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Biden Admin Is Stopping States from Recovering Fraudulent Payments

February 22, 2022

While the White House estimates an alarming 19 percent of total COVID unemployment insurance payments lost to fraud – over $80 billion in taxpayer funds – new measures by the Biden Administration may worsen the problem.


In a letter to the U.S. Department of Labor Secretary Martin Walsh, top House Republicans are urging the Department of Labor to hold off on “reckless” new guidance that would allow states to forgo recovery of overpayments in pandemic unemployment programs, as well as to justify the legality of such a move:


“Allowing use of blanket waivers would let states off the hook for due diligence and fact finding for large volumes of suspicious unemployment claims potentially involving billions of fraudulently obtained taxpayer dollars…

“ETA’s action is particularly reckless in light of White House estimates of improper payments in the Federal-State UI program of an astounding 19 percent equating to an estimated $78 billion fiscal year 2021.”


The letter is signed by Ways and Means Republican Leader Kevin Brady (R-TX), House Oversight Republican Leader James Comer (R-KY), Senate Finance Committee Ranking Member Mike Crapo (R-ID), Senate Health, Education, Labor and Pensions Committee Ranking Member Richard Burr (R-NC), and Senate Homeland Security and Governmental Affairs Ranking Member, Rob Portman (R-OH).


Members also sent a letter to the Labor Department’s Inspector General asking how blanket waivers of overpayments could impact ongoing unemployment fraud investigations.   


The Members wrote:


  • Program integrity cannot be sacrificed for expediency. In fact, the Government Accountability Office estimated that $87.3 billion in CARES Act unemployment insurance funds, about 10 percent of all CARES Act unemployment insurance funds, could have been paid improperly.”
  • “Given the OIG’s work ensuring the recovery of taxpayer dollars, we would like to understand how your work will continue after the UIPL, and in particular any impact on your ability to initiate and conduct investigation and prosecution of fraudulent activity in pandemic unemployment programs.”


CLICK HERE to read the full letter to the DOL

CLICK HERE to read the letter to the DOL-OIG.




  • The White House recently estimated an astounding 19 percent improper payment rate in the Federal-State UI program – amounting to nearly $80 billion in lost funds in fiscal year 2021 alone. This partial estimate does not include the period of the greatest fraudulent activity when generous federal supplements made unemployment a lucrative target for fraudsters.
  • ETA’s guidance allows states to apply blanket waivers to forgo recovery of overpayments in pandemic unemployment programs using seven different loopholes, including failure to provide documentation of eligibility.
  • Since the summer of 2020, repeated alerts from federal law enforcement agencies warned of targeted efforts involving organized cybercrime, foreign actors, and international crime rings using stolen identities of American citizens to obtain fraudulent unemployment benefits. Yet, congressional Democrats have failed to hold a single oversight hearing. 
  • Fraud delayed legitimate payments and turned thousands of Americans into unwitting identity theft victims. Millions of Americans are now stuck dealing with the IRS and a hefty tax bill if they can’t prove fraud – at a time when the IRS is overwhelmed with a backlog of 16 million tax filings.


Related Links: 


Letter: Brady, Crapo, Walorski Brady, Crapo, Walorski Urge GAO to Investigate Fraudulent Activity in COVID Unemployment Insurance Programs


BLOG: Taxpayers Are Finding Out They’re Victims of Fraud Democrats Ignored


REPORT: Fraud overwhelms pandemic-related unemployment programs


The Way Forward on Unemployment: Stop Criminals from Diverting Billions Away from Unemployed American Workers