Pandemic Unemployment Fraud Totaled $46 Billion, Watchdog Says

Pandemic Unemployment Fraud Totaled $46 Billion, Watchdog Says

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A federal watchdog’s estimate of potential unemployment fraud during the pandemic has swelled to nearly $46 billion.

The Labor Department’s Office of Inspector General said in a report this week that it had identified and estimated $45.6 billion in potentially fraudulent unemployment payments obtained by individuals who filed claims in multiple states, used suspicious email accounts or used Social Security numbers of dead people or of federal prisoners. The total covers the period from March 2020 to April 2022.

The new estimate updates one from June 2021 that found about $16 billion in potential fraud (see details in the chart below).

The report said that 205,766 Social Security numbers of dead people were used to file fraudulent claims for pandemic unemployment benefits.

Labor Department Inspector General said that more than 1,000 people have now been charged with crimes involving unemployment insurance fraud since the beginning of the pandemic. “Hundreds of billions in pandemic funds attracted fraudsters seeking to exploit the UI program—resulting in historic levels of fraud and other improper payments,” he said in a statement.

Why it matters: Pandemic aid programs were purposely designed to pump money into the economy with relatively few safeguards that would have slowed the flow of funds. For that reason, they also proved to be inviting targets for fraudsters and criminals. This week also saw the Justice Department charge 47 people with stealing $250 million in pandemic aid funds meant to provide meals for needy children. The latest estimate of unemployment fraud “illustrates the immense task still ahead of Washington as it seeks to pinpoint the losses, recover the funds and hold criminals accountable for stealing from a vast array of federal relief programs,” writes Tony Romm of The Washington Post.