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Pandemic Unemployment Fraud in Context: Causes, Costs, and Solutions

American Enterprise Institute

January 29, 2024

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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.

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