A Texas employer opens the mail and finds a Notice of Application for Unemployment Benefits naming an employee who is still on payroll and still coming to work. An employee opens the mail and finds a Texas Workforce Commission debit card, a claim confirmation, or — months later — a 1099-G reporting unemployment income that never reached them.
These are imposter claims. Criminals file them using Social Security numbers and personal information stolen in unrelated data breaches. The information on the claim is real. The claim is not.
The Texas Workforce Commission has confronted this problem at scale, and periodically reports significant surges in fraudulent filing activity. What follows is the correct response sequence for both sides of the payroll relationship — and several places where the intuitive response is the wrong one.
The warning signs are usually administrative rather than dramatic:
Fraudulent claims frequently contain small errors — a misspelled name, a transposed Social Security number, a maiden name — because the perpetrator is working from partial stolen data. Those errors do not make the claim harmless. They make it harder to untangle later.
The employer response is time-sensitive, and it is the intervention most likely to stop payment before money leaves the system.
Respond to the Notice of Application through Employer Benefits Services. Under Separation Options, select “Still Working” or “Never Worked Here,” as applicable, and note the fraud in the Separation Details box. Prompt employer responses allow TWC to identify imposter claims and lock the accounts before benefits are disbursed.
Do not treat the notice as routine. Some employers, as a matter of policy, do not contest unemployment claims. That policy should not extend to claims filed in the names of current employees. A non-response on an imposter claim is a response, and it removes the fastest check available.
Notify the affected employee. The employer’s response addresses the employer side of the record. It does not substitute for the individual identity fraud report, which only the affected person can file.
Keep documentation. Retain the notice, the date and content of the response, and any confirmation received. If the claim later generates a tax-rate dispute or an overpayment issue, that record is the defense.
Do not complete ID.me verification for a claim you did not file. This is the single most important step, and it is counterintuitive. TWC uses ID.me to verify claimants, and completing verification on a fraudulent claim confirms it as legitimate. The Texas Attorney General’s office has issued the same warning: if you did not file the claim, do not complete the verification.
Report the identity fraud through TWC’s online portal. Provide your name, Social Security number, and contact information, and indicate that you did not file the claim. Two mechanical points matter here. First, unemployment ID fraud can only be reported online — it cannot be reported over the phone, by email, or anonymously, and the general TWC fraud hotline is not an available channel for it. Second, the report should be submitted only once. Duplicate submissions do not accelerate the investigation.
Report the stolen Social Security number to the FTC. Filing at IdentityTheft.gov generates an official recovery plan and supports later disputes with creditors.
File a police report. Contact the police department where you reside, report the identity theft, and obtain an incident report and number.
Notify the Social Security Administration. A Social Security number used to file a fraudulent benefits claim is a number in active circulation, and the exposure rarely stops at unemployment.
Freeze your credit. Place a free security freeze with Equifax, Experian, and TransUnion. A freeze blocks new accounts from being opened in your name and is the most effective single measure against downstream misuse.
If a fraudulent claim results in payments, TWC may issue a 1099-G in the victim’s name reporting income the victim never received. Left unaddressed, that creates a real federal tax exposure for money that went to someone else.
The correct sequence, per IRS and Department of Labor guidance:
Once TWC confirms that a claim was filed using a stolen identity, the individual named on the claim is not responsible for any resulting overpayment, and the employer’s tax rate or reimbursement obligation is not affected.
That confirmation is the objective. It depends on reports filed through the correct channel, filed early, and supported by documentation. The alternative — an unaddressed claim that matures into an overpayment demand, a collection notice, or a tax assessment — is considerably harder and more expensive to unwind after the fact.
Most imposter claims resolve through the administrative process described above. Legal involvement becomes appropriate when:
Gibson Herod Law advises Texas businesses on employment, regulatory, and commercial matters, and represents clients in litigation when administrative processes fail to resolve them. The firm serves clients throughout the Dallas-Fort Worth area and across Texas.
Visit gibsonherod.com to learn more.
This article is provided for general informational purposes and does not constitute legal or tax advice. Agency procedures change; confirm current reporting requirements with TWC and the IRS. Consult a qualified professional regarding your specific circumstances.
