Federal unemployment insurance programs meant to support workers during the COVID pandemic became a gold mine for fraudsters, according to a new report.
. Billions of dollars were paid improperly, including benefits going to people who sought to defraud unemployment relief programs.
The GAO estimated that over $60 billion in fraudulent unemployment insurance payments went to applicants. That may be a low estimate, though, as the report noted the GAO's method of calculation"has inherent limitations and should be interpreted with caution." Plus, because fraud is deceptive in its nature, estimating its full extent can be challenging.
While noting the unprecedented challenges presented by COVID, the GAO also placed blame on the Labor Department, chiding its leadership for being insufficiently prepared. "Because of shortcomings in managing risk strategically, including lack of appropriate internal controls, DOL [the Labor Department] and the states were not adequately prepared to handle UI [unemployment insurance] fraud risks when the pandemic began," the report stated, adding that the department should adopt an anti-fraud strategy consistent with leading practices from GAO's Fraud Risk Framework.
"While DOL has taken steps to address UI fraud risks, its approach has not been strategically organized and targeted at prioritized risks," according to the GAO."Specifically, we found that it has not designed and implemented an anti-fraud strategy to guide its actions based on a fraud risk profile in alignment with leading practices in our Fraud Risk Framework."
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