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United States Government Privacy The Courts News

Identity Thieves Drain Unemployment Benefit Funds 496

Posted by Zonk from the thanks-jerks dept.
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."
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Identity Thieves Drain Unemployment Benefit Funds More

Identity Thieves Drain Unemployment Benefit Funds

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  • Easier the other way... (Score:5, Insightful)

    by TripMaster Monkey ( 862126 ) * on Friday June 24, 2005 @10:16AM (#12900869)

    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.
    • The only way to really be secure with your identity is to not use any automated services involving your ID numbers. Don't use your phone even...do everything in person. But who wants to do that? It's once again a matter of security vs. convienence, and most people will lean towards the latter...

      • Re:Easier the other way... (Score:5, Insightful)

        by BenEnglishAtHome ( 449670 ) on Friday June 24, 2005 @11:33AM (#12901648)
        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.
    • It would probably be a good idea to stop using Social Security numbers for all of these reasons. This is one of those instances where it might be favorable to have a National identification. Sure, there's still the problem of the government having all of this information on everyone (It's not like online companies, banks, and other companies don't have this information about you already), but it could also prevent things like this from happening.
      • The use of the Social Security number as a national ID is the CAUSE of identity theft, not the solution. The only solution is to require creditors to do more to identify a person than to simply use a name and SSN. Anytime there is only one real identifier, whether the current SSN or some other universal number, ID theft will be easy.
      • It would probably be a good idea to stop using Social Security numbers for all of these reasons. [I.e., the SSN is both the public and the private identifier.] This is one of those instances where it might be favorable to have a National identification.

        So, you're suggesting that we replace one obviously insecure numbering system (the SSN) with another (the national ID)? How would this differ from putting your picture on your Social Security card?

        Or are you proposing something else which is more than a

      • "Sure, there's still the problem of the government having all of this information on everyone (It's not like online companies, banks, and other companies don't have this information about you already), but it could also prevent things like this from happening."

        (emphasis mine)

        The difference here is that the banks aren't legally allowed to combine the information they have with the profiling information places like WAL*MART and Radio Shack and the DMV and so on. The government is allowed to.

        If the

    • Re:Easier the other way... (Score:2, Funny)

      by Anonymous Coward
      it might be easier to compile a national database of Social Security numbers that haven't been stolen. ^_^
      Yes, lets make such a list so someone can go and steal it.
    • Having an SSN doesn't give you the keys to the kingdom. Most places still require more than just an SSN to do anything i.e. Mothers maiden name, last tax return amount, etc... This other information could in theory compose the private key your talking about.

      Having said that, I think they do need safeguards in place to detect fraud, and to encrypt the fricking backups and sensitive data for god's sake. If you make the data at least somewhat difficult to get, it will deter most criminals.

    • Tattoos (Score:3, Funny)

      by infonography ( 566403 )
      It's over due, everybody should get them. Best if they are across the forehead, but if you went to Aruba and got a deep tan it may make it hard to run you thru the scanner. Don't you just hate it when these thing don't scan?
    • But the article commentors [com.com] certainly do!

      They point out how almost everywhere, the claimant needs to claim in person... to have too many false faces is to share to wealth too widely, so why aren't they picked up by the staff working in the unemployment offices themselves?

      Or is the fraud itself being exaggerated? Perhaps if there is a fraud, it's an internal one.

  • Tell me about it (Score:5, Funny)

    by Winckle ( 870180 ) <`mark' `at' `winckle.co.uk'> on Friday June 24, 2005 @10:16AM (#12900874) Homepage
    This Malda guy next door has been unemployed for so long I don't think he's ever gonna get a job.

