Key Points
- The nation’s unemployment benefits system, which was significantly expanded during the COVID-19 pandemic, suffered unprecedented losses to fraud and improper payments.
- Official—and still partial—estimates of improper payments approach $200 billion, while unofficial estimates suggest $400 billion or more may have been lost.
- There are multiple causes of these record improper payments, including historically large benefits, poor program design including eligibility self-certification in new programs, and degraded administrative systems without adequate defenses against various fraudulent schemes.
- State and federal policymakers should review the causes and consequences of these unprecedented losses and take specific steps, such as those outlined in this report, to both prevent a recurrence of the record taxpayer losses experienced during the pandemic and better establish a proactive anti-fraud posture for the unemployment insurance system.
