Identity theft 101: what is employment fraud?

August 10, 11:36 AMIdentity Theft ExaminerJoe Campana

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Employment fraud involving identity theft occurs when a person, an identity thief, obtains employment by using a stolen or synthesized (made up) social security number (SSN). It is not uncommon for the identity thief to use the name, SSN and date of birth of the identity theft victim, although many thieves use their given name with a SSN. Employment fraud is a type of non-financial identity theft, and one of the fastest growing types of identity theft in 2008.

Synthesized SSNs may correspond to official SSNs already assigned to other people, which when used have the same negative effects on the rightful SSN holder.

Employers report wages earned under SSNs to state and federal tax authorities, which are in turn reported to the Social Security Administration. This type of fraud has the immediate effect of subjecting victims to additional taxation, tax audits, lost tax refunds, and errors on their government records that may take years to detect and to resolve.  

Employment fraud is a precursor to other types of identity theft.  Illegal workers often use the assumed identity to obtain other services after employment.  These include employer-provided health insurance, medical services, phones and utilities, rental housing,  government identification and benefits and credit.

Employment fraud is most often committed by illegal immigrants who want employment. Felons, uninsurable persons who may need health insurance, and others may also work under assumed identities. Some may be con artists who gain access to and steal employee and customer identities and account information through employment. Others are fraudsters that prey on their employer.

Not all employers, especially smaller ones, are law abiding, and some “turn their cheek” to the issue in order to fill vacancies with low-wage employees. They are at risk for federal and state penalties, and they open themselves up to risks and liabilities related to hiring dishonest employees.

The IRS has been issuing individual Taxpayer Identification Numbers (ITIN)to allow foreigners to work; many of them are believed to be illegal immigrants. Although this ITIN approach is contentious, it avoids the problems associated illegal immigrants that illegally use SSNs.

Law-abiding Employers can avoid employment fraud and reduce identity theft by checking the validity of the applicant’s SSN. Simple SSN verifications tell when, where and to whom it was issued. Verifications that are more detailed provide the current name and address of the person to whom it was issued. Any of this information can be used to determine a fraud. Small investigative firms can perform SSN verifications quickly and at a nominal fee for employers or employers can use the federal government’s E-Verify.