Pandemic unemployment benefits fraud could top $200B, firm says
Lawmakers have committed a total of $496B in funding for unemployment benefits, according to the nonpartisan Committee for a Responsible Federal Budget
FOX Business’ Blake Burman on unemployment fraud rising during the coronavirus pandemic.
A significant portion of unemployment benefits to Americans struggling during the coronavirus pandemic may be getting stolen by fraudsters, according to new data.
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ID.me, a computer security firm which works with 22 states to combat unemployment fraud and successfully helps workforce agencies identify legitimate unemployment claimants, estimates that more than $200 billion in federal assistance for unemployed Americans may have been pocketed through fraud. The finding is more than triple the official government estimate of $63 billion, based on the 10% pre-pandemic fraud rate.
According to ID.me, at least 30% of new claims under the Pandemic Unemployment Assistance program, which provides benefits to Americans who are self-employed and contractors, are fraudulent.
The firm notes that roughly 20% of the fraud is linked to breached personal data, up to 10% is through social engineering, and 2.5% are linked to face matching, where a criminal tries to use a mask, video, or image of the victim.
The American Enterprise Institute estimates the $200 billion figure could make unemployment assistance fraud the fourth largest "spending program" during the pandemic, behind the Paycheck Protection Program, total unemployment benefits and stimulus checks.
"The fraud targeting PUA programs is a national problem," an ID.me spokesperson told FOX Business in a statement. "Organized crime rings have made it their job to steal these funds and are looking for every opportunity to defraud state workforce agencies that are already chronically underfunded."
As of March 20, ID.me prevented 1.2 million fraudulent claims from international and domestic criminals saving taxpayers more than $24 billion.
States targeted by fraudsters with some of the highest per week unemployment benefits include California, Washington and Massachusetts.
California officials confirmed to the Los Angeles Times that $11.4 billion in unemployment benefits paid during the COVID-19 pandemic involve fraud — about 10% of benefits paid — while another 17% are under investigation for potential fraud.
Meanwhile, fraud losses in Washington are expected to total $600 million as of June 2020, amounting to 122,000 known or suspected fraudulent claims, according to a report from the Office of the Washington State Auditor.
In Massachusetts, up to $687 million is estimated to be paid for fraudulent claims as of February, according to the state's Department of Unemployment Assistance.
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According to the nonpartisan Committee for a Responsible Federal Budget, lawmakers have committed $496 billion in funding for unemployment benefits since the beginning of the pandemic.
The recently passed $1.8 trillion American Rescue Plan allows for $209 billion in unemployment provisions. About $95.9 billion has been committed to expand eligibility under the Pandemic Unemployment Assistance program and nearly $2 billion has been allocated under the legislation to improve accessibility and cybersecurity for unemployment benefits.
"We believe additional funding for state workforce agencies for cybersecurity will protect state unemployment systems in years to come,” ID.me added.
The committee estimates the total legislative funding committed to address COVID-19 has reached about $3.12 trillion since the pandemic began.
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The announcement comes as 770,000 Americans filed first-time jobless claims in the week ended March 13, higher than the 700,000 forecast by Refinitiv economists.
Weekly jobless claims have remained high for months, hovering around four times the typical pre-crisis level, although it's well below the peak of almost 7 million that was reached when stay-at-home orders were first issued a year ago in March. There are roughly 9.5 million fewer jobs than there were last year in February before the crisis began.
Continuing claims, or the number of Americans who are consecutively receiving unemployment aid, fell to 4.124 million, a decline of 18,000 from the previous week. The report shows that roughly 18.216 million Americans were collecting jobless benefits for the week ending Feb. 27, a decrease of 1.9 million from the prior week.
FOX Business' Megan Henney contributed to this report