“Eye-Watering” Fraud – Pandemic Unemployment Funds

The Federal News Network has published an article pointing to the shear amount of fraud discovered with the Covid pandemic unemployment program’s funds. Is this a surprise?

‘Eye-watering kind of fraud’: Improper payments account for third of pandemic unemployment program’s funds

Jory Heckman | August 24, 2023

Federal agencies and their watchdogs are still getting to the bottom of the total amount of fraud across more than $5 trillion in COVID-19 emergency spending, but the Labor Department is uncovering a major source of those misspent funds.

The Labor Department, in a report released this week, estimates improper payments made up nearly 36% of spending on the Pandemic Unemployment Assistance (PUA) program between March 2020 and September 2021.

Congress authorized the Pandemic Unemployment Assistance (PUA) program in the CARES Act for self-employed individuals who weren’t eligible for regular unemployment insurance (UI) benefits at the height of the COVID-19 pandemic.

“While PUA provided critical support to workers and communities during a historic pandemic, states faced serious challenges in minimizing improper payments and stewarding federal funds in this entirely new program,” the Labor Department wrote in its report.

In the first nine months of the program in 2020, PUA allowed payments to be made based on self-certification of information, without a requirement for individuals to verify their identity.

The Labor Department paid out $131 billion in assistance in 2020, before it put stronger identity-verification measures in place the following year. At least 60% of program spending that year went out before Congress added identity verification protections.

The report underscores what federal agencies and watchdogs have long suspected — that pandemic-era programs that didn’t verify the eligibility of applicants were exploited at a particularly high rate by fraudsters and criminal syndicates.

Former PRAC Executive Director Bob Westbrooks, author of the book, “Left Holding the Bag: A Watchdog’s Account of How Washington Fumbled its COVID Test,” told Federal News Network it seems a “significant percentage” of the improper payments in the PUA program amounts to fraud.

“It is an eye-watering kind of fraud, there’s no doubt about it,” Westbrooks said. “The number doesn’t surprise me. It actually saddens me, and confirms, I think, what we’ve known for some time.”

Former PRAC Deputy Executive Director Linda Miller, founder and CEO of the Audient Group consulting firm, said in an interview that Congress envisioned the PUA program would benefit freelancers and those participating in the gig economy.

But by allowing PUA applicants to self-certify their eligibility for nearly all of 2020, Miller said lawmakers left the program wide open to fraud.

“Fraud, of course, has to be prosecuted in a court of law to be called fraud. But if somebody knows that they’re not eligible for something, and they’re applying for it anyway … it’s a fair bet that they were at least trying to get something, whether or not they knew they weren’t entitled to it,” Miller said.

Then, they tie it up with…

While agencies face a tricky balance between ease of access and mitigating fraud, Simon said program managers shouldn’t sacrifice one for the other.

“I tend to think that it’s a false dichotomy, to say we can prevent fraud, or we can get benefits to people. I think that, in fact, fraudsters often had a really smooth customer experience journey, and they got benefits in very high volumes. And in some cases, that was the thing that prevented folks who were eligible from getting benefits.,” Simon said. “Effective fraud detection and prevention is part of delivering benefits to eligible claimants in a timely manner.”

Spot on when they said there was a ‘Perfect storm’ for fraud.

Absolutely LOVE the line “fraudsters often had a really smooth customer experience journey.”

I’m going to try to make the distinction here – “mind numbing” is when you just can’t believe it and you are stunned. “Eye watering” is when you see and and believe it is happening, but your eyes just can’t take it anymore. Tell me where I’m wrong.

I don’t know if you’ve watched the recent episodes of Judge Judy – I think called “Judy Justice” – but about a good 20-25% of the cases are about COVID check disputes. All kinds of craziness. “Give me the money now and when the COVID check comes in it is yours.” “I supported you, therefore that COVID check is mine.” Many people claiming they had a business when they didn’t – sole owner, boyfriend was employee – got COVID relief loan. List goes on.

Category: "Teh Stoopid", fraud