Labor Dept Grants $195M to Root Out Unemployment Fraud

Labor Dept Grants $195M to Root Out Unemployment Fraud a benefit fraud banner is in front of a lawyers at a desk holding a magnifying glass (Andrey Popov/Dreamstime)

By Charles Kim | Saturday, 02 October 2021 05:21 PM

The U.S. Department of Labor announced Thursday it awarded some $195 million to 58 U.S. states and territories to help detect and prevent unemployment insurance fraud.

"Amid the pandemic, temporary federal unemployment insurance programs sustained millions of Americans forced into unemployment through no fault of their own," Secretary of Labor Marty Walsh said. "International and domestic crime rings were among those who attacked states' antiquated claims systems to commit massive identity fraud at rates never seen before. These grants will enable states to procure, implement, and maintain identity verification and fraud detection solutions to ensure the safety and integrity of states' unemployment insurance systems, paving the way for better access for people with legitimate claims."

On Aug. 11, the department's Employment and Training Administration informed states of a total of $240 million grant funding from the initial Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation programs and the American Rescue Plan passed earlier this year.

The grants are to be used to "strengthen identity verification, enhance fraud detection, increase cybersecurity and expand overpayment recovery efforts for all unemployment insurance programs."

In its guidance to the states, the department said the three rounds of funding were aimed to address its top priorities of eligibility and identity fraud throughout the system.

The money will also help state systems recover fraudulently issued benefits, according to the agency.

An estimated 20.5 million people lost their jobs during the first wave of the pandemic in the winter and spring of 2020, creating an increase in the unemployment rate from a near-record post-World War II low of 3.8% to 13% in May 2020, according to the Pew Research group.

The federal government enhanced state benefits with additional payments of first, $600 per week, then later reduced that to an extra $300 per week.

Currently, only nine states still offer the enhanced benefits as the labor market experiences a worker shortage, with more jobs available that applicants.

The week of Sept. 25 saw an increase of new seasonally adjusted weekly claims of 11,000, from the previous week of 351,000 to 362,000.

As of Sept. 17, the three states with the highest unemployment numbers were Nevada, California, and New York, while 22 states were below the national average unemployment rate of 5.2%.

The agency said states will have an extended period until Oct. 31 to apply for the grant money.