Insider fraud is emerging as yet another threat to the nation’s unemployment insurance (UI) program, already under siege as cybercriminals and criminal gangs make away with billions, according to a new federal report.
State unemployment officials, who oversee jobless benefits on the local level, should be on the lookout for collusion in their own ranks by employees looking to steal funds, according to new alert issued by the Financial Crimes Enforcement Network, or FinCEN.
Along with highlighting better-known scams involving identify theft, the FinCEN report warns also of the emergence of “insider fraud.”
In particular, this involves cases in which “state employees use credentials to inappropriately access or change UI claims,” giving a green light to “unqualified applications, improper payment amounts,” as well as the “movement of UI funds to accounts that are not on the application.”
In June, a federal watchdog warned that $26 billion in jobless benefits is at risk of being stolen by criminals or improperly made for one reason or another.
“As unemployment claims in the United States have surged due to the pandemic, U.S. law enforcement and financial institutions have detected numerous instances of COVID19-related UI fraud,” the new FinCEN report notes.
Also emerging as a problem are cases involving “employer-employee collusion fraud.” In these scams, an employee actually returns to work but fails to report this to state unemployment authorities in order to continue to receive jobless benefits.
The employer, in turn, also makes out, paying “reduced, unreported wages,” according to the report.
In a variation on that theme, some employees are returning to work and continue to collect unemployment benefits without involving their employer, or they are lying about how much they made before they were laid off in order to boost their unemployment check.
These scams join already well-known cons that have been in play since the start of the pandemic, such as fraudsters creating fictional companies with fake employees to reap hundreds of thousands in benefits.
