Over $60 billion in fraudulent unemployment insurance benefits were likely paid out during the COVID-19 pandemic, according to a report released Monday by the U.S. Government Accountability Office (GAO).
However, the watchdog agency warned that the estimate is probably an undercount and the actual amount of fraud may be “substantially higher.”
The GAO made its estimate by applying the Department of Labor’s (DOL) lower-bound estimate for typical fraud rates (7.6%) to the roughly $849 billion pandemic benefits paid out between April 2020 and December 2021. The agency also rounded down to the nearest $10 billion.
The $60 billion figure is more than the $45 billion in fraudulent pandemic-related unemployment payouts estimated by the Department of Labor’s Office of the Inspector General (OIG) in a September report which announced that 1,000 people had been charged in connection with the fraud, as reported by The Dallas Express.
Republicans now in charge of the House Ways and Means Committee put out a statement saying Monday’s report by the GAO “only scratches the surface of what is publicly known about the unprecedented scope, size, and severity of the fraud.”
The chairman of the committee, Rep. Jason Smith (R-MO), added the following:
“This report proves what Republicans have already been saying. American families, whose wages have eroded under President Biden’s inflation crisis, have watched as hundreds of billions of their hard-earned tax dollars were lost to criminal activity and fraud because Democrats refused to acknowledge the problem and repeatedly rejected Republican efforts to put basic safeguards in place to protect against this activity.
“Congressional Democrats walked away from their oversight responsibilities of getting to the bottom of how this happened, what they could do to prevent it, and even how much has fully been lost, leaving criminals to profit off the backs of taxpayers. Republicans are committed to investigating fraud and conducting rigorous oversight on behalf of working families.”
Fraud within the nation’s unemployment system skyrocketed with the outbreak of the COVID-19 pandemic and shutdowns in March 2020 after Congress enacted new federally funded unemployment insurance programs that expanded eligibility.
One of the temporary programs allowed freelancers, gig workers, and others to collect benefits for the first time.
The report noted that the payments were meant to give people money to pay for food, rent, and utilities, but the new guidelines led to a situation where state unemployment agencies were overwhelmed.
Over 57 million unemployment claims were filed in five months, starting with March 2020.
Swamped with claims, DOL staffers relied on those filing them to provide accurate information.
Fraudsters took advantage, successfully receiving benefits by falsifying information, filing in more than one state, and using the personal information of dead people and federal prisoners.
There were also apparent efforts by organized crime groups to use stolen identities to try to collect benefits.
While the DOL has since taken some steps to combat fraud, the agency’s response was “ad hoc,” the GAO report states.
The report arrives as House Republicans are set to launch an investigation into pandemic-related benefits fraud, CNN reported.
House Oversight Committee chairman Rep. James Comer (R-KY) has sent letters to the DOL, its OIG, and the state labor departments in California, New York, and Pennsylvania, asking for additional details about any potential jobless benefits claims involving fraud. The DOL said it has received the letter and is reviewing it.
The committee will hold a hearing on “the rampant waste of taxpayer dollars in COVID relief programs” on February 1.
“We owe it to Americans to identify how hundreds of billions of taxpayer dollars spent under the guise of pandemic relief were lost to waste, fraud, abuse and mismanagement,” Comer said.