As if Americans didn’t have enough to worry about during the COVID-19 pandemic, now we have to deal with rising fraud.
How did it start? When Congress passed the CARES Act to help workers and their families during the lockdowns and shutdowns, they included a weekly $600 boost in the unemployment insurance (UI) program. This means that for many workers, being on unemployment has paid better than having a job did. In fact, the average unemployed individual is earning roughly $50,000 per year on UI, more than the average American worker.
This boost in unemployment has put the American recovery in jeopardy. In part due to many individuals refusing to return to work, small businesses across the country are struggling to hire back their workers, even as their states reopen and loosen restrictions.
Congress must end this boost. Not only is there likely irreparable damage being done to thousands of small businesses across the country, we’re seeing a spike in fraud—and it’s directly a result of the expanded benefits.
The U.S. Department of Labor estimates that as much as $26 billion in improper unemployment payments this year is directly attributable to the CARES Act. For perspective, $26 billion is roughly equal to the entire amount of all unemployment benefits paid out in 2019. These improper payments stem from work refusals, overpayments, payments to ineligible (some even dead) people, and international fraud rings.
Here are five states that are seeing that spike:
Oklahoma has seen more than 64,000 fraudulent unemployment claim attempts after teachers’ identities were stolen to make the claims. Now, state leaders estimate tens of millions of dollars in fraudulent claims may have been paid out just in the first few months of the pandemic
The Evergreen State has been one of the worst-hit states during COVID-19—and we’re not talking about the virus itself. Washington fell prey to the Nigerian fraud ring, and the state lost as much as $650 million. Portions of it have been recovered, but hundreds of millions of dollars may gone for good.
Steve Gray, the director of Michigan’s Unemployment Insurance Agency, testified that the boost in benefits and overloaded welfare systems created a “perfect storm for criminal activity” and it’s hurting the state. More than 540,000 potential cases of fraud have been flagged already this year.
Montana was hit hard by identity theft as people attempted to make fraudulent claims to collect the expanded benefits. Since late April, it’s estimated that Montana has lost roughly $10 million to fraud, and another $220 million in fraudulent claims have been attempted.
More than 5,000 claims have been investigated for fraud in Arizona, with many of them being the result of identity theft. They now must delay some payments to people who truly need them to try and stop the rise in fraud. State officials estimate that roughly 10 percent of the benefits the state has issued this year have been the result of fraud. To put that in perspective, this rate was just 4.2 percent last year.