Unused COVID-19 Unemployment Benefits Raise Fraud Concerns

WASHINGTON – Almost $1 billion in unemployment benefits linked to COVID-19 remains unclaimed, raising alarm about potential fraud, according to a warning from the Labor Department’s internal watchdog.

The Office of Inspector General (OIG) revealed that around $720 million in unemployment funds is currently stored on prepaid debit cards, while another $192 million has been moved to the state’s Office of Unclaimed Property.

“Without prompt action, American taxpayers risk losing nearly $1 billion in improperly obtained benefits,” stated Inspector General Anthony D’Esposito in a recent announcement. “This money belongs to taxpayers and needs immediate attention. We’ve identified where the funds are, and any further delay is unacceptable; our priority should be returning this money to the public.”

One of the debit card accounts in question contains roughly $76,000, as mentioned by D’Esposito’s office.

Many states allow residents to access unemployment benefits through prepaid debit cards. This system can be more convenient since it doesn’t require establishing a bank account or providing extensive personal information. Depending on where you live, direct deposit or paper checks might also be viable options.

D’Esposito’s team urged the Labor Department’s Employment and Training Administration, the body overseeing these benefits, to provide states with guidance on how to recover these funds.

“Fraud doesn’t just affect a few; it impacts families who need dollars for essentials—groceries, rent, medical bills, or gas. Tackling fraud helps protect taxpayers and helps manage living costs,” he emphasized.

The OIG’s report followed an analysis of 6.5 million prepaid debit cards issued during the pandemic period.

To date, OIG efforts have led to 1,800 convictions and 2,300 indictments, recovering around $2.2 billion overall.

A recent federal and private study indicated that, years after the COVID-19 crisis, potential fraud due to pandemic relief efforts amounts to hundreds of billions of dollars.

For instance, the Small and Medium Enterprise Agency last year reported up to $200 billion in “potentially fraudulent loans” stemming from pandemic relief programs.

D’Esposito, previously serving as a detective with the NYPD, has received encouragement from the Long Island Republican Party to run against Democrat Laura Guillen for a congressional seat representing parts of Nassau County. However, he hasn’t yet actively campaigned against Democrats who are looking to regain control of the House in the upcoming midterm elections.