According to the Government Accountability Office’s (GAO) recent report, approximately $45 billion was fraudulently claimed during the COVID pandemic for Unemployment Insurance (UI). The Department of Labor has taken steps to try to minimize such fraudulent activity, yet they have yet to incorporate prior GAO suggestions into a comprehensive strategy.
This has left the billions spent on COVID-related unemployment relief vulnerable to fraud over the past few years.
The Government Accountability Office (GAO) stated that without a strategy to combat fraud, the Department of Labor (DOL) cannot guarantee that the highest fraud risks to the Unemployment Insurance (UI) system are being addressed in line with the Fraud Risk Framework.
The government has reportedly invested $878 billion in unemployment insurance (UI) programs between the months of April 2020 and September 2022 to combat the job losses caused by the pandemic. Based on an evaluation of the UI system in the initial two years of the pandemic, the estimates of how much money was utilized in fraudulent claims can be calculated.
According to the report, state workforce agencies have identified $4.3 billion in fraudulent unemployment insurance (UI) payments. However, investigations into all such payments could total around $45 billion.
House Ways & Means Committee Chairman Jason Smith, R-Mo., stated that the report further demonstrates the need for Republicans to increase oversight of the Biden administration. Smith added that Democrats have neglected their duty to investigate how these fraudulent payments occurred, how to prevent them in the future, and exactly how much money was lost, permitting wrongdoers to benefit from taxpayer funds.
Meanwhile, the unprecedented surge in UI requests raised the threat of improper payments and exposed flaws in the system designed to prevent such payments. Additionally, more than 300 individuals have already been charged with fraud-related offenses for swindling the UI program.
Moreover, one individual misused the identities of other people to secure almost $4 million, and another collected $1.6 million by submitting fraudulent applications across 17 states. That was just two of what is suspected to be thousands or tens of thousands of bad actors.
The report also concluded that it is difficult to determine the level of fraud within the system, yet the Labor Department believes that up to $8.5 billion in UI claims were fraudulent in 2021. GAO suggested exercising caution when applying this estimate to the whole pandemic period, as it suggests that more than $60 billion in fraudulent payments were made.