Labor Department gives states $240 million to fight unemployment fraud

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How much money was lost in theft is unclear. The Department of Labor’s Office of Inspector General estimates that $ 87 billion in benefits could ultimately not be paid properly, a significant part due to fraud, while pandemic-era programs are intact. These programs are scheduled to end on September 6th.

Much of the early fraud focused on a federal program for the self-employed and others that allowed applicants to self-validate their eligibility for benefits. This feature helped provide assistance faster, but opened the door to criminals who wanted to take advantage of the system.

Now officials are seeing more scammers “hijacking” claims of legitimate claimants in need of benefits, Evermore said.

According to two memos the agency released on Wednesday, the department is providing $ 240 million in grants to help states fight fraud, $ 100 million from leftover CARES Act funding and $ 140 million – Dollars from the American Rescue Plan.

States can use the money to step up measures such as applicant identity verification, fraud detection and prevention, cybersecurity, and efforts related to overpaid recovery.

Broader plan

The funds are part of a broader effort by the Department to improve the US unemployment system, with approximately $ 2 billion from the American Rescue Plan.

The pandemic has exposed significant benefits management issues that vary from state to state. Many use outdated mainframes that made it difficult to adapt to changing federal regulations and programs. States have also faced the lowest administrative funds in 50 years and had entitlements to benefits in addition to increased criminal activity, Evermore said.

Many are still struggling to quickly pay benefits to all applicants. Sometimes new anti-fraud measures that states have put in place since last year trap legitimate requests and delay benefits.

“It’s not a blame-the-state mentality,” Evermore said. “It is very difficult for states to deal with the onslaught.”

The department plans to provide an additional $ 260 million in equity grants to states. The funds, a unique endeavor for the agency, aim to improve reach and customer service to address potential ethnic and racial inequalities.

The agency has also deployed advisory teams in six volunteer states – Colorado, Nevada, Kansas, Virginia, Washington, and Wisconsin – who will compile a list of recommended system optimizations.

The Department of Labor is giving states $ 200 million to make these corrections, which can then be used by other states with similar problems, Evermore said.

The agency has also begun building a centralized technology that any state with legacy capabilities can use, Evermore said.

However, reshaping some aspects of the US unemployment system would require federal legislation. For example, a federal, rather than a state, system of benefit management has been called for to address some of the large regional differences in areas such as weekly benefit levels, benefit duration and qualification regulations.

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