Identity theft – specifically linked to unemployment – jumped to astronomical levels last year during the COVID-19 pandemic, according to data from Allstate Identity Protection (AIP) – Allstate Insurance’s identity theft insurance business.
The report found that unemployment fraud in 2020 increased by more than 17,000%. Tax fraud also increased last year, by 258% more than 2019. AIP has warned that both are likely to continue rising, with unemployment fraud cases expected to more than triple in 2021.
Prior to the COVID-19 pandemic, unemployment fraud accounted for only a small fraction of all identity theft cases; in AIP’s case, it only accounted for less than 0.1% of the fraud cases it handles. However, it now represents about 70% of the fraud cases resolved by AIP.
AIP also noted that since the start of the pandemic, the Department of Labor has estimated that scammers have collected $36 billion in fraudulent unemployment insurance claims. Fraudsters typically exploit state-run unemployment insurance platforms that are swamped by thousands of claims.
“Cybercriminals are always finding new ways to use people’s personal information to get access to money,” said AIP vice president of product Lewis Bertolucci. “These new tactics, like unemployment fraud, pop up quickly and are getting more difficult to resolve.”
Bertolucci added that it is no longer enough for consumers to rely only on their banks or free credit services to protect themselves from fraud; it will require specialized expertise and even reimbursement coverage to resolves such issues.