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Federal Watchdog Notes Pandemic Unemployment Fraud Could Top $45 Billion

UTC by Bhushan Akolkar · 2 min read
Federal Watchdog Notes Pandemic Unemployment Fraud Could Top $45 Billion
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The fraudsters exploited the Social Security numbers by filing multiple claims in different states and using suspicious emails.

In a memorandum on Thursday, September 22, the US Department of Labor’s Office of the Inspector General said that nearly $45.6 billion could have been paid fraudulently in pandemic unemployment benefits between March 2020 and April 2022.

This tally is nearly three times that of last summer’s estimate of $16 billion in fraudulent payments. The investigation also shows that there have been payments to the Social Security numbers of people who filed in multiple states. These users reportedly used suspicious email accounts in their claims.

Since March 2020, more than 1,000 people have been charged with crimes involving unemployment insurance fraud. Also, an alert last year found that Social Security numbers linked to prisoners as a high-risk area.

However, on Thursday, the inspector general’s office said that it didn’t have access to most of the data from the Federal Bureau of Prisons. As per the office, the payout of the pandemic aid since March 2020 tops more than $872 billion. Larry Turner, inspector general for the Labor Department said that this massive outflow of funds attracted people to exploit the unemployment program. This, resulted ” in historic levels of fraud and other improper payments,” as per Turner.

The Labor Department has agreed to the observations and assessment made by the inspector general’s office. The department remains committed to leveraging new tools and strategies to combat fraud.

Over the last two years, the state unemployment agencies have been overwhelmed with a record number of claims. However, some experts also believe that the total number of fraudulent payments would be much higher. During the pandemic, nearly 19% of unemployment money was misspent.

The Pandemic Unemployment Fraud Details

States in the US had to grapple with the major unemployment fraud post the March 2020 pandemic announcement. Many states also had antiquated technology leaving them unprepared to weed out fraudulent claims.

The fraud also led many states to temporarily freeze unemployment payments affecting thousands of other claims. Sen. Ron Wyden (D., Ore.), who chairs the Senate Finance Committee said:

“I’ve long said we need a national set of technology and security standards for state systems to better prevent this kind of fraud and we’re going to keep working to get our reforms passed”.

The reports of fraudulent claims just come at a time when the White House is seeking an additional $22.4 billion in fresh aid for COVID-19 from Congress.

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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