Fraudulent Unemployment Claim Attempts Rise During COVID-19

Fraudulent unemployment insurance claims are up in Alabama and around the country.

The Alabama Department of Labor says fraudulent unemployment claim attempts are on the rise, and COVID-19 is to blame for the increase.

“It’s definitely happening more and more, and the volume is related to the pandemic,” says Tara Hutchison, communications director for the labor department.

The fraudulent unemployment claims — sometimes filed using the name of an actual employee of a company, sometimes filed using a fake name — are on the rise because of the increased numbers of people who are out of work, coupled with federal money available to help those who are out of work.

“It’s more money that’s normally available and a lot more people eligible to receive it, so the fraud has increased exponentially,” Hutchison says. “And this isn’t just an Alabama problem. It’s happening all over.”

Though specific numbers are not available, Hutchison says she knows “it has increased.”

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“We’re hearing from all different types of businesses,” she says. “It’s definitely widespread. It’s affecting all sectors. There’s no company size, no one sector that’s being targeted. There doesn’t seem to be any rhyme or reason to it.”

Many fraudulent claims — 96% or 97% of them, Hutchison says — will be flagged by the Department of Labor because they won’t have all of the information needed for the claim. “It’s not necessarily going to disqualify it, but it will get someone in our department involved,” she says.

The Department of Labor is working with a number of state and federal agencies to pursue prosecution of some of the cases, and Hutchison says the most important thing for someone who receives a fraudulent claim is to report it.

There’s a place at to report fraud, and “we also encourage people to file police reports and notify credit bureaus,” Hutchison says. “If something does get paid out, there won’t be any tax liability as long as it is reported as fraud.”

Unemployment fraud is nothing new, but it’s definitely on the rise, Hutchison says.

“People have tried to do this for as long as I can remember, but we’re definitely seeing it at an increased volume,” she says. “The important thing to do is report it.”

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