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More Identity Scams Target Employers and Employees

Employee Benefits Headline News – February 24, 2021
More Identity Scams Target Employers and Employees Identity fraud is on the rise and two scams employers should be aware of relate to tax returns and unemployment claims. Tax-Related Identity Theft Thieves often use stolen names and data to file fraudulent tax returns. The Federal Trade Commission recommends businesses protect themselves by: Setting security software to update automatically Backing up important files Requiring strong passwords for all devices Encrypting devices Using multi-factor authentication. Employers and employees also should be aware of COVID-19 or tax-related phishing email scams that attempt to trick employees into opening embedded links or attachments. A popular scam is when a thief poses as a high-ranking company executive and requests a list of employees and their W-2s. Businesses don’t know they’ve been scammed until fraudulent returns show up in employees’ names.

The Internal Revenue Service is now masking sensitive information from business tax transcripts to prevent thieves obtaining identifiable information allowing them to file fake returns. Unemployment Claims Scammers are using illegally obtained personal information to file claims in the name of employees who still have jobs.

It happens in every state. The U.S. Department of Labor said in October 2020 that theft costs taxpayers $8 billion and could reach $26 billion.

Fraudsters often set up a fake company and then file claims against the phony business. This has been a popular strategy during the pandemic to take advantage of the Pandemic Unemployment Assistance (PUA) program. For instance, earlier this year the Kansas Department of Labor was prepared to pay out $37 million in PUA payments only to learn upon investigation that $35 million of them were fraudulent.

Employers or employees usually become aware of the fraud when they receive a letter saying that a claim has been received.

Fake claims should be reported to your state Department of Labor immediately. Employees can lessen the impact of identity theft by reporting the fraud to credit agencies and checking bank accounts and credit card security.