Labor Department Commits $240M to Fight Unemployment Fraud

August 13, 2021

3 min Read

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The expansion of unemployment benefits at the start of the COVID-19 pandemic provided millions of Americans with extra money to weather the ensuing economic downturn — and also gave scammers a golden opportunity to defraud the government.

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Now the authorities are fighting back.

On Thursday, the U.S. Department of Labor said it will offer $240 million in grants to help battle unemployment fraud, CNBC reported. That funding is part of a larger $2 billion push to fix flaws in the nation’s unemployment system that have been exposed during the pandemic.

Attempts to steal unemployment benefits have risen sharply since the beginning of the pandemic, Labor Department officials say, with many criminals coming up with new and inventive ways to do so.

“What we’re seeing now is really terrifying. Fraud has gotten so big,” Michele Evermore, a senior policy advisor for unemployment insurance at the Labor Department, told CNBC.

No hard and fast numbers are available on how much unemployment money has been stolen. However, the Labor Department’s Office of Inspector General said the total of improperly paid benefits could reach as high as $87 billion, with much of that due to fraud.

Early fraud attempts largely involved a federal program for the self-employed, CNBC noted, along with other programs that let applicants self-certify their eligibility for jobless benefits. The self-certification programs were designed to deliver aid more quickly, but they also made it easier for scammers to game the system. The latest trend involves stealing benefits from legitimate applicants.

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Fraud attempts aren’t confined to just exploiting the system or stealing benefits from others, however. As the AP reported on Thursday, two New Hampshire men were charged with taking part in schemes to defraud government aid programs tied to the coronavirus pandemic.

See: Pandemic Fraudsters Swindled Nearly $500 Million From Americans — And They’re Not Finished Yet
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The men laid off employees from two companies they controlled, then directed the workers to keep working for the companies while also collecting unemployment insurance payments from the New Hampshire Employment Security agency. Those payments included the additional $600 emergency weekly benefits provided by the CARES Act, according to the indictment.

States can use the Labor Department grant money to bolster measures like identifying the verification of applicants, detecting and preventing fraud, cybersecurity, and recovering overpayments.

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