The notable rise in unemployment last year has put some in our local region at risk after a data breach at the Vermont Department of Labor (VDOL). The mix-up resulted in over 40,000 1099-G tax forms, containing Social Security numbers and other personally identifiable information, being addressed and sent to the wrong recipients. This breach was not the result of a cyber attack or hacker, but common human error. According to Vermont Labor Commissioner Mike Harrington, “It looks like the way the file was sorted caused the information to be shuffled”. This sticky situation underscores the need for data privacy and protection legislation. Even though these forms were sent via snail mail, there could still be serious digital implications.
Who was impacted?
The 1099-G form is used to report unemployment compensation or local and state income tax refunds. The 1099-Gs in question are those issued by the Department of Labor, not the Department of Taxes. Department of Labor forms will have “Unemployment compensation” in Box 1, Department of Taxes forms will not. The Department of Labor is sending out pre-paid return envelopes to all unemployment recipients and the documents must be returned to the Department, even if the information on it is correct. Department of Taxes documents are not defective and do not need to be returned.
What’s the risk?
“I think the risk here that people are concerned with is identity theft. I would caution anyone if they were to take information, that is a felony and you will be prosecuted,” said Vermont Attorney General T.J. Donovan. Those with suspect intent could use the information gained from other’s 1099-Gs to open fraudulent accounts in their name. Misusing a person’s PII is punishable by three years in prison and a $5,000 fine in Vermont. To help protect Vermonters, the state is providing $7 million worth of identity theft protection to those whose information was mistakenly sent to the wrong recipient.
What should I do?
If you receive identity theft protection from the state, use it! Beyond that, you can also monitor your own credit report for any suspicious activity such as newly opened accounts. To place an alert or freeze on your credit, you can contact the three major credit bureaus: Experian, Transunion, and Equifax. To read FAQs released by the VDOL, click here.