The Department of Labor’s (DoL) Office of Inspector General (OIG) determined that the agency – along with state workforce agencies – has paid more than $45 billion in unemployment insurance (UI) pandemic benefits to fraudsters, according to an alert memorandum published on Sept. 21.
The OIG alerted the Employment and Training Administration (ETA) to three specific high-risk areas they found to be vulnerable to fraudulent activity from March 2020 to April 2022: jobless aid filed from multiple states, from dead people, or from suspicious email accounts.
The watchdog has previously raised alarm bells regarding the fraud from pandemic benefits. In both February and June 2021, OIG issued memorandums to the agency identifying the same three high-risk areas – with a fourth fraud risk coming from Federal prisoners – that gave away $16 billion in fraudulent payments. They urged the ETA to issue guidance on UI data.
As of the most recent update, and $29.6 billion later, the department has not implemented the recommendations given to them over a year ago.
“ETA’s lack of sufficient action significantly increases the risk of even more UI payments to ineligible claimants,” the memo reads. “Our identification of the additional potentially fraudulent payments emphasizes the need for increased ETA engagement and assistance to mitigate fraud and protect the UI program’s integrity.”
The UI program is a joint Federal and state program, allowing states to administer their own pandemic benefits while following specific guidelines. However, each of the 50 states and territories use their own, unique systems that are often outdated.
President Biden requested an increase in DoL’s budget for fiscal year 2023 to tackle fraud in the UI program, including funding to support enhanced identity verification for UI applicants and help states develop and test fraud-prevention tools and strategies.
The third alert memorandum from the OIG gave the assistant secretary of employment and training three recommendations, including implementing immediate measures to ensure states are required to provide ongoing access to the OIG; make ongoing disclosures of UI information to the DoL OIG mandatory; and expressly make disclosures of UI information to Federal officials mandatory.
“Sufficient action has not been taken or implemented that would help mitigate and prevent even more potentially fraudulent payments from occurring,” the report concluded. “Our concerns remain regarding $45.6 billion in potential fraud in the four high-risk areas and regarding a more permanent solution to unfettered access to UI data.”
