Pandemic unemployment benefits fraud may top $45 billion, federal watchdog says


Some $45.6 billion in pandemic unemployment benefits may have been fraudulently paid to criminals between March 2020 and April 2022, the US Department of Labor’s Office of the Inspector General said in a memorandum on Thursday. It’s the latest report to identify widespread schemes to steal money from a variety of federal relief programs.

The updated figure is a big jump from the $16 billion in potentially fraudulent unemployment payments that the office cited in a June 2021 alert, which looked at claims from March through October of 2020. Since then, there were increases in payments tied to Social Security numbers of people who filed in multiple states, who were deceased and who used suspicious email accounts in their claims – all deemed high-risk areas.

The 2021 alert also found payments tied to Social Security numbers of federal prisoners to be a high-risk area. The office said in Thursday’s memorandum that it could not update that figure because of a lack of new data from the Federal Bureau of Prisons, which declined to provide it because of the burden the request would create on the bureau’s resources and technological platform, the inspector general’s office said.

Fraud within the nation’s unemployment system skyrocketed after Congress enacted a historic expansion of the program to help Americans deal with the economic upheaval sparked by the Covid-19 pandemic in March 2020. State unemployment agencies were overwhelmed with record numbers of claims and relaxed some requirements in an effort to get the money out the door quickly to those who had lost their jobs. Within five months, more than 57 million people filed claims for unemployment benefits, the inspector general’s office said.

“Hundreds of billions in pandemic funds attracted fraudsters seeking to exploit the UI program – resulting in historic levels of fraud and other improper payments,” Inspector General Larry Turner said in a statement.

States and Congress subsequently tightened their verification requirements in an attempt to combat the fraud, particularly in a new temporary program that allowed freelancers, gig workers and others to collect benefits for the first time.

A key component of the relief effort was a federal weekly supplement for out-of-work Americans. The jobless received a $600-a-week boost from April through July of 2020. Congress then revived the enhancement in late December 2020 but reduced it to $300 a week. That supplement expired in September 2021, though many states led by Republicans and one with a Democratic governor ended it earlier.

Lawmakers also created two other measures to aid the jobless. The Pandemic Unemployment Assistance program provided payments for freelancers, the self-employed, independent contractors and certain people affected by the outbreak, while the Pandemic Emergency Unemployment Compensation program extended payments for those who exhausted their regular state benefits. Those programs also ended by September 2021.

A total of…

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