Police Urge Residents to Stop Reporting Unemployment Fraud to Law Enforcement

Police across the U.S. are urging residents to call state labor agencies—and not local law enforcement—amid a barrage of calls from people reporting unemployment insurance (UI) fraud or pandemic relief package scams.

The Batavia Police Department in upstate New York on Tuesday joined hundreds of local law enforcement agencies in asking both potential victims and concerned residents to report allegations of unemployment benefit fraud directly to the state's Department of Labor. Police in Avon Lake, Ohio, in Whitman, Massachusetts, and in Evanston, Illinois, say frustrated taxpayers have called or even shown up at the station holding 1099-G tax forms which show someone is fraudulently reporting income in their name. Often slow to investigate, state agencies say they're already overwhelmed with higher-than-usual jobless claims amid the pandemic and tens of millions of dollars in additional fraud claims tied to the federal Pandemic Unemployment Assistance (PUA) program created by Congress in March.

In addition to seeing unaccounted-for income on their tax forms, thousands of frustrated Americans have reported telephone scams, shady "how to" emails on maximizing jobless benefits and even online forums which lay out ways to fraudulently apply for pandemic relief money.

Small police departments in towns like Batavia say there's been a spike in reports of unemployment fraud coming from both alleged victims and concerned citizens who say they may know someone committing criminal tax fraud. In Ohio, state officials are pushing to create a public-private partnership aimed at improving the unemployment system as thousands of frustrated potential fraud victims exposed a gap between local agencies and the state's Department of Job and Family Services (JFS), which investigates fraud allegations.

But unlike most typical crimes, unemployment benefit fraud is best reported directly to state-level officials, and not just to your local police.

"We've had calls coming from regular citizens as the victims in this case, where they have learned from some source or another—their employer or [income tax forms]—that someone else had been using their info to obtain unemployment benefits," Batavia Detective Eric Hill told Newsweek Tuesday. "Many people are looking for assistance right then and there but should get in touch with the Department of Labor."

New York's Department of Labor told Newsweek Tuesday the most common way people find out they're being used in a benefit scam is they receive a monetary determination letter from their agency even though they did not apply for such benefits.

"Some say they've been receiving benefits in other states or other cities within New York, kind of all over the place," Hill added. "There's been a wide range of different types of people calling to report 'somebody is obtaining [UI] benefits in my name' and others just trying to help out" by reporting a possible scammer.

In California and Illinois, similar spikes in unemployment scams and identity fraud have been exposed in recent weeks as people receive 1099-G tax forms to report their income on annual tax forms. Many officials in California Governor Gavin Newsom's office have blamed the state's payout of nearly $30 billion in unemployment fraud on federal-level officials and the Trump administration.

About $11 billion in fraudulent California unemployment claims have been paid since March. And the state-level agency which handles such claims, the Employment Development Department (EDD), estimated that another $19 billion in claims have been deemed "suspicious," the Fresno Bee reported Tuesday.

"[The Trump administration] did not provide adequate guidance or information to protect against fraudulent rings state by state," said California Labor Secretary Julie Su, whose department oversees the EDD, Monday. "The Trump administration provided insufficient support to states to address the aggressive attacks by domestic and international criminal syndicates."

Many state officials said they received no warnings of the potential for newly formed fraud loopholes after Congress created the federal program under last March's CARES Act. Specifically, new types of tactics emerged under the legislation because it expanded eligibility to people who identified as self-employed or "gig economy" workers.

State and federal labor agencies have issued several warnings about protecting one's information from UI scammers or other pandemic relief defrauders. They urge any and all suspicious Americans to contact state agencies because such criminals can use people's ID or tax information in the future.

The New York state agency hotline urges callers to complete the online fraud form "if you think you're a victim of unemployment insurance fraud or believe you know someone who is committing fraud." Any concerned taxpayer who gave any information to an unprompted phone caller should also immediately inform labor officials.

Newsweek also reached out to the Ohio Department of Job and Family Services, as well as to local police in Wilmette and Evanston, Illinois, but did not hear back by the time of publishing.

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Man Looking Unhappy While Filling Out His U.S. 1040 Tax Form and looking at Tax Instruction Book Julie Thurston Photography / Contributor/Getty Images