What Is Employment Identity Theft?

Highlights:

• Employment identity theft is a type of identity theft that occurs when someone steals your Social Security number and other personally identifiable information to apply for a job in your name.
• Employment identity theft is illegal, and once you report it, government agencies such as the Internal Revenue Service, the Social Security Administration and the Federal Trade Commission work with you to correct any false information.
• Employers also have a responsibility to help safeguard employee information against identity theft.

Employment identity theft is a serious crime, and like any form of identity theft, it comes with frustrating consequences. Victims of employment identity theft can end up with a blemished work history, have difficulty filing taxes and, in extreme cases, even find themselves facing a tax audit.

Employers and employees alike should know how employment identity theft works — and how to protect against its damaging effects.

How does employment identity theft occur?

Employment identity theft is a type of identity theft that occurs when someone steals your Social Security number (SSN) and other personally identifiable information to apply for a job in your name. It usually happens when the fraudulent applicant has been disqualified for work in some way. For example, they may have difficulty passing a background check, have been incarcerated or simply have a poor employment history.

An employer that has hired an identity thief may report their wages to the Internal Revenue Service (IRS), meaning that you, the victim, owe taxes on income you didn’t earn. Unreported wages attributed to your SSN and other tax discrepancies that often result from identity theft can trigger an IRS audit. Your Social Security benefits may also be adjusted to your detriment based on the income falsely attributed to you. Victims can spend hours recovering from employment identity theft and working to restore their identity.

Employment identity theft is illegal, and once you report it, government agencies such as the IRS, the Social Security Administration (SSA) and the Federal Trade Commission (FTC) will work with you to correct any false information. Fortunately, there are a few steps you can take to help avoid employment identity theft.

How can you protect yourself against employment identity theft?

Although there’s no way to completely eliminate the risk of employment identity theft, the following strategies can help safeguard your personal and financial information:

• Keep personally identifiable information confidential. Stopping identity theft is as simple as keeping your personal information — especially your SSN — close to the vest. Leave your Social Security card at home in a safe place, and never provide your SSN aloud in public.
• Don’t store personal information on a work computer. Data stored on your work computer isn’t private. Keep your SSN, passwords and other information related to your identity safe from prying eyes.
• Use caution with public Wi-Fi networks and opt for a VPN if possible. A virtual private network, or VPN, helps protect your privacy and helps keep your personal information out of criminal hands by hiding your IP address and encrypting the data you send and receive when you connect to a public network. It’s important to note that you generally don’t have the same protections when using an unsecured Wi-Fi network without a VPN.
• Be aware of phishing scams. Phishing happens when someone uses an email, text, phone call or other form of communication to trick you into providing personal or financial information. Such communications often appear to be from a trusted, legitimate source. However, you can usually spot phishing scams if you look carefully for things like misspelled web or email addresses, grammatical errors and vague salutations.
• Use security software. Some phishing messages contain links that, when clicked, can install malicious software on your computer. Known as malware, this unwanted software allows thieves to collect passwords, your SSN and other sensitive information that can then be used to commit identity theft and other fraud. Use antivirus software to protect yourself from malware and other types of security risks.
• Lock your SSN with E-Verify. E-Verify is a U.S. government service that compares information provided by new employees with government records to verify an individual’s identity and employment eligibility. If your SSN has been compromised, E-Verify allows you to lock your SSN, preventing employers from hiring a fraudulent job applicant who is using your identity. You can unlock your SSN at your discretion.

How can employers protect against employment identity theft?

Employers can take actions to help protect employees from identity theft:

• Help employees identify scams. Keep employees up to date on common identity theft and phishing scams. Provide regular training to make sure they can identify red flags. Well-informed employees are less likely to fall prey to fraud.
• Implement digital security best practices. Avoid storing sensitive information on computers connected to the internet. If that’s not possible for any reason, the information should at least be encrypted. Make sure all computers have up-to-date security software with comprehensive antivirus and other protection.
• Screen employees handling sensitive information. Minimize the number of employees who have access to personal data. Be sure to screen them carefully and develop a detailed protocol to prevent any careless errors that might lead to identity theft.
• Provide identity theft protection as an employee benefit. Identity theft protection services can help victims intervene early by alerting them when their sensitive information appears online. Such services are an attractive benefit because they protect both employers and their employees.

What should you do if you’re a victim of employment identity theft?

Sometimes these preventative measures fail. If you receive IRS notices about wages you didn’t earn, W-2s from unfamiliar employers or an indication from the SSA that your benefits were adjusted, you may be the victim of employment identity theft.

If you suspect that someone has stolen your identity, you should immediately file a complaint with the FTC at IdentityTheft.gov or by calling 877-438-4338. They will create an individualized recovery plan appropriate for your situation.

You may also need to contact the SSA or the IRS, especially if someone has filed a tax return using your SSN. You can also choose to file a police report, particularly if you know who stole your information and have strong evidence against the culprit.

Placing a security freeze and initial fraud alert on your Equifax^® credit report through myEquifax are two ways you can help better protect your identity. You only need to contact one of the three nationwide consumer reporting agencies — Equifax, TransUnion^® and Experian^® — to place an initial fraud alert. That agency will then transmit your request to the other two.