Michigan unemployment insurance fraud is a serious crime that affects everyone, from Michigan workers to businesses to the state as a whole.
There are three types of UI fraud: employee fraud, employer fraud, and identity theft. For every type of unemployment insurance fraud, criminals can face penalties, prosecution, and monetary fines.
Michigan Employee Fraud
Employee fraud, also known as claimant fraud, is a type of unemployment fraud that involves a claimant knowingly and purposely misrepresenting information in order to receive unemployment benefits.
There are many ways claimants can commit employee fraud. Here are some examples:
- Filing a false claim
- Working full-time or part-time while collecting unemployment compensation without reporting your hours and earnings to MARVIN
- Giving fake work search efforts when you file your weekly claim
- Not reporting refusals of job offers
- Supplying the Michigan Unemployment Insurance Agency with false or deceptive information
- Not disclosing vacation/holiday pay, severance pay, or any other types of pay you were given after separating from your job
- Being dishonest about the reason your job ended
- Using someone else’s name or Social Security number to work while on unemployment insurance
- Having someone else complete your biweekly certifications or Michigan unemployment application
- Not reporting being unable or unavailable to work (such as being sick, injured, or on vacation) while receiving unemployment benefits
- Keeping an overpayment
Claimants who commit employee unemployment fraud can face criminal prosecution, which may include jail time, community service, loss of future unemployment benefits, and/or fines of up to 4 times the amount that you fraudulently collected.
Michigan Employer Fraud
Another type of unemployment fraud is employer fraud. It occurs when an individual or business takes illegal actions to avoid tax liability.
The following examples all count as employer fraud:
- Misrepresenting or giving false information that prevents a claimant who otherwise meets the Michigan unemployment eligibility requirements from collecting unemployment benefits
- Reporting incorrect wages
- Purposefully miscategorizing a worker as an independent contractor
- Paying workers “under the table” to avoid having to pay taxes
Michigan Identity Theft
Identity theft, on imposter fraud, is the third kind of unemployment insurance fraud. It happens when an individual uses someone else’s personal information, like name, Social Security number, or employment history, to steal their identity and use it to illegally collect unemployment insurance benefits.
Here are some ways to tell if someone is using your stolen identity to claim Michigan unemployment insurance benefits:
- You tried to file an unemployment claim but were notified that there was already one under your name.
- You got a Michigan Unemployment Insurance Agency unemployment determination letter in the mail, but you never applied.
- You received an IRS statement or tax form for unemployment benefits you never claimed.
- Your employer told you that an unemployment claim was filed in your name while you were still working.
It’s important to report identity theft and unemployment fraud as soon as you think it might be happening to you. The faster you report fraud, the quicker the fraudulent claim can be put to a stop.
How to report UI fraud and identity theft
If you believe you may be a victim of identity theft or that someone you know is committing employee or employer Michigan unemployment fraud, take action immediately.
You can report fraudulent unemployment claims online or over the phone. To report fraud online, visit the MiWAM portal. Click on the “Report Fraud or Identity Theft” button.
In your report, be sure to include as many details as possible, including:
- The name of the person committing unemployment fraud
- The type of fraud being committed (employee, employer, or identity theft)
- When the fraud happened and if it is still happening
- Exactly what an individual is doing that makes you suspect they are committing unemployment fraud
If you would prefer to report an unemployment fraudulent claim over the phone, you can also contact the Michigan UIA Claimant Hotline at (866) 500-0017.
What is an overpayment?
An overpayment happens when you collect unemployment benefits that you are not eligible to receive.
Overpayments can occur if you make a mistake when certifying, are not available to work, or provide misleading or false information when you file an unemployment claim. If this happens, you will receive a letter in the mail notifying you about an overpayment with instructions on how to repay it.
If you receive an overpayment while you are still on unemployment insurance, then 50% of your weekly benefit amount will be taken as recoupment until the amount of the overpayment is paid back in full. If fraud was involved, then 100% of your weekly benefits will be taken.
Interest on overpayments is accrued at a rate of 1% every month until you pay it back. Interest will continue to increase until the entire amount of the overpayment is paid off.
Failure to pay back an overpayment qualifies as fraud, and you can be penalized in any of the following ways:
- A garnishment can be taken from your wages as recoupment
- You may forfeit the right to collect unemployment benefits in the future
- Your United States Federal and Michigan State income tax returns can be taken as payment
- You can be criminally prosecuted for a felony
- Any lottery winnings you collect over $1,000 can be seized
How to protect your personal information
Identity theft is taken seriously in the state of Michigan.
In 2021, Gov Gretchen Whitmer signed an executive order to combat identity theft with a UI Fraud Response Team task force. New identity verification systems to protect Michigan residents from identity theft are being developed every day, but it’s still a big issue that you should be aware of and take precautions against.
There are many steps you can take to prevent yourself from falling victim to identity theft, including:
- Being careful about sharing your Social Security number. Only provide it when necessary to legitimate organizations and websites.
- When you contact the Michigan Unemployment Agency, give them your MIN number instead of your Social Security number.
- Review your credit report every year to ensure there are no accounts under your name that you did not open.
- Shred old cards, bank account statements, receipts, and credit offers to keep your personal information safe.