Skip to Content

A Step-by-Step Guide to Ending Unemployment Fraud

Accountability, after a period of dormancy in Washington, D.C., is back.

Following two years of one-party rule in our nation’s capital, investigations are flying, spending is getting a closer look, and scams of all kinds are getting exposed and prosecuted. 

Some of the stories that are just now coming out are staggering—and point to the desperate and urgent need for government-wide reform.

  • Rampant COVID unemployment benefit fraud might be the single biggest waste of taxpayer dollars in American history. The House Ways and Means Committee estimates that as much as half of COVID unemployment benefits may have been stolen, up to $400 billion.
  • As many as 1,000 federal employees applied for and received unemployment benefits while being simultaneously paid to work remotely during the pandemic.
  • In the unemployment insurance program at large, as much as one in every four dollars in the program is lost to fraud.

Unemployment insurance, as a state-run program (with broad federal parameters), presents an opportunity for state leaders to seize the mantle of accountability and make a real difference in their state’s bottom line at the same time.

Here’s how:

  • Performing data cross-checks: States already have troves of data like new hire records, incarceration records, and participation in (and eligibility for) a variety of other state programs, and even something as simple as age. Allowing that information to work together can uncover fraud that otherwise is allowed to grow in the dark corners of the bureaucracy. 
  • Increasing administrative accuracy: Requiring intuitive tools like legislative oversight and regular data cleaning can prevent programs from running off the rails and should be a starting point for every state. 
  • Curbing improper payments: Stopping improper payments to ineligible recipients needs to happen before the money goes out the door, rather than forcing auditors to chase down improper payments months or years after the money has been spent.

These aren’t new, untested ideas. When Florida implemented data cross-checks, it detected more than 60,000 cases of unemployment fraud in less than a year, with a savings of more than $500 million. At least a dozen states have passed significant unemployment program integrity legislation to reduce waste, fraud, and abuse, including OhioVirginiaMontana, and many others. This is an opportunity for states to take what’s worked elsewhere and benefit from it.

At the end of the day, it’s also important to remember the real purpose of the unemployment insurance program: helping people get back to work as a temporary safety net, not a permanent income replacement.  

FGA has a broad suite of research to assist any state that wants strengthen and protect its unemployment system, including:

  • Research: Top five unemployment insurance fraud schemes—and how to stop them
  • Polling: Voters strongly support unemployment insurance reform, as a general goal and specific measures
  • Case Studiese.g., “How Tennessee supercharged its economic recovery by ending expanded unemployment benefits”

Obviously, we at the Foundation for Government Accountability are big fans of accountability at every level. We’ve been hard at work to deliver the accountability that taxpayers deserve—whether it’s strengthening integrity in our elections, stopping institutional scams like ESG, or supporting welfare reform that preserves resources for the truly needy. 

Read more about FGA’s efforts in reforming unemployment insurance—including ways to crack down on fraud—here


At FGA, we don’t just talk about changing policy—we make it happen.

By partnering with FGA through a gift, you can create more policy change that returns America to a country where entrepreneurship thrives, personal responsibility is rewarded, and paychecks replace welfare checks.