Are You at Risk for Unemployment Identity Theft?

If there are funds that can be stolen, identity thieves are likely on the case — and unemployment benefits prove no exception. In a Q1 2025 update to its website, the IRS noted several states experienced a surge in fraudulent unemployment claims as organized criminal gangs used stolen identity information to file false claims. Meanwhile, the US Government Accounting Office (GAO) reported $162 billion in improper payments during 2024.

Given the ongoing economic uncertainty, it’s understandable someone might worry about whether their unemployment benefits will be there when they’re needed most. Recognizing the telltale signs of this scam is important to better spot and stop abuse as quickly as possible. 

Much like medical identity theft or tax identity fraud, victims may not find out about the theft associated with unemployment fraud until much later. Some people only discover they've been victims of unemployment identity theft when they file their own claims and their applications are rejected because an identity thief maxed out the available funds. Other times, victims learn of the fraud because their employers are notified their employees have been receiving unemployment benefits.

Additional signs your identity may be used for unemployment fraud include:

• Requests for information from your state’s unemployment office
• Loan rejections based on your employment status
• IRS letters about underreporting of benefits you’ve supposedly received
• An unexpected 1099-G form showing unemployment benefits that you didn’t collect

To protect against this type of unemployment identity fraud, a proactive approach is important. Consider these strategies:

• Guard your Social Security number (SSN) as this is the most important piece of information thieves need to steal your identity and commit fraud. Only give out the number when necessary. Do not enter your SSN on forms unless you know how the paperwork will be used. Do not carry your Social Security card with you, and if you suspect it has been lost or stolen, take steps to replace it and monitor for any suspicious activity.
• Don't share your birthdate on social media since your age and exact date of birth gives thieves a piece of useful information that can be used to commit synthetic identity theft.
• Avoid using public Wi-Fi networks which can be easily compromised by threat actors. If you must use one, be sure to use a virtual private network (VPN)[PH1]  which encrypts the data being transmitted to and from your device. That encryption makes any intercepted data essentially useless to the threat actor.

If you receive a 1099-G tax form or an unexpected letter from your state unemployment insurance office that details benefit claims you have not made, you should take the following actions immediately:

• Report the suspected fraud. The U.S. Department of Labor lists websites and tip hotlines for reporting unemployment fraud in different states.
• File a non-emergency police report so you have documentation of the suspected identity theft.
• Notify your current employer (and any former employers during the past 18 months) that you believe your identity was used to file for false unemployment benefits.
• Consider placing credit freezes with all three major consumer credit bureaus, which will make it more difficult for someone to open or extend credit using your information. TransUnion details what to if you're a victim of identity theft, but to place a credit freeze, contact:
  • TransUnion — call 800-916-8800
  • Equifax — call 800-349-9960
  • Experian — call 888‑397‑3742
• File a complaint with the FTC.

Acting quickly can help stop improper payments and creates a record of your efforts to stop the theft. Once the fraud has been handled, ask your company's HR department to verify that your employment files are accurate. By staying vigilant and reporting any suspicious activity in a timely manner, you can help keep unemployment identity theft from compromising your personal information.