Top Five Unemployment Insurance Fraud Schemes—And How to Stop Them

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The unemployment system has long been plagued by waste, fraud, and abuse. But through pandemic-related federal programs, Congress has only made fraud more lucrative and easier to commit. Congress expanded unemployment program eligibility, extended program duration, and even provided a bonus on top of state-paid benefits—making fraud pay better than ever. To make matters worse, the federal government suspended the Benefit Accuracy Measurement program in 2020, a tool used to detect improper payments and verify program eligibility.

The COVID-19 pandemic has made clear that many states lack sufficient safeguards on their unemployment systems, enabling fraudsters to bilk taxpayers out of billions of dollars. The lack of safeguards allowed fraudsters to file for benefits in multiple states, use stolen identities, claim benefits from behind bars, and more. As a result, taxpayers could now be on the hook for more than $300 billion in improper unemployment payments.

Thankfully, states have tools readily available to shut fraud schemes down. But they must act quickly. Further delays will only mean higher taxes on employers as the state tries to replenish funds decimated by fraud.