The State of Maryland processed nearly two million unemployment claims during the COVID-19 pandemic. A large number of those claims were fraudulent, with the full extent of the fraud yet to be understood. A significant amount of the fraud involved identity theft, where fraudsters applied for benefits in the names of individuals whose personal information had been compromised.
During the pandemic, many employers received calls from anxious employees who had received notices that unemployment benefits had been applied for or awarded in their names. Human resources staff routinely reviewed their claims history to find the names of currently employed employees and reporting the claims as fraudulent.
Unfortunately, employers may once again be facing calls from anxious employees, as the Maryland Department of Labor recently announced that it has sent out 180,000 notices of overpayment of benefit claims, many of which relate to claims paid during the pandemic. It is becoming readily apparent that many of these notices relate to fraudulent claims involving identity theft, so employers should prepare for an influx of questions from their employees.
Clearly anticipating the issue, the notices direct individuals who believe their identity was stolen to make a report of fraud:
DO YOU BELIEVE YOUR IDENTITY WAS STOLEN TO APPLY FOR BENEFITS? If you did not apply for the benefits referred to in this notice and believe that another individual may have filed the claim for benefits using your information, refer to: https://labor.md.gov/unemployment-insurance/fraud-and-identity for instructions on reporting potential fraud.
The notices sent by DOL also provide a mechanism to appeal the benefits determination. Appeals can be filed by mail, email or fax, to the address noted in the determination. Appeals can also be filed through the BEACON portal; but since the fraudsters who filed the claims may have set a BEACON account up with a fraudulent email, an employee may not be able to access their claim in BEACON. It appears that individuals who appeal the determination based on fraud are receiving an automated response directing them to file a fraud claim per the above.
The DOL has also set up a web page for individuals who have received the notices that provides information on the notices and what they mean, which includes a section on identity theft.
Employers may wish to review these resources so they are prepared to assist their employees who receive notices in the coming days and weeks. Miles & Stockbridge’s labor and employment lawyers also are available to help employers handle any employee questions or problems.
Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.