Overpayment Scam: Your State Unemployment Agency Is Coming for You and They Hope You Aren't Brave Enough to Fight Back
When COVID-19 hit, it turned the world and the economy upside down. In the U.S., unemployment skyrocketed as people were told to shelter in place. Only essential workers kept their jobs. I worked at Starbucks, one of the few businesses that stayed open, though many of its locations temporarily closed. For one month we were sent home with a reduced pay stipend and then we returned to work with reduced hours. For 6 months I was making far less than my regular 40-hour paycheck making it tough to pay bills.
Despite the hardship, I was fortunate to have a job. Many others weren’t as lucky, waiting weeks for unemployment benefits due to overwhelming demand. The CARES Act in March 2020 brought some relief. It provided an extra $600 weekly to those receiving unemployment, even for reduced hours. I qualified for these benefits, which helped cover rent and essentials.
Weekly, I had to certify my work hours to continue receiving aid. More hours meant less unemployment, and fewer hours meant more. This system worked well and helped me stay on my feet until a year later in 2021 when I secured a full-time job and stopped receiving benefits. Little did I know this lifeline would later become my biggest nightmare.
Unemployment Overpayment Nightmare
Three years after receiving unemployment benefits, I got an email demanding I repay $10,300 due to alleged overpayment. They claimed I hadn’t provided necessary information needed to prove my eligibility and gave me only 15 days to appeal. It was around the holidays and I was busy with travel and family, so by the time I even saw the email the deadline was already passed. I wasn’t even sure it wasn’t fraud or a scam at first because it made no sense. Confused, I reached out to the unemployment team through their messaging system. I got another email a month later with no answers to my questions, only a notice that I missed a hearing.
Suddenly, I was receiving bills and payment plans to repay this massive amount. I started researching online and found this wasn’t unique to me — many were facing similar demands. All over the country state unemployment offices were treating unemployment funds like loans and trying to recoup their deficits from Americans who suffered income loss in the pandemic. Even though these people, just like me had carefully followed all rules and provided all required documentation, they insisted we owed them money.
The Bigger, Sinister Picture
In my research online I found a website called Rektifire that offered services for people going through my exact issue, saying they could provide letters and information about how to appeal and get the unemployment office to stop hounding you for payments. Unfortunately, it cost $750 for access to their letters and assistance and there is no guarantee your state will drop the charges through this method. I did have a free consultation with one of their agents, Christian and he told me that apparently after the pandemic, many states had started acting like debt collectors trying to get back any money they could. He explained that states like Nevada, California, and Tennessee were aggressively pursuing unemployment repayments to cover their financial shortfalls. This might just be the beginning of a large-scale legal battle against state governments. What remains unclear is how they can legally do this and on what grounds can they claim that we owe back this money.
Traditionally, unemployment funds would only be requested to be repaid if you made an error on your reports and thus were overpaid, or committed fraud. But that’s not the case here. For my personal story the state was not saying I made an error, or that there was fraud. They were only claiming that I did not provide requested documents to support the fact that I was eligible for unemployment to begin with.
This is absurd because they already sent me notice that I did qualify for these funds when they originally paid them to me. In what world could the state find me eligible for funds, give me those funds and then 3 years later decide I am not eligible and request further documentation to maintain this eligibility at threat of taking it all back?
Furthermore, if that were reasonable wouldn’t they have to ask me for this evidence in order for me to provide it? But I received no letter requesting any evidence and when I asked what documents they requested I was not given an answer.
Upon finally calling the state department I was told that I actually needed to submit an appeal to appeal my appeal. Yes that is correct. You see, they decided randomly that I owed them money and I appealed that. But then they randomly sent me a court date after the fact and I missed that so my decision was considered final. From there I now needed to appeal the decision of the appeal. However, you only have 15 days after that decision to appeal your appeal. So I now had to submit an appeal to allow me to appeal the original appeal despite 15 days being past. Ridiculous right? I did appeal the appeal and in it I stated that the state had not been sending me any mail and I never received notice of this court date until after the fact via email.
Guess what? They responded a week later via snail mail. Now they suddenly knew how to use the mail system! The first letter I received from them stated that my appeal to the appeal of my appeal was denied because I did not provide adequate evidence that I was unable to attend the court date that I never knew about. Apparently, I am somehow meant to provide evidence that they did NOT mail me a summons. I guess I could try to call the USPS and see if they have some sort of record of what mail I did receive to prove their letter was not ever sent, but typically the party sending a court summons is required to send certified mail so that they can prove the letter was received. They did not, and that is what Christian, from Rekitfire, told me is the legal mistake that can actually help lawyers defend us against having to pay these funds.
Sadly most people in this situation it seems are just giving up and paying the government what it’s asking, which is exactly their goal here. They are bullying and scaring Americans with legal jargon and threats. Americans who only a few years ago had no employment due to a worldwide pandemic and events beyond their control. They know most of us probably can’t afford a good lawyer to fight their claims. This is how the unemployment system is becoming a threat to America. The State has found a legal loophole to pay back their deficit on the backs of the most vulnerable Americans.
Is this happening to you or someone you know?
If so please share your story. The only way we can fight back this injustice is by banding together and proving its not okay. If enough people with similar stories speak up we may even be able to start a class action lawsuit and put an end to these shady practices for good.
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P.S. Also here is a news story of a woman who experienced a similar issue. https://www.youtube.com/watch?app=desktop&v=oIkTRg3ylLo
She is one of those who sadly did not know how to fight the system and is paying back at great cost. What's worse is people online of course show no empathy and assume she must have done something wrong on her paperwork. While I can't account for everyone's story, I can say this issue is more likely the state trying to earn its money back or the state trying to hold citizens accountable for their clerical errors. A quick search shows it's more likely the state who made any clerical error and is now trying to make those who properly filed their paperwork pay for the states errors. This is currently a legal practice in many states. Even if your overpayment is due to the states clerical error, you are required to pay it back. "State government agencies are struggling to handle the influx of unemployment claims, leading to errors, audits, and repayments. This situation is often not the fault of the claimants. State agencies may determine a payment is improper after a claimant receives benefits based on new information that was unavailable initially [1]. Such challenges have been highlighted by reports indicating that states are still struggling to make timely unemployment payments to laid-off workers [3]. It's crucial for policymakers to address these issues to ensure that individuals receive the financial support they need during periods of unemployment."
In my case I don't believe myself or the state made an error because I know the amount I received was correct based off what my income was and what I was meant to be given. If I had received more than what I was owed I would have sent it back knowing that the state doesn't care who made the error. As it was I know I received what the law said I qualified for and I am now just trying to get the state to acknowledge my evidence.
Take a look at this news story, you will see its the unemployment agencies that need to be audited and held accountable, not those who qualified for benefits.
https://www.newschannel5.com/news/newschannel-5-investigates/audit-finds-tn-dept-of-labor-still-far-behind-with-paying-unemployment-benefits-on-schedule
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