Monday, May 20, 2024
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You Won’t Believe the Amount of COVID-19 Relief Fraud (So Far)



Congress created four new unemployment insurance (UI) programs during the COVID-19 pandemic, but late last month the U.S. Government Accountability Office (GAO) reported that the programs have had at least $60 billion in fraud.

“U.S. Department of Labor (DOL) officials stated that the UI programs during the pandemic were a key target for fraud because fraudsters could receive a large amount of money in one payment. In its fiscal year 2020 Agency Financial Report, DOL acknowledged an increase in potentially fraudulent activity related to organized fraud schemes targeting the pandemic UI programs,” according to the GAO report.

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“Moreover, according to National Association of State Workforce Agencies (NASWA) officials, the UI system has faced unrelenting attacks by foreign organized crime groups during the pandemic. Also, in a March 2021 press release, the U.S. Secret Service noted that its early investigation and analysis indicated that international organized criminal groups have targeted UI funds using stolen identities to file for UI benefits.”

The four COVID-19 UI programs were:

• Pandemic Unemployment Assistance (PUA)

• Federal Pandemic Unemployment Compensation (FPUC)

• Pandemic Emergency Unemployment Compensation (PEUC)

• Mixed Earner Unemployment Compensation (MEUC)

“The PUA program in particular was at high risk for fraud due to its unique program rules and eligibility requirements,” according to the GAO report.

“Specifically, the CARES Act allowed PUA applicants to self-certify their eligibility and did not require them to provide any documentation of self-employment or prior income. In October 2021, we reported that relying on program participants to self-report and self- certify information on agency forms, instead of verifying such information independently, could cause an agency to miss opportunities to prevent program fraud and abuse.”

Since March 2020, the U.S. Department of Justice (DOJ) has publicly announced charges related to UI fraud. As of July 2022, at least 226 individuals faced federal fraud-related charges related to UI.

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DOL officials, meanwhile, reported that they have charged more than 1,000 individuals with crimes involving UI fraud since March 2020.

“The Department of Labor has taken steps to address such fraud. For example, it issued guidance, provided funding to states, and recommended improvements to state unemployment insurance programs,” according to the GAO report.

“However, the department has yet to develop an antifraud strategy based on leading practices from GAO’s Fraud Risk Framework as required by law.”

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