Hundreds of thousands of Ohioans are victims of unemployment fraud. Here's what to do

Feb. 2 update: The state has created a new telephone hotline for victims of unemployment ID theft or fraud. 833-658-0394. The state has also updated it's website, unemployment.ohio.gov to make it easier for victims to file fraud claims (still preferred and potentially quicker than the phone lines) and for employers to report fraud. Updated story.

Feb. 5 update: Here is another follow-up column with more information.

March 8 update: More businesses are getting lots of bogus unemployment claims. 

March 11 update: Did you get a debit card at your address but to someone else? Here's what to do

Jim Irwin received a 1099 tax form last week saying he claimed more than $17,000 in unemployment benefits last year. 

The problem is Irwin, 83, hasn’t worked in 13 years, said his wife, Bernie Irwin. 

The wife of a colleague also recently opened a piece of mail at her law firm job from the Ohio Department of Job and Family Services. It was asking her employer to confirm that she – the woman opening the letter – had left the company since she was filing for unemployment. 

They’re not alone.

They are among hundreds of thousands of Ohioans whose identities have been stolen or attempted stolen as their names and Social Security numbers and other information have been used fraudulently by scammers to claim unemployment benefits.

Right before the holidays, I wrote a column warning of some scams, including unemployment scams where fake texts were showing up seeming to come from the state and reports of people but who hadn’t filed for benefits receiving debit cards from unemployment. 

But the fraud against unemployment benefits is even bigger, as I found out last week.

Even Gov. Mike DeWine, his wife, Fran, and Lt. Gov. Jon Husted were among the victims of fraudulent claims, officials said in a recent news conference. 

And more people are just finding out now that they may be ID theft victims as the Ohio Department of Job and Family Services (ODJFS) has begun mailing out the 1099 tax forms. 

That’s because when a person files for unemployment, there is typically nothing sent by mail from the state as confirmation. The payment is usually sent by direct deposit or the fraudster could redirect the debit card, if payment was made via a debit card, to another address.  And all correspondence has been by email during the pandemic. 

So the 1099 form may be the first “notice” a person finds out anything is wrong. 

“We really need your help to get the word out,” ODJFS spokesman Tom Betti told me when I called to find out how large the fraud problem was and what people could do. 

Betti explained that the fraud was not a result of a data breach at the ODJFS but "you can probably surmise all of the major national data leaks that have happened in the past few years. It’s highly likely that’s all connected somehow. These criminal rings are using people’s identities in mass to defraud federal and state and local governments in this time of crisis.” 

These scams have hit the state’s unemployment coffers hard. Betti didn’t have the latest numbers, but said ODJFS Director Kim Henderson has estimated it to be in the hundreds of millions of dollars in fraudulent unemployment claims. 

And our state is not alone. This is a problem nationwide as criminal rings took advantage of expanded federal unemployment benefits (known as the Pandemic Unemployment Assistance or PUA program) during the COVID-19 pandemic without the normal confirmation processes in place. The PUA program allowed for people who normally don’t qualify for unemployment benefits, like self-employed workers, to claim unemployment, in addition to people in the traditional unemployment program. 

The difference, Betti said, is the Department of Labor urged states to let PUA recipients "self-certify both their eligibility and their earnings history. This allowed payments to be issued quickly, but, unfortunately, it also opened a door for criminal activity.”  

New checks and balances were enacted on Dec. 27 for claims since then, but much of the damage has been done. 

Take in these staggering numbers:

• The Ohio Department of Job and Family Services in December suppressed issuing 1099 tax forms for 166,000 people under PUA system because of known identity theft. Another 1,900 tax forms were suppressed for the traditional unemployment system because of known identity theft. 

• Overall, the state has flagged about 44,000 traditional unemployment claims out of a total 1.7 million and about 796,000 PUA claims out of a total 1.4 million for potential fraud. Those may or may not have turned into claims that were paid out to the fraudsters.

