Unemployment Bonus Has Led to a Spike in Fraud, New Research Shows

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Naples, FL — New research from the Foundation for Government Accountability (FGA) demonstrates how the financial packages meant to assuage the unemployment spike caused by the coronavirus led to a dramatic increase in unemployment fraud.

The U.S. Department of Labor estimates that $26 billion of improper unemployment payments is directly attributable to the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Families First Coronavirus Response Act (FFCRA)—an amount equal to the total amount of unemployment benefits paid out in 2019.

The increased fraud numbers have come from individuals refusing to return to work or refusing suitable work, overpayments and payments to ineligible people, and a spike in international fraud rings taking advantage of state programs. 

“The $600 weekly unemployment bonus created by the CARES Act transformed the program into a goldmine for fraudsters,” said Josh Waters, senior research fellow at FGA and paper author. “Allowing the UI bonus to expire as scheduled will help reduce the incentive for fraud, decrease the inflated cost of fraud, and eliminate the driving force currently pushing people towards unemployment rather than work. Additional program integrity measures taken by states will ensure that fraudulent claims are caught and stopped, and that the system is there for those who truly need it.”

Read the full report here.

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The Foundation for Government Accountability is a non-profit, multi-state think tank that specializes in health care, welfare, and work reform. To learn more, visit TheFGA.org