  • Unemployment rate? (Score:5, Interesting)

    by Ironsides ( 739422 ) on Friday June 24, 2005 @10:19AM (#12900906) Homepage Journal
    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? (Score:2, Insightful)

      by DogDude ( 805747 )
      Actually, the fraud doesn't even come close to balancing out the other side of the equation: people dropping off of unemployment because it expired. That's why when the gov't trots out it's usual "The economy is GREAT!" speech, and back that up with falling unemployment numbers, all that means is that a lot of people had their benefits run out.
      • can you prove that assertion? for the unemployment number to fall, there still has to be less people loosing jobs or no one loosing a job, which is still a good thing. incidentally, i have known a number of people who intentionally dont get a job until their benefits run out.

      • Re:Unemployment rate? (Score:3, Informative)

        by demaria ( 122790 )
        That is untrue. Unemployment is calculated based on a household survey of thousands of people, not the number of people on unemployment insurance.

        This can be confirmed in wiki [wikipedia.org] and various gov [census.gov] sites.

        • Re:Unemployment rate? (Score:3, Informative)

          by geekoid ( 135745 )
          hmmm.... no.
          Politicians use the number of people getting the check.

          Poeple who write policy and ar EXPERTS in this area do it this way, but it is almost always ignored.

          the same thins with social security. Some politicians start saying it is going to fall apart and is broken, and people take it as fact. However, people who are experts in that field, who love numbers and economics. Essentially economic nerds, are ignored when they say that it will only need an occasional tweek every few years, like always.

          a

    • 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?

      The unemployment rate is not calculated by tallying the number of people collecting unemployment, though this is a commonly-repeated media myth. See snopes.com.

      The confusion is this: the definition of "unemployment" is the same as that used by the unemployment benefits system -- but it measures both those who do not collect, and those w

    • Unemployment Rate is Unaffected (Score:5, Interesting)

      by tabdelgawad ( 590061 ) on Friday June 24, 2005 @11:17AM (#12901488)
      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.

  • Check for actual unemployment? (Score:5, Insightful)

    by moz25 ( 262020 ) on Friday June 24, 2005 @10:19AM (#12900908) Homepage
    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? (Score:5, Interesting)

      by Kohath ( 38547 ) on Friday June 24, 2005 @10:25AM (#12900959)
      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?
      • Yes, private systems sure is making US health system way better than the state-run systems in Europe.

        I sure hope US soon privatises their army; that will show everybody!!!

        • Re:Check for actual unemployment? (Score:4, Interesting)

          by BlewScreen ( 159261 ) on Friday June 24, 2005 @10:51AM (#12901239)
          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

          • The benefit of a private, all access health care system is not cost, it is making sure that EVERYONE has equal access to health care. In a private system where the government does not pay for health care middle and upper class people have better access to health care, and the lower class are shit out of luck.

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

            Sounds like it if you believe crap like that article, you mean. "Oh, this country is worse than the USA on X, while this totally different country is worse on Y, so that makes us best!" How stupid do you have to be to fall for that?

            Technology-wise: yeah, of course...the USA invented everything. If it wasn't for the USA the rest of the Universe would stagnate. Grow up and actually learn something about science.

            "Taxes would have to double":

    • Re:Check for actual unemployment? (Score:5, Insightful)

      by Kintanon ( 65528 ) on Friday June 24, 2005 @10:37AM (#12901096) Homepage Journal
      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

      • What makes you think they are checking the right employers? When I filled out the MN forms a few years back they asked me who I was working for in the last 6 months. I list all my past employers, and they call them to verify I was laid off.

        If I wanted to cheat I could fill the forms out today, listing "mom and pop, inc" as employer, give my parent's phone number, and have my parents verify "Was a good employee, but we just don't need him anymore so we laid him off." Of course my parents wouldn't chea

    • [New York State Department of Labor]
      MRS. SOKOL: You know you only have two more weeks before your benefits run out.
      GEORGE: Yes and I was hoping ... to get a thirteen week extension.
      MRS. SOKOL: So where have you been looking for work?
      GEORGE: Well you know what I've discovered Mrs. Sokol. It's not so much the looking as the listening. I listen for work. And as I'm looking and listening I am also looking. You can't discount looking. It's sort of a combination. It's looking, and listening, listening and
    • Would prove nothing.. They would *gasp* lie during the interview...

