Discussing state and federal pandemic unemployment benefits in testimony for a March 17 hearing of the Senate Homeland Security and Government Affairs Committee, Department of Labor Inspector General (IG) Larry Turner stated that “at least $163 billion . . . could have been paid improperly”:

In December 2021, consistent with our recommendation, ETA reported an improper payment rate of 18.71 percent. The OIG notes this estimate is based on the regular UI program and has been applied to two of three key pandemic UI programs, PEUC and FPUC. ETA states it will report the third program, PUA, in 2022. Applying the 18.71 percent to the estimated $872.5 billion in pandemic UI payments, at least $163 billion in pandemic UI benefits could have been paid improperly, with a significant portion attributable to fraud.

That testimony almost doubled the prior minimum official government estimate for improper unemployment benefit payments during the pandemic. As Committee Chairman Gary Peters (D-MI) noted in his opening statement for the same hearing, prior estimates suggested “more than $87 billion may have been paid improperly.” Regardless of the amount, Committee Ranking Member Rob Portman (R-OH) described the losses as “one of the largest frauds committed against the American people in our history.”

The new $163 billion estimate could rise, perhaps significantly. The 18.71 percent improper payment rate underpinning it is likely too low, Turner noted, since it fails to account for potentially greater improper payments under the fraud–riddled Pandemic Unemployment Assistance (PUA) program. That program, he said, “had control weaknesses that may have facilitated comparable or greater improper payments” compared with other programs. PUA accounted for $131 billion in pandemic benefits, amplified by a significant share of the $442 billion in pandemic supplements ranging from $300 to $600 per week.

Other highlights from the IG’s testimony:

• “As the OIG reported, the unprecedented
  infusion of federal funds into the UI program gave individuals and organized
  criminal groups a high-value target to exploit. That, combined with easily
  attainable stolen personally identifiable information and continuing UI program
  weaknesses identified by the OIG over the last several years, allowed criminals
  to defraud the system.”
• “Fraudsters had a high-reward target where an
  individual could make a fraudulent claim with relatively low risk of being
  caught, at least initially, due to the lack of basic anti-fraud measures. As
  time went on, one fraudster could have been issued several UI debit cards, with
  tens of thousands of dollars on each card.”
• “Prior to the pandemic, the OIG opened
  approximately 120 UI investigative matters annually. Since the pandemic
  started, the OIG has received more than 143,000 UI fraud complaints from the
  U.S. Department of Justice’s (DOJ) National Center for Disaster Fraud (NCDF)
  and has independently opened more than 38,000 investigative matters concerning
  UI fraud. That is an increase of more than 1,000 times in the volume of UI work
  that we are facing.”

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