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More than $87 billion in federally funded unemployment benefits may have been withdrawn from the system during the Covid-19 pandemic, most of it due to fraud, according to a report from the US Department of Labor.
Congress authorized several new programs in the early days of the pandemic to support the millions of workers who lost their jobs. Those programs that Labor Day is over This year, it raised weekly benefits, extended the term of assistance, and expanded the pool of unemployed Americans eligible for payments.
The federal government released $872 billion in total benefits as of September 30, according to an estimate from the Labor Department’s Office of Inspector General, which released a semi-annual report. Report to Congress on Monday.
However, the “unprecedented” level of funding has led to high rates of theft and fraud, according to the watchdog that scrutinizes Labor Department programs and operations.
It estimates that 10% or more (at least $87 billion) of federal funds were likely lost due to “incorrect payments,” with “a significant portion attributable to fraud.”
(States, which administer benefits, may have issued some payments in error for reasons unrelated to fraud, such as processing errors or application errors from claimants.)
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Much of the criminal activity has focused on one temporary program, the Pandemic Unemployment Assistance Program, which has expanded assistance to the self-employed, temporary job workers and others who would not normally qualify for state unemployment insurance, according to labor experts.
Legislators initially allow program applicants to certify for themselves their qualifications for benefits. (This does not apply to traditional state benefits, which became available after more thorough verification).
The move helped accelerate aid to struggling families during the deepest economic downturn since the Great Depression. But the lenient requirements, along with a $600 increase in weekly benefits, prompted thieves to try to exploit the system.
Many unemployment frauds have been linked to the purchase of organized crime identity information Stolen in previous data breaches, the Labor Department said. criminals Use this data To apply for benefits on behalf of others.
said Andrew Stettner, senior fellow and unemployment expert at The Century Foundation, a progressive think tank.
“[However] “States haven’t had much time to build them up with the right protections,” Stettner said of temporary federal programs. “A permanent system would certainly help.”
Stettner said that while the high level of fraud is a problem, it does not diminish the overall success of pandemic-era programs, which reduce poverty and lead to a rapid economic recovery. Expanded unemployment benefits prevented 5.5 million people from falling into poverty in 2020, according to to the US Census Bureau.
Investigative work involving unemployment benefits has increased 1,000 times the usual amount during the pandemic, according to the inspector general’s report. Such work now accounts for 92% of the watchdog’s investigative inventory, up from 12% before the pandemic.
Lawmakers and states have taken drastic measures to try and curb theft.
For example, Congress passed the Relief Act in December 2020 that tightened some documentation requirements for collecting pandemic benefits. Many countries have implemented identity verification procedures. The Department of Labor also provides up to $240 million to states to help prevent and combat fraud in both traditional and pandemic unemployment programs.
However, some guarantees have The legitimate claimants are entrapped Aid is delayed.