Fraudulent Unemployment Claims Surge in Texas, Employers Urged to Remain Vigilant

Texas employers are facing a rising tide of fraudulently filed unemployment benefit claims, prompting officials to issue warnings about this growing threat to businesses and workers alike.

The fraudulent claims often appear in the names of current employees, former workers, and sometimes individuals who never worked for the organization at all. Authorities note these false claims frequently contain telltale errors, including misspelled names, incorrect Social Security numbers, and the use of maiden names that don’t match employment records.

Security experts believe many of these fraudulent filings stem from identity theft incidents related to data breaches that occurred outside of employers’ systems, making it particularly challenging to trace the source of the stolen information.

The Texas Association of School Boards (TASB) Risk Management Fund and HR Services have reported numerous instances where member organizations received claim forms for current employees who had no knowledge of filing for unemployment benefits. This fraudulent activity has serious financial implications for both employers and employees.

“If these fraudulent claims aren’t caught and stopped, employers could face significant costs for benefits they never should have paid, while employees might find themselves responsible for repaying benefits they never actually received,” said a TASB representative who requested anonymity due to the sensitive nature of ongoing fraud investigations.

Under Texas law, obtaining unemployment insurance benefits through misrepresentation constitutes a reportable violation of the Texas Unemployment Compensation Act. Both individuals and organizations are legally obligated to report suspected fraud, waste, or program abuse to the Texas Workforce Commission (TWC) for thorough investigation.

Unlike during previous high unemployment periods, the TWC cannot immediately void suspicious claims, creating additional challenges for employers. The commission has established a specific protocol for addressing suspected fraudulent activity.

Employers who receive suspicious claims should first contact the employee named in the filing to confirm they didn’t initiate the claim. Most legitimate employees are surprised to learn their identities have been targeted. Organizations should then respond to the TWC form, explicitly indicating the claim involves identity theft and noting if the named individual remains employed.

All suspected fraud should be reported through the TWC’s online fraud reporting portal. For cases involving broader TWC program fraud, employers should also notify the State Auditor’s Office.

For affected employees, the implications extend beyond unemployment benefits. Since these fraudulent claims often involve identity theft, victims should take immediate protective measures. The TWC recommends filing a police report in their city of residence, consulting the Federal Trade Commission website for guidance, and contacting one of the three major credit reporting agencies to place fraud alerts on their accounts.

“Identity theft can have cascading effects beyond unemployment fraud,” explained cybersecurity analyst Maria Rodriguez. “Victims should monitor their credit reports closely and consider freezing their accounts if there’s evidence of broader identity compromise.”

If bank accounts have been compromised, victims should contact their financial institutions’ fraud departments immediately. The TWC has established a process for confirmed identity theft victims to obtain identity verification documents either online or in person at participating U.S. Postal Service offices.

Employers are advised to review their quarterly unemployment statements with heightened scrutiny, watching for any suspicious claims that might have slipped through initial screening processes.

The TWC clarified that some legitimate unemployment claims from school employees during summer breaks, when they’re not scheduled to work, should not be confused with fraudulent activity. While these claims should still be properly evaluated based on Letter of Reasonable Assurance or contract status, they represent a separate category from intentionally fraudulent filings.

As this fraud trend continues across the state, authorities urge both employers and employees to remain vigilant about protecting personal information and reporting suspicious activity promptly.