Unemployment insurance is no stranger to fraudulent claims, whether intentional or unintentional. In some cases, a claimant may not realize he or she didn’t follow the proper procedures that ultimately led them into a dishonest situation. While this does happen, more often, it is an intentional effort to get more money.
The fraud itself can materialize in several different ways. One of the more common is to keep filing benefits without reporting income earned, meaning a former employee is getting more from UI than they should while receiving additional income, whether it’s on the books or not.
Sometimes it looks like helping to falsify records for someone, so they can claim or trying to collect benefits while not even trying (or able) to find work. It can also be identity theft – someone steals personally identifiable information from someone else and uses that to file a UI claim.
UI Fraud Effects on Businesses
No matter how it happens, unemployment insurance fraud occurs every day and ultimately hurts employers. The fair system is jeopardized by others breaking the law, leaving those who follow the rules frustration as it can affect them as all.
One of the most likely results is an increase in UI taxes for employers. Because they’re paying more out of the fund to these fraudulent claims, the fund assumes it will need to increase what is being collected this year to cover the current trend. As a result, you pay more into the fund each year just to see it go to someone who should not be receiving benefits.
Recouping Lost Payments
Unfortunately, even after the fraud is suspected, the money cannot be immediately paid back. Depending on the situation, you may be able to halt payments immediately or wait until a formal investigation proves your claim correct. Either way, you may be losing money as you get to the bottom of the scheme.
Once charged, the guilty party will face several potential consequences, including jail time, fines, and having to pay back all the money they fraudulently received. From there, how much goes back into the fund will be reported and noted on your business’s account to keep rates from going up.
Catch Fraud Faster with Unemployment Tracker
You know the damage a fraudulent claim can do to your business, so constant vigilance is your plan. Unfortunately, this isn’t always possible considering everything else you handle in your company. Instead of contributing to the more than $3 billion in overpaid unemployment benefits in the United States, you can take control and lower your risk. Request a live demo today to learn more about how Unemployment Tracker can save you time, money, and continuing fraudulent claims.