The US Department of Labor’s Inspector General reported that fraudulent unemployment benefits paid during the novel coronavirus (Covid-19) pandemic could be as high as $45.6 billion, much higher than previous estimates.
More than a thousand people have been charged with fraud for claiming unemployment insurance they were not entitled to, the inspectorate said.
A total of $45.6 billion in unemployment benefits were fraudulently distributed between March 2020 and April 2022, Inspector General Larry D. Turner said in a statement, AFP reported.
“The identification of 1,000 individuals charged with crimes involving user interface fraud and $45.6 billion in potentially fraudulent user interface payments underscores the magnitude of this problem,” Turner said.
The coronavirus pandemic devastated the US economy in March 2020. Within two months, more than 20 million workers were laid off. At the time, the federal government expanded the base of recipients of unemployment benefits and increased the amount and duration of those benefits.
The Inspector General’s office said more than 57 million unemployed people were registered in five months.
But as state governments responsible for paying unemployment benefits struggled with the huge increase in jobless claims and ensuring they paid the right amount to the right person, the influx of claims created a loophole for scammers.
In particular, fraudsters were able to obtain unemployment benefits by filing applications in multiple states or using the identities of people who had died or been incarcerated.
Officials acknowledged at the time that there were gaps in some benefit programs, but stressed the need to pay benefits quickly.
“Hundreds of billions in pandemic funds attracted fraudsters trying to take advantage of the program, leading to historic levels of fraud and other improper payments,” Turner said.