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Unemployment Insurance Fraud

Updated : February 18th, 2021

United States is one of the few countries in the World which maintains a well frameworked and efficient social security benefits system in place. A range of benefits for all ethnic groups, ages and classes makes it a leader in social welfare schemes across the World. Many of the developed and booming economies across the globe have replicated these schemes in their own countries benefitting millions of citizens.

Unemployment Insurance

One of the prominent government provided benefits is the unemployment insurance which provides limited weekly monetary relief to jobless citizens who are out of work due to involuntary reasons. The labor department in each state administers its own  insurance scheme under the federal guidance.

The weekly dole is paid out to unemployed persons from a pool funded largely by  unemployment taxes collected from employers and substantial contributions by the federal and state governments. In order to be eligible to receive the weekly compensation, an unemployed claimant should fulfill the laid out criteria that differs from state to state. Knowingly providing incorrect information at the time of application or manipulating facts to receive or maximise unemployment is considered a fraud and is punishable under the law.

Unemployment Insurance Fraud

Committing a fraud is a serious offence under labor laws in all states across the country. There are strict laws enacted because protecting the integrity of the unemployment benefits system is on top of the agenda. States are determined to ensure an accountable system.Fraud Prevention

Let us understand what constitutes a fraud so that you are well educated in filing and managing your weekly UI claim.

Examples of Fraud are

  • A claimant returns to work or lands a job and continues to make weekly claims to receive benefits.
  • A claimant does not report accurate wages to the DOL. Lets say you failed to report severance or other payout from your employer during application.
  • A claimant is working part time and does not report the income earned or has undertaken a temporary job, withholds the earnings intentionally.
  • A claimant holds back any other information or provides false details at the time of application.
  • A claimant claiming unemployment compensation on behalf of someone else by providing wrong identity.

A claimant must be vigilant and understand the UI system. Ignorance or tardiness can have unprecedented consequences. We must underline the basic fact that all applications and claims are tracked with the SSN.

The labor departments in many states actively encourage its citizens to report UI fraud to avert monetary losses.

Penalties for Committing a Fraud

Fraud is a criminal offence and the consequences of it may attract one or more penalties as below.

  • Repayment of benefits collected including fines and other charges
  • Barred from collecting benefits in the future
  • Repayment of benefits collected including fines and other charges
  • Prosecution for criminal charges and possible jail sentence

Needless to say, the above list is not exhaustive. We’ve only described the most common penalties.

How to Keep Away From Fraud

By simply knowing the rules and your responsibilities. At any point of time, should a question arise, you must immediately contact the phone service of the labor dept in your state.

  • Report gross and accurate wages.
  • If you are under a severance payout, apply only towards the end of it.
  • Provide correct information at the time of filing. Do not manipulate or suppress.
  • Apply for and maintain work search records as requested.
  • Be willing to accept a suitable job offer and report to DOL if you denied the offer for a valid reason.

The labor department’s work with various agencies to detect and prevent fraud. This also includes a well co-ordinated network with federal agencies for data exchange on claimants, wages etc.

Reporting Fraud in Your State

Known cases of fraud are quite a common occurrence. Fraudsters hoodwink and receive thousands of dollars of unemployment insurance. There are cases of scams that cause major financial loss to the state exchequer.

If you know someone who is cheating to make financial gains by drawing UI or suspect a person to be deceiving the system, report it immediately to the labor dept in your state. All of them have an exclusive hotline number to report and manage fraud cases. You can find the relevant and contact information on the respective websites.

As a responsible citizen of the country, you must consider it an obligation to report any suspicious activity. Your identity will be kept confidential and in some states, you have an option to remain anonymous.

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    • Alexis,

      If you filed a claim, please reach out to the Unemployment Office for an update. Make sure to chase at regular intervals until payments normalize.

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