Are your employees who they say they are? Most people know that identity theft is a serious threat. However, they may be less aware of employment identity theft, a specific category of identity theft that has significant consequences for the employees and employers who become victims.
What is employment identity theft?
Identity theft occurs when someone assumes the identity of another person for fraudulent purposes, often for direct financial gain. For example, a fraudster might pose as another person to take out loans or credit cards in the victim’s name. Tax identity theft is another common problem, with identity thieves posing as another person to file fraudulent tax returns and claim tax refunds.
In employment identity theft, a scammer poses as another person in order to gain employment.
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Why does employment identity theft occur?
Before you can start a new job, you’ll typically be required to complete a background check. At a minimum, this includes verification that you’re authorized to work in the country. Employers may also check criminal background, driving history and even credit, depending on the position.
Employment identity theft may occur because someone wants a job but knows they will not pass the hiring checks. There are many situations in which this may happen. For example, someone may not be authorized to work in the United States. Alternatively, someone who has been convicted of a felony in the past might engage in employment identity theft to avoid being denied employment. A person who is currently attempting to evade the authorities might also engage in identity theft.
Employment fraud also occurs when a thief steals someone’s credentials in addition to their identity. For example, if the thief wants to work as a nurse but does not have a nursing license, they might try to assume the identity of a qualified nurse when applying for jobs.
Why is employment-related identity theft a problem?
If someone steals another person’s identity to secure a job, there can be serious consequences for the victim.
Tax complications are a common issue. If an identity thief is using an individual’s Social Security number to work, the wages and tax obligations will be tied to the victim’s name. As a result, the victim could owe income tax or lose out on a refund. If the victim is a retiree, their Social Security and Medicare benefits could even be impacted.
Beyond the financial implications, there is potential for reputational harm. What would happen if someone using the victim’s identity performed poorly or did something unethical? This is especially a concern when an identity thief steals someone’s professional credentials in addition to their Social Security number.
Since employment identity theft can also cause harm to the employer, this is a critical issue for HR departments and businesses. Employers usually establish requirements for a job for a reason. For example, a trucking company may require all drivers to have a clean driving history. If someone with a history of DUIs uses identity theft to secure a position, the driver could pose a risk to both the company and other drivers on the road.
Recognizing Signs of Employment-Related Identity Theft
Employment identity theft is often discovered when victims realize that something strange is happening with their taxes. For example, victims might receive a W-2 or 1099 form from an employer they don’t recognize, or the Internal Revenue Service (IRS) may notify them of a discrepancy in their tax filings, such as a duplicate filing or additional income.
Likewise, victims might realize that something is amiss when they interact with the Social Security Administration. For example, their Social Security Administration benefit statements may include income from a job they never had.
Background and credit checks can also provide evidence of employment-related identity theft. For example, a strange employer showing up on a credit report could be a sign of identity theft.
Employees and employers should take any discrepancies involving income or employment very seriously and investigate them further. Although there may be a milder explanation, such as a data entry error, it could indicate a case of employment identity theft, which should be resolved quickly before more serious issues arise.
What to Do if You’re a Victim of Employment Identity Theft
If you believe or suspect that you or an employee may be the victim of employment identity theft, take the following actions:
- Report the identity theft to the Federal Trade Commission (FTC) at gov.
- Report the identity theft to your local police department. Although the police may not be able to do much in the way of investigation, it can be helpful to have a record of the police report as you try to correct your employment history. The police department may also have resources and advice to help you.
- Check your credit report and dispute any errors. You may also want to freeze your credit or place a fraud alert on it. Visit gov for more information.
- Notify the IRS. If the IRS has sent you a notice stating that you may be a victim of identity theft, follow any instructions given in the notice. For more information, go to the IRS website.
- Notify the Social Security Administration (SSA). For information on how to report fraud, see the SSA website.
- Notify the employer. If possible, contact the employer that has hired the identity thief to explain that someone is misusing the identity.
How to Prevent Employment Identity Theft
Both individuals and employers have a role to play in identity theft prevention. Taking a few proactive steps now could help you avoid major consequences later.
Individuals should take steps to protect their Social Security numbers, as these are commonly used for employment identity theft. For example, avoid carrying your Social Security card with you to prevent losing it or having it stolen, and be cautious about where you share it. Watch out for phishing scams and fake job scams, as these may steal your information in order to use it for identity theft. If you believe your information has been stolen or compromised in a data breach, place a fraud alert on your credit. You should also consider freezing your credit if you will not be applying for a loan in the near future. The FTC has more details on this process on their website.
Employers should vet job candidates carefully by carrying out background checks and verifying credentials. It’s also helpful to train HR professionals to spot and respond to employment identity theft. When training employees on cyber security practices, include information on employment-related identity theft. Adding identity theft protection services or insurance to your employee benefits package may also be a good idea.
HR teams have a lot on their plate – watching out for employment identity theft is just one of their many responsibilities. Do you need support? Higginbotham offers HR services, including HR outsourcing and HR consulting, that can help lift your HR team’s burden and allow them to focus on core tasks. Talk to one of our HR professionals to learn more.