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Businesses frustrated over unemployment fraud

Posted at 3:39 PM, May 26, 2021
and last updated 2021-05-31 10:06:56-04

(LEX 18) — "Rebecca Flood" applied for unemployment insurance with the Kentucky Retail Federation. The Kentucky Retail Federation says they've never heard of her.

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It's just one of many examples of unemployment fraud that businesses are facing.

At the KRF, six fraudulent claims have been filed. Five of them had names the staff didn't recognize. One was filed in the name of a current employee, who hadn't filed a claim.

"It's definitely been a headache for them and we've actually had small businesses that get 20 or 30 claims a week for people who've never worked there," State Attorney General spokeswoman, Lindsey Hix, said.

Steve McClain, spokesman for KRF, would have to agree. And he said it's been a headache for more businesses than theirs.

"It's frustration here and among our members, as we've gotten calls from several of our members," McClain said.

He added that it can be especially frustrating for smaller businesses that are short-staffed and trying to hire employees. Instead of focusing on that, they have to deal with these claims.

Ignoring them isn't an option, according to Hix. She said if a business does not deny a fraudulent claim, the business could be liable for paying the fraudster.

In addition to denying the claim, she suggested reporting the fraud to the Attorney General's Office as well.

"We're going to turn around as well and report it to UI. So, it's duplication but a lot of times that's a good thing to do," Hix said.

To report a claim to the AG's Office, go to ag.ky.gov/scams. You can also call 800-804-7556.

"How they're getting targeted, I'm not sure, but it's definitely a frustration and something they're definitely ready to move on and not have to deal with anymore," Hix said.

However, moving on can be tough, especially since McClain said the U.I. Office has not confirmed whether the fraud has been taken care of. KRF members also wonder if it will affect their UI rates.

"They're wanting to keep an eye on that to make sure they're not getting dinged for what they pay into the system because of a fraudulent claim," McClain said.

LEX18 reached out to the UI Office to ask whether this is a valid concern, and Kentucky Labor Cabinet Information Officer, Kevin Kinnaird, replied with a statement that may bring some relief to concerned business owners.

"With several measures taken by the state and federal government, some of which will continue through August, employer contribution rates would not be affected by unemployment fraud during 2021 or 2022. The Governor also reached a bipartisan agreement with the General Assembly to set aside $575 million of the state’s American Rescue Act funds to help pay back interest and principle on the federal unemployment insurance trust fund loan Kentucky took out early last year during the pandemic. In the coming months, the Governor will repay the entirety of the unemployment insurance loan. Given all of these actions already taken to prevent employer rates from increasing, the Kentucky General Assembly can again take action during the 2022 legislative session to freeze rates if needed."

McClain said there is good news, though. The fraud amongst the KRF's members has seemed to slow since the State briefly shut down the system back in April to stop fraud. For KRF, they haven't seen a fraud case since February.

Even so, it's still happening amongst members and McClain said he hopes it gets fixed soon.