Using Cyber Currencies to Inflate WC Claims

In workers’ compensation, an injured worker with multiple business enterprises (jobs or gig business) creates a more complex claim because the wages earned from ALL income sources need to be added together when calculating wage benefits. The rise of cyber currency apps like Venmo and CashApp creates the risk of award inflation through combining non-work and work payments into a larger benefit award.

Apps like Venmo or CashApp are now mainstream ways to easily move money between individuals, and are often used as a way to quickly pay a gig-sized vendor. But these apps can cause confusion in a workers’ comp claim scenario because the recipient of Venmo payments may not be very good at book keeping, blending together personal and business payments into a single stream of income used to inflate their WC award.

The best way to describe the risk is through an example. Let’s talk about our injured worker “Todd” who works for a retail store, but does auto mechanic work on the side. He uses cyber currency app Venmo as his payment method for all of his mechanic work.  Venmo records transactions, but does not necessarily tie payments to an invoice or tax id number. (see this helpful article about Venmo payments being considered “cash” transactions by the IRS)

Further complicating the matter, let’s assume last month was Todd’s birthday, and his favorite aunt sent a $500 Venmo payment for his birthday, Then his parents send an unrelated rent payment of $3000 in the same month, also using (you guessed it) Venmo. In this scenario, Todd has a Venmo account with a lot of transactions but no clear labels for the transactions, or ties to invoices for the transactions, because Todd does not have experience with business accounting and performs most of his work on a ‘handshake contract’.

In an injury claim, Todd  could submit gross revenue for his business of $4500/month based on the activity log on Venmo.  What should an adjuster accept as basis for your wage benefit calculation or, more importantly, how do you dispute any of it?  Return to work becomes even more problematic especially when the claimant has the agenda of staying off work to continue working on his rapidly growing, successful business.

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