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By Eva Velasquez, president and CEO, Identity Theft Resource Center 

  • The Identity Theft Resource Center (ITRC) expects to see the number of victims of COVID-19 identity crimes continue to rise in 2021. The ITRC’s new data shows an increase in identity crime victims being targeted multiple times (28 percent in 2019 versus 21 percent in 2018) before pandemic-related identity crimes. The ITRC expects to see victims targeted multiple times continue to rise. 
  • Right now, victim resources are not top of mind for many people. Since 2018, U.S. Department of Justice funds allocated for all crime victim services has fallen from a high of $3.7 billion to $1.9 billion. 
  • Focusing on just the dollar losses of identity fraud paints an incomplete picture because it does not consider long-term impacts or each victim’s unique situation. 
  • Additional pandemic-related benefits and stimulus payments due in early 2021 will also result in more identity crime victims linked to new benefit fraud cases.  
  • Join experts from the ITRC and the Federal Trade Commission (FTC) on Monday, February 1, at 10 a.m. PST (1 p.m. EST) for a free webinar, Protecting Yourself Against Identity Theft in the Age of COVID-19. 

The last year has been a difficult one for many people. Some have lost their jobs, others have had to close their businesses and many people have gotten sick or lost loved ones from the coronavirus. Another segment of people affected has not gotten as much attention: victims of COVID-19 identity crimes.  

The Impacts of COVID-19 Identity Crimes in 2020 

Millions of state unemployment benefit-related identity theft cases have been detected across the country since March 2020. On average, the Identity Theft Resource Center (ITRC) receives less than 20 inquiries regarding unemployment benefits a year. In 2020, the ITRC had more than 700 unemployment benefits fraud victims reach out for help. 2020 also saw a sharp increase in scams. Criminals had countless opportunities to trick people with phishing scams, charity scams, healthcare scams, disaster scams and work-from-home scams.  

What to Expect in 2021 

The ITRC believes COVID-19 identity crimes will impact victims well into 2021. Many victims may not be aware that their identity credentials were misused until they receive an IRS Form 1099 for non-wage income. The ITRC’s research also shows a significant increase in identity crime victims being victimized a second time, even before the rise in fraud, scams and identity crimes in 2020. The post-pandemic analysis should show an even greater spike.  

The Ripple Effects of the Pandemic-Related Identity Crimes 

Resources for identity crimes are not keeping pace with the criminals. Trends identified by the ITRC and many private-sector researchers show that profit-motivated cybercriminals are using consumer’s and employee’s bad security habits, as well as the changing work environment, to attack businesses more often. Yet, resources for cybersecurity training and education along with identity-related crime victim assistants are moving in the opposite direction. 

Since 2018, U.S. Department of Justice (DOJ) funds allocated for all crime victim services has dropped from a high of $3.7 billion to $1.9 billion. Discretionary DOJ grants awarded to victim services organizations dropped from $311 million in 2019 to $144 million in 2020. Funds to programs that support victims of identity crimes and compromises, cybercrime, scams and fraud have been reduced to $0. 

Meanwhile, the average ransomware payment has grown from less than $10,000 per incident in late 2018 to $233,000 as of Q3 2020, with some large enterprises reportedly paying ransoms over $1 million, according to cybersecurity firm Coveware. The most common root cause (55 percent) of ransomware attacks is stolen credentials to access a business system or network remotely. 

Measuring just the dollar amount paints an incomplete picture. A dollar sign does not take into account the trauma, downstream effects and lost opportunity costs for each of the victims whose identity credentials were misused. New ITRC research that will be published in May 2021 reveals an increase in identity crime victims being targeted multiple times. Nearly 28 percent of victims reported a second identity crime in 2019 versus 21 percent in 2018. At the ITRC, we expect to see that number continue to go up, especially after the rise in COVID-19 identity crimes.  

What It Means Moving Forward 

The data shows that COVID-19 identity crimes will continue in 2021, and more victims will suffer from the trauma of a second and even third identity crime. Someone that does not trust an infrastructure that has failed them will continue to disengage. Some victims cannot meet their basic needs or find a job because they cannot pass a background check until they get the fraud resolved. How long does that take? How does someone explain that to an employer? They are simply the victim of a crime that is not acknowledged to have the devasting life impacts that it does.  

The statistics show we are not winning the battle to protect ourselves from cybercriminals. Winning will require us to devote more resources toward assisting victims and devote more time and attention to educating consumers and employees of their need to be cyber-aware and vigilant. 

What to Do If You’re a Victim of Identity Theft 

If anyone believes their information may have been compromised, we suggest contacting us toll-free. Consumers can call (888.400.5530) or live-chat with an identity theft advisor to start their remediation process. Our experts will help advise victims on the best next steps for them to take.  

