Government watchdog: Over $60B lost to pandemic unemployment benefits fraud

01/26/2023 / By Belle Carter

The Government Accountability Office (GAO) has stated in a report that more than $60 billion was lost to unemployment insurance fraud during the Wuhan coronavirus (COVID-19) pandemic.

According to the government watchdog’s report made public on Jan. 23, state workforce agencies proved $4.3 billion were fraudulently claimed. Moreover, at least $45 billion in transactions, while not confirmed, were flagged as potentially fraudulent. (Related: Government report reveals criminals stole BILLIONS from unemployment benefits during pandemic.)

It also noted findings from the Department of Labor (DOL) stating that about $878 billion in total unemployment benefits were paid out from April 2020 through September 2022. Regular unemployment insurance comprised $209 billion of that total, while about $669 billion in payouts under various pandemic unemployment programs comprised the remaining amount. Unemployment benefits formally ended on Sept. 6, 2021.

Since the figure is an estimate spread over the entire unemployment system, the GAO cautioned that the data should be “interpreted with caution.” The watchdog also questioned the DOL’s efforts to fight benefits fraud.

“The DOL has taken steps to address such fraud,” it pointed out. “However, the department has yet to develop an antifraud strategy based on leading practices from GAO’s Fraud Risk Framework as required by law. Without an antifraud strategy, DOL is not able to ensure that it is addressing the most significant fraud risks facing the unemployment insurance system.”

“Also, it has not yet addressed the six October 2021 recommendations GAO made including to identify, assess the impact of, and prioritize [unemployment insurance] fraud risks. These are essential pieces to inform an overall anti-fraud strategy.

Acting Assistant Labor Secretary Brent Parton responded by saying his department has the plan to ensure the integrity of the unemployment insurance program and is working to implement the GAO’s recommendations. He objected to the report’s instruction to complete those recommendations before it undertakes any new anti-fraud strategies.

“Instead of delaying antifraud efforts, the department is developing the UI fraud risk profile in tandem with ongoing anti-fraud efforts,” Parton stated.

House GOP to investigate unemployment benefits fraud

According to the GAO, the actual amount involved in the COVID-19 unemployment benefits fraud may even be “substantially higher.”

The House Oversight Committee chaired by Rep. James Comer (R-KY) wrote to the DOL and its inspector general’s office about fraudulent jobless benefits claims. Aside from the federal agency, state labor departments in California, New York and Pennsylvania also received letters from Comer.

According to the Republican congressman, the Biden administration has allowed fraud to run rampant in federal assistance programs and Democrats in Congress have conducted little oversight. He assured the public that this will change with the GOP controlling the House of Representatives.

“We owe it to Americans to identify how hundreds of billions of taxpayer dollars spent under the guise of pandemic relief were lost to waste, fraud, abuse and mismanagement,” he said.

The GAO’s report came a week before a scheduled hearing by the House GOP over “the rampant waste of taxpayer dollars in COVID relief programs” on Feb. 1. The Labor Department said it received Comer’s letter about unemployment benefits fraud and is now reviewing it.

Watch Fox Business host and former National Economic Council Director Larry Kudlow discuss the fraudulent spending of federal unemployment benefits.

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