According to a preliminary analysis by the Department of Labor’s Office of the Inspector General, at least 10% of the $ 360 billion required by Congress for unemployment benefits in the Cares Act has been improperly distributed, mainly due to fraud.
“This is the largest fraud attack ever perpetrated in the United States. Point “, Blake Hall of ID.me, which provides identity verification to state unemployment agencies, he told CNBC. “And it’s not even close.”
Most of the fraud is concentrated in the Pandemic Unemployment Assistance program, a temporary effort to help people who are usually not eligible for benefits, including contractors and the self-employed. More than 8 million people received benefits through the PUA program in December.
In some states, over 35% of PUA requests were fraudulent, most of which involved identity theft. Organized crime has been involved, including criminal groups in China, Nigeria and Russia, CNBC’s Greg Iacurci reported.
The new $ 900 billion Covid relief bill includes an additional $ 120 billion for the unemployed, as well as stricter requirements for aid recipients, including employment documentation. But these new rules could make it more difficult to distribute benefits quickly by delaying payments by weeks or months.
“It’s a bit of a cabaret act because there’s so much pressure to get money,” Bill McCamley, cabinet secretary of the New Mexico Department of Workforce Solutions, told CNBC.