BUC - Fraud Information


Unemployment Insurance Fraud is a crime, and it affects everyone. It drives up unemployment taxes for businesses, and is frustrating and time-consuming to resolve problems. Individuals who commit fraud are subject to penalties, interest, and/or criminal prosecution. If you suspect someone is committing unemployment insurance fraud, please tell us about it.

Both benefit recipients and employers can avoid serious costs and consequences by learning more about their roles and responsibilities when it comes to providing required information for collecting benefits or reporting employee data.
Here are some common examples of fraud that may surprise you:
  • You return to work but continue to collect UI benefits without reporting the work and wages to the EDD.
  • You work a temporary or part-time job but do not report your earnings, so you are collecting more benefits than you are allowed.
  • You withhold information or give false information when filing a claim or certifying for benefits.
  • You pay your employees under the table and don’t report the wages to the bureau of unemployment insurance.
  • You do not report when you hire new employees or you report incorrect start dates.
Fraud Detection: The bureau conducts cross-matches with several data sources and when we find instances of someone collecting benefits he or she was not eligible to receive, an overpayment is established. Overpayments due to fraud are subject to penalties including denial of benefits, and paying back money the claimant was not entitled to receive. Overpayments can also result in higher taxes for employers whose annual contributions pay for unemployment benefits for their former workers.

If you think someone is committing unemployment insurance fraud, it is important that you let us know about it. All allegations of fraud are taken seriously, and you can remain anonymous. Please note that the bureau will not disclose your identity unless required by law. If you wish to remain anonymous, DO NOT include your personal information.

The bureau of unemployment insurance offers several options for reporting fraud such as: unemployment insurance or payroll tax fraud:

Fraud FAQ's

Fraud FAQ for Claimants

1. What is Unemployment Insurance Fraud?

Collecting Unemployment Insurance (UI) benefits based on providing false, misreported, or unreported information is considered committing UI fraud. If you are filing a claim, reopening a claim, or certifying for UI benefits, you are legally responsible for making sure you follow the requirements set by state law. Examples of UI fraud could include:

  • You return to work but continue to collect UI benefits without reporting the work and wages.
  • You do not report wages during the week that the work was performed.
  • You work a part-time job but do not report your earnings, so you are collecting more benefits than you are allowed.
  • You perform temporary work while collecting UI benefits, but do not report these earnings when certifying for benefits.

You withhold information or give false information when filing a UI claim or certifying for benefits. If you commit UI fraud, then you could face a variety of serious penalties. These include:

  • Losing the eligibility to collect UI benefits in the future.
  • Forfeiting future income tax refunds.
  • Repaying the UI benefits collected, plus penalties and interest.
  • Prosecution by government authorities.
  • Possible jail or prison sentences.

2. How to Avoid Committing UI Fraud When Collecting Benefits

To avoid penalties for committing UI fraud:

  • Report wages during the actual week when you worked and earned the wages—NOT when you receive your pay.
  • Report total wages earned. Total wages are all earnings or income before deductions.
  • Report all work for which you will receive wages. This includes tips and self-employment such as internet business.

Fraud Prevention for Employers

1. Minimize employer UI costs

Employers can take an active role in reducing improper UI benefit payments by providing important information in a timely manner. Employers are required to:

  • Report all new hires / re-hires to the State Directory of New Hires within 7 days.
  • Respond to requests for verification of employee earnings in a timely manner.
  • Provide timely and accurate employee separation information and any other known potential eligibility issues by the due date.

2. Avoid higher UI taxes

Tax-rated employers are taxed based on the amount of UI benefits paid to former employees. Reimbursable employers must pay the full costs of the improper payment paid. Benefits are paid, or not paid, based on information provided by unemployed individuals seeking benefits and information provided by the employer. If information from employers and/or information requested by the Bureau is not received in a timely manner, benefits may be paid to unqualified individuals

Accurate and timely verification of employee weekly earnings, when requested, ensures that the correct amount of UI benefits is paid and that improper payments are detected and prevented.

3. Prevent overpayment of UI benefit payments

In Maine, UI benefits are funded by employer taxes. Improper payment of UI benefits may result in higher taxes to all employers. UI benefits allow qualified unemployed workers to continue to buy goods and services.

An improper payment of UI benefits means that a claim for benefits was paid in error. An improper payment of benefits can result when inaccurate information is provided by the claimant or employer, or when information is not received by the Maine Bureau of Employment Insurance in a timely manner. Once an improper payment is detected, the claimant is notified of an “overpayment.”

Did you know…

  • UI benefits to qualified unemployed workers are funded by employer UI taxes.
  • The U.S. Department of Labor estimates that in Calendar Year 2010 more than 11% of UI benefits in the nation were paid improperly, usually because of inaccurate or missing information from employers and claimants.
  • Improper payment of benefits is a serious problem that has a financial impact on employers and can result in higher UI taxes to all employers.
  • The best way to prevent improper payments is through the New Hire Reporting at DHHS.