• And just in the last few weeks, 53,000 people have filled out the ID theft fraud form on the ODJFS website, unemployment.ohio.gov, to notify the state that they received a 1099 tax form in error. That number is expected to continue to rise and rose 30,000 in two days from Wednesday to Friday last week as Betti was updating me. As of Jan. 21, that number was only 6,000, said Betti. 

What to do

If you get a 1099 tax form from the state saying you claimed unemployment when you didn’t or if you get notice that an unemployment claim has been attempted in your name, ODJFS has come up with a simple three-step process for people: 

1. Go to unemployment.ohio.gov where you will see two large red buttons on the top of the page. One will take you to more information about ID theft and resources, such as filing a local police report and letting the Ohio Attorney General know you’ve been a victim. 

The button on the left that says “Report Identity Theft” is important to fill out. This will notify ODJFS that you got a fraudulent 1099 so the agency can flag your case and re-issue you a new 1099 that says you did not receive unemployment income and send an updated form to the IRS. 

Betti said the preferred method to report the fraud to ODJFS is through the online form. People can try calling the ODJFS fraud hotline, but Betti said it is difficult to get through. That number is 800-686-1555.

I would suggest if you don’t have access to a computer, see if you can get a trusted friend or family member to help you. That is going to be the quickest way to notify the state.

2. According to the Ohio Department of Taxation’s website, if you received a 1099 for unemployment benefits in error, “generally, you should not include unemployment benefits you did not apply for as income on your federal and state income tax returns.” The site also says not to file an Ohio ID theft affidavit with your Ohio tax return unless a fraudulent tax return was filed using your Social Security number.

Also, “you do not need to have a determination from ODJFS on your ID theft claim or a corrected 1099-G to file your federal and state income tax returns.” The department does recommend getting the updated 1099 for your records. 

Go to tax.ohio.gov/wps/portal/gov/tax/ for more information. 

3. Take steps to protect your identity, including contacting the local police and attorney general. The state also suggests placing fraud alerts on your accounts. Go to unemploymenthelp.ohio.gov/IdentityTheft/ 

My suggestion is to place credit freezes on all of credit bureau files. A fraud alert is just a note on your credit report that creditors may or may not see. A credit freeze will lock you and any potential creditors or scammers out of your account without your permission, or a lift of your freeze.

I have long been an advocate to proactively place a credit freeze for yourself, your spouse or any adult in your household. They are now free to place and lift a freeze. With data breaches becoming so common, I liken a credit freeze to locking the doors of your house. You also need to put a freeze on your spouse’s accounts or you haven’t locked all of the doors to your house.

A credit freeze does not prevent you from using existing credit you have, like your credit cards, but does mean you have to lift your freeze before you can apply for credit or a new account. You can read more about credit freezes and other popular topics I’ve written about in my Betty’s Best Tips. That can be found at tinyurl.com/bettysbesttipsABJ 

One other thing of note: While I do recommend credit freezes and they do thwart potential identity theft, it would not have stopped the unemployment ID theft since unemployment claims don’t have anything to do with your credit bureau files. 

Here’s how to contact the bureaus:

• Equifax: 888-298-0045 or equifax.com/personal/credit-report-services/credit-freeze

• Experian: 888-397-3742 or experian.com/freeze/center.html

• TransUnion: 888-909-8872 or transunion.com/securityfreeze 

Depending upon the extent of ID theft — if you have been getting mail you weren’t expecting for accounts you haven’t applied to open, for example — you may need to do some cleanup and make phone calls. Cleaning up after ID theft can be a tedious process. The colleague’s wife who opened that piece of mail trying to confirm her unemployment from her current employer said the police told her other victims have reported problems with other accounts. They recommended she also contact her bank and the Social Security Administration. 

Another good resource for ID theft victims is the Identity Theft Resource Center, a nonprofit in San Diego. Visit idtheftcenter.org or call 888-400-5530 

Beacon Journal staff reporter Betty Lin-Fisher can be reached at 330-996-3724 or blinfisher@thebeaconjournal.com. Follow her @blinfisherABJ on Twitter or www.facebook.com/BettyLinFisherABJ To see her most recent stories and columns, go to www.tinyurl.com/bettylinfisher