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Most of $163B in Unemployment Fraud May Never Be Recovered

Sareena Brown-Thomas had just arrived home from her shift as a custodian when she noticed an envelope in the mail from the Washington, D.C., government. Bearing her name, address and the last four digits of her Social Security number, the letter said she had been awarded unemployment benefits. That was a problem because she had never applied for them. Brown-Thomas is part of a sprawling community of victims caught up in a massive series of attacks targeting the nation’s generous coronavirus aid programs. The more than $5 trillion approved since the start of the pandemic has become a wellspring for criminal activity, allowing fraudsters to siphon money away from hard-hit workers and businesses who needed the help most, reports the Washington Post. The exact scope of the fraud targeting federal aid initiatives is unknown, even two years later. With unemployment benefits, the theft could be significant.

Testifying at congressional hearing this spring, a top watchdog for the Labor Department estimated there could have been “at least” $163 billion in unemployment-related “overpayments,” a projection that includes wrongly paid sums as well as “significant” benefits obtained by malicious actors. So far, the U.S. has recaptured just over $4 billion of that, according to state workforce data from the Labor Department in March. That amounts to roughly two percent of the wrongful payments, if the government’s best estimate is accurate, raising the specter that Washington may never get most of the money back. In many cases, the criminals stole unemployment funds using real Americans’ personal information. They bombarded states with applications filed in the names of actual workers or people in prison — sometimes to such a degree that, in the case of Maryland, fraudulent claims came to outnumber real requests for help.


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