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Staying Ahead of the Scams

By Julie Quink

 

With the continued intensity created by the COVID-19 pandemic, business owners and individuals have continued to be victims of fraudulent activity as the scams and schemes are continually changing and increasing in number.

At a time of significant economic stress and uncertainty, the barrage of ever-changing fraudulent attempts and attacks becomes increasingly difficult to manage and prevent. Fraudsters have also become very creative in their methods of gathering sensitive information to commit fraud, so it becomes increasingly difficult to predict what might be coming next in the form of an attack.

Since the onset of the pandemic, these schemes have continued to include filing fraudulent unemployment claims. As practitioners, we have also noticed an increase in stolen identities, whether it be by the interception of documents containing personal information or through online access.

As professionals who work with clients to implement best practices and detection techniques, we fall victim to fraud attempts as well. The most recent fraud attempts include continued false unemployment claims and theft of identities through mail interception.

 

Fraudulent Unemployment Claims

The filing of fraudulent unemployment claims is not a new fraud scheme. However, the repeated attempts at compromising employee data and filing of fraudulent claims in other states has increased.

Fraudsters have taken to heart the saying, ‘if at first you don’t succeed, try, try again.’ Some businesses have seen repeat attempts at fraudulent claims filed against the business using the same employees but citing different reasons for filing for unemployment, such as break in service or lack of work.

Further, claims are being filed for employees in different states. The fraudster is using an employee’s information to file in a state in which the employee does not live or work to gain access to unemployment benefits in the state where they live. It has become a vicious cycle.

“The most recent fraud attempts include continued false unemployment claims and theft of identities through mail interception.”

States have tightened controls and verifications to try to manage these fraudulent claims, but the tightening of controls comes with a cost. Employees who have been victims of fraudulent claims in the past may have a more challenging time filing for unemployment as their account has now been flagged. The ease of filing online for these people has now become complicated and time-consuming as they try to navigate the unemployment system.

The continued monitoring of a business unemployment account to prevent and detect fraudulent activity and responding to fraudulent claims can be time-consuming. If fraudulent claims are paid against an employer account, it can impact the employer’s experience rate and unemployment account if not identified quickly.

This is not a new area of fraud, but the methods that fraudsters use to gain access and apply is ever-changing.

 

Identify Theft

Fraudulent unemployment claims are an example of identity theft. It is believed that some of the personal information used in filing fraudulent unemployment claims has come from data breaches. However, creative methods of accessing personal information have now encompassed intercepting hard documents.

Another area of data interception, with which we have had personal experience, is through the mail. If a fraudster is not able to access personal information through electronic means, why not try the good old-fashioned way, through the U.S. Postal Service or another carrier?

Intercepting mail is a scheme that seems to be on the rise. In one such case of which we are aware, information was intercepted prior to arrival at its intended location. Between the time it was initially mailed and the time it finally arrived at its location, the sender’s identity was stolen, and a loan was opened in their name, unbeknownst to them. The fraudster intercepted tax documents, which had personal identifying information, and secured a fraudulent loan. Ultimately, the fraudster, realizing that the mail was in a tracked envelope, secured the package with significant amounts of tape and forwarded it to the final destination.

The Office of the Inspector General for the U.S. Postal Service is diligent in investigating suspected mail theft, from both internal and external sources. Because of its commitment to finding and detecting mail fraud, the office has devoted the Office of Investigations to handle complaints and fraud.

The impacts of identity theft for a business owner or an individual can be far-reaching. Significant impacts can include compromising credit and financial hardship, compromising legal relationships and documents, and compromising tax filings.

Perhaps one of the most significant impacts may be the feeling of violation, distrust, betrayal, or even embarrassment created by the theft of identity. The unwinding and unpacking of identity theft can be a time-consuming and emotional process for business owners and individuals.

 

Takeaways

What we know is that fraud schemes are changing faster than business owners, individuals, and technology can keep up. Whether the fraud scheme is a recurring scheme or a new and improved scheme, the importance of diligence, communication, and monitoring should not be discounted.

Communication with employees about fraudulent schemes involving unemployment and mail, along with continued monitoring, are best practices in keeping information safe and secure.

 

Julie Quink is managing partner with West Springfield-based Burkhart Pizzanelli; (413) 734-9040.

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