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COVID Fraud, Overpayments, and Missing Money: How States Can Fix Their Broken Unemployment Insurance Systems to Restore Confidence

The Foundation for Government Accountability’s new paper details how UI systems lost $400 billion to improper pandemic payments, one state found 90 percent of claims to be fraudulent

Naples, FL—Today, the Foundation for Government Accountability (FGA) released a new research paper on must-pass reforms for states looking to restore confidence in their unemployment insurance (UI) systems.  

“During the COVID-19 pandemic, Congress expanded payouts with additional weekly payments of up to $600 extra, while lengthening the time individuals could receive benefits—turning a temporary benefit into a welfare-type dependency program ripe for fraud,” said Kristi Stahr, FGA research analyst. “Across the nation, the total loss to fraud has been staggering and without program integrity measures, the cheating will continue.” 

While misuse of government programs and wasteful spending is not new, payment errors increased significantly during the pandemic, more than tripling from 7.3 percent in early 2020 to 23.7 percent in spring 2021. Paying individuals to stay home only exacerbated the issue, with up to $400 billion lost due to improper payments during COVID-19.

When Congress removed the safeguards protecting states’ programs through pandemic-related “relief” for individuals facing hardship due to job loss, it created the perfect storm for fraud, waste, and abuse. But this so-called “relief” backfired and cost states and businesses alike by quickly depleting UI trust funds, fueling a historic worker shortage, and opening the door to billions lost in fraudulent payments and overpayments to ineligible enrollees.

“Had the program integrity solutions FGA proposes been in place, states could have prevented untold millions in taxpayer funds from being lost to fraud and abuse during the pandemic. That fact that we can’t calculate the exact number of fraudulent cases is terrible failure of government in and of itself,” said Hayden Dublois, FGA data and analytics director. “Data cross-checks, recovering overpayments, prosecuting UI fraud: These commonsense reforms have the power to restore trust in this leaky safety net and reestablish program integrity in unemployment systems nationwide.”


The Foundation for Government Accountability (FGA) is a non-profit, multi-state think tank that promotes public policy solutions to create opportunities for every American to experience the American Dream. To learn more, visit

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

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