Unemployment insurance fraud in U.S. totaled more than $60 bn

Unemployment insurance fraud since April 2020 could total more than $60 bn, according to a report by the U.S. Government Accountability Office.

While state workforce agencies have so far confirmed fraudulent claims totaling just $4.3 bn, at least $45 bn in pandemic unemployment insurance claims are flagged as potentially fraudulent, according to the GAO report.

The total fraud was over $60 bn and perhaps much higher.

Approximately $878 bn in unemployment insurance benefits were paid out between April 2020 and September 2022, with some states just beginning to uncover fraudulent claims that took place during that period. The Ohio Department of Jobs and Family Services, for example, confirmed last week that it is currently investigating a subcontractor suspected stealing more than $10 mn from the state’s unemployment system.

The GAO report adds weight to claims that the introduction of four new unemployment benefits programs during the pandemic put state systems under significant strain and let fraudulent claims slip through the cracks.

While the Department of Labor has taken steps to prevent, detect and respond to unemployment insurance fraud, including providing funding and guidance to states, these actions have not been sufficient.

The report recommends that the Labor Department develop an antifraud strategy based on the watchdog’s fraud risk framework. It also urges the department to address recommendations made in October 2021 to prioritize unemployment insurance fraud prevention and impact analysis.

Acting Assistant Labor Secretary Brent Parton wrote in response that his department does have a plan to ensure the integrity of the unemployment insurance program and is working to implement the recommendations. The report’s instruction to complete those recommendations before it undertakes any new antifraud strategies.

by Yana Keller