A sharp rise in fraudulent unemployment claims targeting Becker County residents in 2021 caused law enforcement officials issue guidance to the victims and post a warning to area residents.
Since Jan. 19, at least 15 Becker County residents have called the Becker County Sheriff's Office to report unauthorized unemployment benefit claims in their name. With additional unemployment funds added to each claim from pandemic-related relief packages, law enforcement officials are worried these identity thieves could receive improper payments and potentially leave the victim on the hook with a compromised identity.
"It can be prosecuted criminally," said John Stiles, deputy chief of staff for the Minnesota Attorney General's Office. "If it's a crime committed in Minnesota, using Minnesota unemployment funds, then it would be a state crime and it could be prosecuted in the county where it took place by the county attorney."
Stiles said if the amount of the fraud was less than $500, the suspect could be charged with a gross misdemeanor, but, if the amount exceeds $500, the suspect would face felony fraud charges. Many of the pandemic-related unemployment programs included an additional $600 benefit, which would turn many of the fraudulent offenses into felonies.
According to the Minnesota Unemployment Insurance program, unemployment benefits are also considered taxable income federally and at the state level, which would leave defrauded tax payers with an additional hurdle to remove the claims from the tax records. However, beneficiaries have the option to change their withholding through an automated phone system, web portal, or by mail-in form.
The U.S. Department of Labor inspector general's office believes more than $63 billion in unemployment benefits nationwide has been dispersed to fraudulent claims, or in error, which represents nearly 10% of the total benefits paid out since March 2020 through pandemic-related unemployment programs, according to the Associated Press.
The fraudulent claims in Becker County began Jan. 19.
On Feb. 22, the Becker County Sheriff's Office posted a link on its Facebook page warning residents of the fraudulent scheme and directing them to guidance on the Minnesota Unemployment Insurance program's website.
"I feel like that somebody's system … was breached because they have everybody's name, address, and full Social Security number," said Kathy Nguyen, investigator for the Becker County Sheriff's Office. "It looks like they are trying to reroute the unemployment, basically trying to defraud the Minnesota Unemployment Insurance."
She also said multiple unemployment fraud reports have been made to the Detroit Lakes Police Department.
A police department official said teachers and staff in the Detroit Lakes Public Schools were targeted and multiple employees of the district reported fraudulent claims.
"(The Minnesota Unemployment Insurance Program) has been sending a letter to the rightful person's address and that is how they are discovering that their information has been stolen," said Nguyen.
To her knowledge, she said, none of the victims she has been dealing with have had fraudulent checks be sent out because they were caught in the initial claims process.
If residents have become victims of unemployment claims fraud, law enforcement officials suggest:
- File a police report with the local police department, or county sheriff's office.
- File an identity theft report with the Federal Trade Commission through their website.
- If you received a 1099-G tax form, but did not receive any benefits, file a report with the Minnesota Unemployment Insurance program through their website.
- File a fraud alert with the three major credit reporting agencies: Experian, TransUnion or Equifax.
- Seek credit monitoring, or identity protection services. Your bank may offer free credit monitoring tools, such as a free credit report. Free credit reports can also be obtained through annualcreditreport.com.
- Change passwords to email, banking and other personal accounts.
"In general, we're always happy to hear from Minnesotans who experience any kind of consumer related trouble, and we are happy to help," said Stiles. "In suspected unemployment fraud, DEED, the Department of Employment and Economic Development, really has all the authority they need to investigate cases like this."
In Minnesota, the COVID-19 pandemic caused a surge unemployment applications and benefits to those furloughed, according to a Minnesota DEED official. In April 2018 and April 2019, Minnesota averaged nearly 14,000 unemployment claims in each month, but, in April 2020, during the height of the state's stay-at-home order, 324,973 Minnesota residents filed for unemployment benefits.
Claim levels have remained elevated in the state compared to past years throughout the pandemic with 56,309 filing for benefits in January.
In Becker County, the unemployment claims remain more than double the normal rate with 295 residents claiming benefits in January 2021 compared to 123, in January 2020, and 151, in January 2019.