Massachusetts employers should be diligent when reviewing unemployment insurance (UI) claims as fraudulent attempts to access the state’s system rose dramatically last week. The Commonwealth is frequently the subject of organized UI fraud because the state has some of the highest average benefits in the country. 

Last week the number of initial claims filed in Massachusetts was so high that job market analysts had to discard the data from that week. Claims from Massachusetts accounted for 45.6% of the increase in all unadjusted claims across the United States in the week ending May 6. For context, Massachusetts employment accounts for less than 3% of U.S. private payrolls, and initial jobless claims have made up less than 3% of all claims in 328 of the 411 weeks from July 27, 2015, to May 6, 2023. 

Fraud is categorized into two distinct groups, eligibility fraud and identity fraud. Eligibility fraud occurs when a claimant provides false information in order to receive benefits for which the claimant would not otherwise be qualified. Identity fraud is when one person acquires and uses the identifying information of another person to illegally receive benefits. The fraud can happen either at the time of the UI application submission, or by changing key user data like bank account information after a claim has been established.  

The current uptick in fraudulent claims is from identity fraud, with criminals likely using personal information stolen in previous national data breaches, for example those occurring in the healthcare or retail industries in an attempt to claim a benefit they are not entitled to. 

The good news is that the Department of Unemployment Assistance (DUA) is aware of the issue and has systems in place to combat fraud. For the most recent batch of applications, DUA approved only 12 percent after an initial review, rejected 25 percent, and withheld approval of the remaining 63 percent pending additional identification verification. 

AIM maintains that program integrity is essential to controlling costs of the UI system. Last session the AIM Government Affairs team was able to secure $600 million from the legislature to help offset some of the extreme costs that the system weathered during the pandemic, including fraud.  

For employers: if you believe you are witnessing fraudulent activity such a receiving a suspicious “conformation of employment” letter or a “lack of work letter” please see step by step guidance from the department to ensure your issue is resolved in an effective manner:  https://www.mass.gov/doc/proper-handling-for-reporting-fraudulent-or-improper-unemployment-claims/download  

For individuals: If you believe that you are personally being targeted and that your personal information is being used to make fraudulent UI claims, please fill out the department’s fraud form. https://www.mass.gov/forms/unemployment-fraud-reporting-form