  • Ah, but are they really thieves? (Score:5, Funny)

    by Anonymous Coward on Friday June 24, 2005 @10:24AM (#12900950)
    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 ? (Score:4, Funny)

    by Adult film producer ( 866485 ) <van@i2pmail.org> on Friday June 24, 2005 @10:26AM (#12900973)
    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? (Score:5, Insightful)

    by Peyna ( 14792 ) on Friday June 24, 2005 @10:26AM (#12900976) Homepage
    When the author referred to the victims of this crime as being the government agencies and not the taxpayers, I stopped reading.
  • So can I file for unemployment for myself, and then complain about identity theft and say I didn't get it?

    Sounds like a free iPod a week for half a year! I'm up for that game. Where do I sign up?

  • Easy to catch? (Score:3, Interesting)

    by kevin_conaway ( 585204 ) on Friday June 24, 2005 @10:26AM (#12900980) Homepage
    Those checks have to be mailed or deposited somewhere right? Wouldn't it be fairly easy to catch these people "red handed" picking up their checks or depositing the checks in their account? What about withdrawing it? It all leaves a trace..

  • Little harder than indicated... (Score:4, Insightful)

    by It doesn't come easy ( 695416 ) * on Friday June 24, 2005 @10:27AM (#12900986) Journal
    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?!? (Score:4, Insightful)

    by A nonymous Coward ( 7548 ) * on Friday June 24, 2005 @10:28AM (#12901007)
    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?
  • Now everyone knows.. Thanks..

  • Software probably can solve this (Score:5, Insightful)

    by Jurph ( 16396 ) on Friday June 24, 2005 @10:29AM (#12901015)
    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.
    • 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.

      If this problem were really widespread, wouldn't we be hearing story after story from people being denied unemployment benefits because someone had already filed in their name? I agree -- this is pretty fishy.

      Also, while IANAIT, it seems to me that screwing with credit card companies is safer than ripping off governments. The companies are in the busi

    • I wouldn't doubt that a few people have tried to collect unemployment using a stolen SSN; however, he's really just trying to create FUD, which is evidenced by his "example" which is a hypothetical that probably has never occurred. (Don't most states actually require you to file an unemployment claim in person initially?)
  • Hm, your social security number is irregular? Well, you're not an enemy combatant, nor a criminal. It's off to Diego Garcia with you, and if anyone - spouse, neighbour - wonders about you, there's room for them too.

  • Quick? (Score:3, Funny)

    by Poromenos1 ( 830658 ) on Friday June 24, 2005 @10:32AM (#12901045) Homepage
    you've made a quick $1.04 million

    Quick compared to what? Bank robbery?
    • Break into bank
    • Disable guard
    • Unlock safe with stolen code
    • Wait 26 weeks
    • PROFIT!!!

  • Airtight Security (Score:3, Interesting)

    by dereference ( 875531 ) on Friday June 24, 2005 @10:32AM (#12901048)
    FTFA:
    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.

    Right... Hacker target number one. Ah, but maybe they've thought of this.

    Again FTFA:
    If and when a database is created, the only caveat is that it must possess airtight security features.

    Right... See, humans will be involved somewhere, and humans can be corrupted just as easily as databases (and perhaps more so). The database will have a lookup function or it's worthless. So who will get access? Only state unemployment offices? How about credit card companies (think MasterCard)? And won't banks want a piece of this, too?

    But wait, there's more. What about employers? They certainly wouldn't want to hire somebody who is using a known stolen SSN. Ok, so employers get access. It wouldn't be fair if it weren't every employer, from massive multinationals to the mom-and-pop store on the corner. Every one of these organizations will have the ability to lookup information from this database.

    FTFA one last time:
    At the current time, this initiative isn't even being discussed in the halls of Congress

    Let's just hope it stays that way.

