More than $200 billion in unemployment aid may have gone to fraudsters in the pandemic

A significant chunk of the government support reserved for unemployed Americans went to fraudsters instead during the pandemic, according to new estimates.

More than $200 billion of unemployment benefits distributed in the pandemic may have been pocketed by thieves, according to ID.me, a computer security service that 19 states — accounting for 75% of the national population — use to verify worker identities. That’s more than triple the official government estimate of $63 billion based on the 10% pre-pandemic fraud rate.

“The level of fraud is truly unprecedented,” Blake Hall, CEO and cofounder of ID.me, told Yahoo Money. “The main driver is the PUA program… For criminals, this program essentially makes every American and their identity a target.”

Up to 30% of claims under the Pandemic Unemployment Assistance (PUA), the program that provides benefits to self-employed and contractors, are fraudulent, according to data by ID.me.

‘The nature of what you’re setting up is very vulnerable’

Generally, unemployment programs are vulnerable to fraud because eligibility rules can change quickly. That was especially true during the pandemic when new programs were established. Then there was the sheer scope: Around 30 million Americans were relying on jobless benefits last spring.

Add in the fact that the benefits increased in value per person — first the additional $600 per week under the CARES Act and then $300 extra a week under various other actions — and the programs became a lightning rod for fraud, especially from professional criminals.

“Unemployment is a program that certainly has a high rate of overpayment,” Andrew Stettner, an unemployment insurance expert and senior fellow at the Century Foundation, told Yahoo Money. “What’s different about this period is the level of organized crime activities targeting unemployment insurance is definitely unprecedented.”

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