With unemployment reaching historic highs in Minnesota and across the county in recent months, the Minnesota Department of Employment and Economic Development (“DEED”) has received an influx of unemployment insurance applications. Since March 16, 2020, there have been 776,227 unemployment insurance applicants in Minnesota.
This large surge in applications and the increase in weekly unemployment compensation available through the CARES Act have created an incentive for fraudsters to attempt to obtain unemployment compensation using stolen personal information.
Recent weeks have seen an increase in the number of employers alerted to fraudulent unemployment insurance applications received by DEED for individuals still employed. In other words, fraudsters are using the stolen personal information of employees to apply for, and in some cases receive, unemployment compensation through DEED even though the employee is still working. Employers and employees may only discover the fraudulent application once DEED creates the employee’s online account and sends correspondence to the employer or employee. Once the employer becomes aware of the fraudulent application, a prompt response is essential to allow DEED to investigate and remedy the fraudulent activity.
Unemployment insurance fraud is punishable by law and DEED takes fraudulent unemployment insurance applications seriously. Employers alerted to potential fraudulent applications should complete the Minnesota Unemployment Benefits Fraud Report available on the DEED website. Additionally, employers should quickly respond to any request from DEED for additional information or documentation related to the fraudulent application following the initial submission of the Fraud Report.
Cyber Security Considerations
Several states experiencing significant fraudulent unemployment insurance applications, such as Washington, Florida, North Carolina, and Massachusetts, have indicated that the surge in fraudulent applications is likely the result of large-scale criminal operations. Likely, these criminal operations have access to significant amounts of personal identifying information including social security numbers. Employers alerted to numerous fraudulent unemployment applications should consider undertaking a forensic analysis of their internal computer systems to determine whether a security breach has occurred.
The economic and employment landscape brought about by the COVID-19 pandemic has resulted in an increase in fraudulent unemployment insurance claims. However, employers can do their part to lessen the impact of this fraudulent activity by promptly alerting the appropriate state agency and evaluating their internal computer systems for evidence of a data breach.