  • State dependent though (Score:3, Interesting)

    by jav1231 ( 539129 ) on Friday June 24, 2005 @10:38AM (#12901100)
    In my state, you unemployment is based on the last job you had (or jobs). They look at like the last 6 - 24 months or something. A company has the right to appeal as well. I'm not sure how one would defraud in this case. Joe Schmoe files against Acme Widget. Acme Widget says either a) He never worked here, b) wait, he still works here! (if say the phisher knew he worked there), or c) we don't think he's entitled.

  • how can it be that easy? (Score:5, Informative)

    by MattW ( 97290 ) <matt@ender.com> on Friday June 24, 2005 @10:43AM (#12901157) Homepage
    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.

  • This sounds like a worst-case scenario to me. (Score:3, Informative)

    by King_TJ ( 85913 ) on Friday June 24, 2005 @10:45AM (#12901168) Journal
    Maybe some states are more lax, but I know here in Missouri, there's no way you'd "easily get away" with this type of scam.

    For starters, you're required to do an in-person reporting to your local unemployment office every 4 weeks. Until you do, your benefits cease, and not showing up for the in-person reporting after 2 weeks go by terminates your benefits.

    Also, the maximum benefit amount they pay out in Missouri is $250 per week, not $400 like the figures used in the article.

    To top it off, they also require that you apply for at least 3 jobs per week and keep a log of your contacts. True, they may or may not ever really look at this - but they reserve the right to. (I don't know exactly how that policy works, but I'm guessing maybe they randomly select people from the pool of benefits-seekers to come in and show them the log of contacts.) And in some cases, applicants for benefits are also required to go through other processes, such as spending time each week in their "resource room", using their computer database to job hunt.
  • Your employer *has* to have your SSN, and the government *has* to know that your SSN is currently registered with X employer. THis is how the whole benefit system works.

    If the government is not checking if an SSN is *already currently employed* when an unemployment claim is being filed, it is a result of pure incompetance. You would think this thing could be enforced with a foreign key constraint in the SSN claim database for god's sake.

  • I can understand the underlying concept of the fraud, but your social security number is linked to your name, atleast in New York state. I can guess you can change the address to where the check is sent to, but it seems hard.

    1)Most states won't send unemployment checks out of state without some extra paperwork, with more authorization.

    2)The computers will most likely pick up the fact that 100 checks are being sent to the same address. I had an issue once when I was collecting unemployment at the same time
  • Just trying to get you to accept identity cards, national database of everyone, etc.
  • Anybody still want the government as their ISP?
  • There are certain services that governments should be providing, not private companies who cut corners and use your tax to make themselves richer while providing the absolute minimum quality of service they can get away with. Security has always been the last priority in just about every area of industry because it doesn't make money, prime example: this whole shambles will continue, no-one will assign a team to fix it.
  • [...]In fact, it is easier to convert stolen identity data into money by filing false unemployment claims than going after the credit card companies.

    This is another example or rot, I am sorry to say. It troubles me that we as a nation are going down the drain. How are we more different as compared to those in the third world in this regard?

    To make matters worse, many technology writers and pundits do not see matters like these as news-worthy! Our leaders are not doing a good job.

  • How is this even possible? (Score:3, Interesting)

    by NoMoreNicksLeft ( 516230 ) <{ten.tsacmoc} {ta} {relyo.nhoj}> on Friday June 24, 2005 @12:00PM (#12902019) Journal
    I hate to call FUD, but something is wrong here. Even if I stole 1000 numbers, had all the other information I needed to go with them, at most, 50 of those will turn out to be eligible, and maybe not for the full $400. You have to file every single week of those 26 weeks. Then you have to convert a check with someone else's name on it... and it's been forever since I've been able to cash even a payroll check anywhere without an account. Hell, even the grocery stores that used to do it won't anymore.

    100 checks, would require 100 visits to unemployment offices, there are maybe a dozen in my city, that means at least 8 people visiting. Lots of potential for someone to notice a familiar face.

    I just don't see how this happens.

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