Learn more  

People can learn more about identity theft and COVID-19. Join experts from the ITRC and the FTC on Monday, February 1, at 10 a.m. PST (1 p.m. EST) for a free webinar, Protecting Yourself Against Identity Theft in the Age of COVID-19. We’ll explore topics including identity theft involving unemployment benefits, federal stimulus payments, Small Business Administration loans and more. Register here

The webinar is being held as part of the FTC’s Identity Theft Awareness Week, February 1-5, 2021. To find out more about the week’s events and the FTC’s free identity theft resources, please visit the FTC’s website

  • One of the first changes in 2020 due to COVID-19 was the delay in the regular income tax filing date. Soon after that, millions of out-of-work Americans began to receive enhanced unemployment benefits and special small business loans.
  • Soon after that, cybercriminals began to steal those benefits. The Department of Labor estimates that unemployment fraud could total as much as $26 billion. California alone has seen nearly $2 billion in unemployment benefits fraud.
  • With the 2021 tax filing season quickly approaching, many people will receive a 1099 form alerting them that they must claim income they never received from the benefits they never sought.
  • To learn more, listen to this week’s episode of the Fraudian Slip.
  • People can learn about taking advantage of the Internal Revenue Service (IRS) identity protection programs or reporting identity-related issues to the IRS at IRS.gov and clicking on the Identity Theft Protection link at the bottom of the home page.
  • If anyone believes they are a victim of tax identity theft or unemployment benefits fraud, they should contact the Identity Theft Resource Center toll-free at 888.400.5530 or live-chat on the company website idtheftcenter.org.

The below is a transcript of our podcast episode with special guest, IRS

Welcome to the Fraudian Slip, the Identity Theft Resource Center’s (ITRC) podcast, where we talk about all-things identity compromise, crime and fraud, including the impact identity issues have on people and businesses.

In a typical episode, we would focus on something that has happened or is happening that impacts consumers and businesses. Not today. We are going to talk about what’s about to happen, specifically the 2021 tax filing season.

It’s been nearly a year since the COVID-19 pandemic disrupted virtually every aspect of everyday life. One of the first changes in 2020 was the delay in the traditional income tax filing date. Soon thereafter, millions of out-of-work Americans began to receive enhanced unemployment benefits and special small business loans. Shortly after that, cybercriminals began to steal those benefits. The Department of Labor estimates that unemployment fraud could total as much as $26 billion. California alone has seen nearly $2 billion in unemployment fraud.

Fast forward to today, and the spike in benefits fraud is subsiding. However, a second round of victims may soon emerge. Benefits like unemployment payments are considered income and are taxable. Thousands of the unemployment payments made in 2020 were made in the names of people whose identities were misused – and they didn’t know it. With the 2021 tax filing season quickly approaching, many people will receive a 1099 form alerting them that they must claim income they never received from the benefits they never sought. That is on top of the usual identity-related income tax fraud the IRS sees each year.

We talked with Jim Robnett, the Deputy Chief of the IRS – Criminal Investigation Division, about the following:

Overview

  • Before 2020, the number of false income tax returns linked to identity compromises was already falling. What had the IRS done that was working so well to reduce tax-related identity theft?

Pandemic-Related Tax Issues

  • The most obvious change in terms of taxes in 2020 was moving the filing date. From the IRS perspective, what was 2020 like for you?
  • Anytime there is a mass injection of money into the economy, there is fraud. The IRS played a crucial role in delivering the stimulus checks approved by Congress. What kind of response did you expect from criminals, and what did you see? 
  • We know there has been a massive amount of unemployment fraud, and that has had tax implications for victims. Explain why that is and what taxpayers should do if they suspect or know they are the victim of benefit fraud?
  • What should taxpayers do who get a 1099 form they were not expecting?
  • What about small businesses or entrepreneurs who may discover someone took out an SBA loan or other pandemic benefit in their name?

2021 Tax Issues

  • What should taxpayers do to prepare for 2021?
  • The IRS recently announced the expansion of Identity Protection PINs. That’s going to be a great tool for preventing fraud. Explain how that works and what taxpayers need to do to take advantage of the IP PIN program?

For answers to all of these questions, listen to this week’s episode of The Fraudian Slip Podcast.

Learn More From the IRS

You can learn more about taking advantage of the IRS identity protection programs or reporting identity-related issues to the IRS at IRS.gov and clicking on the Identity Theft Protection link at the bottom of the home page.

Contact the ITRC

You can learn how to protect yourself from identity fraud, crimes and compromises – including the tax-related issues we discussed today, by visiting idtheftcenter.org, where you can also read more about the latest data breach trends.

If you think you are the victim of an identity crime or your identity has been compromised, you can call us, chat live online, send an email or leave a voice mail for an expert advisor to get advice on how to respond. Just visit the website to get started.