether or not you are counted as unemployed. You are considered unemployed so long as you are not working but were available to work and have actively been seeking employment.

Ummmm, no.

[khasim (1285)]

The theory is that people that do not have a job and have reached the end of unemployment benefits should not count as unemployed.

Okay ...

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.

But unemployment benefits do not exist in a vacuum. Those people had to have HAD jobs in the very recent past.

So, in the very recent past, they WERE willing to accept a job and their skills WERE useful.

Either way, they are not counted in unemployment because unemployment is more a measure of people that are likely to be useful in the workforce and are willing to fill a present economic need.

Again, they were considered "useful" in the very recent past.

By your "logic", there would never be any unemployment because the only people who would be counted as "unemployed" would have skills currently needed by business and a willingness to work for those businesses. So why would they not be hired by those businesses?

And before you talk about demanding too much money, the businesses would only have to offer them more than they'd make on unemployment.

Which doesn't leave much rational for "unemployment".

Re:Unemployment rate?

[Lumpy (12016)]

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 (262020)]

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 (38547)]

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?

[BlewScreen (159261)]

Yes, private systems sure is making US health system way better than the state-run systems in Europe.

I know you're trying to be sarcastic, but you're 100% correct.

Here's an interesting article [reason.com] that discusses this topic.

From that article:

Today, the whole world benefits freely from advances in health technology that are driven largely by the allure of the profitable U.S. market. If the United States joins other nations in having more socialized medicine, the current pace of technology improvements might well grind to a halt

and

If the US adopts a nationalized health care system, taxes will have to double for pay for it.

Sounds like the private system actually is "way better"...

-bs

Re:Check for actual unemployment?

[Kintanon (65528)]

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

Ah, but are they really thieves?

[by 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

sorry, but where is the HOWTO file ?

[Adult film producer (866485)]

I don't see it included in the story.. it sounds like such a great deal for those with initiative, I have to ask if this is illegal?

Victims?

[Peyna (14792)]

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

Little harder than indicated...

[It doesn't come easy (695416)]

No doubt lots of fraud going on but simply having the SSAN isn't all you need. You would also need at least some employment history data.

Instead of another central database which conveniently aggregates all your personal information in one place, ripe for the hacking, what we need is a law passed that requires companies to remove the SSAN from their databases. All of them. The company can replace it with a unique identifier if they want but there is no reason for them to have the SSAN in the first place. Yes, I know it's the one number everyone remembers when someone is trying to identify you, but that is a poor reason for every database on the planet to contain such an important identifier. Let's develop a better way to authenticate someone, why don't we?

Quick?!?

[A nonymous Coward (7548)]

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.

Quick? 26 weeks? Plus the start up overhead of several weeks?

Re:Quick?!?

[GreyyGuy (91753)]

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

Software probably can solve this

[Jurph (16396)]

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.

how can it be that easy?

[MattW (97290)]

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.

Re:how can it be that easy?

[Aggrazel (13616)]

Thats exactly how Ohio works too.

I would imagine that most states are the same way, and that the article is full of FUD.

Re:Easy to fix

[ZephyrXero (750822)]

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?

BAD ADVICE Re:abuse of SSN

[spoonyfork (23307)]

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.

Re:Employees don't pay into UI

[Zak3056 (69287)]

UI is funded through payroll taxes - the employer pays the tax.

I'm betting he's self-employed. The self-employed are the ones who get truly screwed by our tax system--they pay both the employer and employee halves of all payroll related taxes, and as a result are taxed double. His anger at the situation--particularly about being forced to pay 3x the allowable benefit for his insurance--is quite understandable, and completely justified.