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At least 10% of total claims were fraudulent. Cost more than triple total benefits paid in 2019
Unemployment fraud exploded during the COVID-19 pandemic, according to the U.S. Labor Department Inspector General’s semiannual report to Congress.
Approximately $872 billion in federal funding was allocated to unemployment benefits in the last year, and at least 10% was estimated to be paid “improperly, with a significant portion attributable to fraud.”
This means that at least $87 billion was lost to fraud, the report said. By contrast, $27.3 billion in total unemployment insurance benefits were paid in 2019, according to the Labor Department.
The major increase in fraud is labeled a “significant” concern by the inspector general.
The watchdog office attributes it to the pandemic economy and the “unprecedented” levels of federal funding for unemployment insurance through the Coronavirus Aid, Relief and Economic Security (CARES) Act, and other legislation. This “into the UI program gave individuals and organized criminal groups a high-value target to exploit,” according to the report.
Both factors have also made it difficult for the Labor Department to efficiently distribute benefits “while ensuring integrity and adequate oversight,” according to the report.