Unemployment fraud throughout the COVID-19 pandemic could cost $400 billion as fraudsters and criminal groups may have stolen nearly half of all unemployment benefits during that time, experts told Axios.
Blake Hall, CEO of the online identity network ID.me, estimated that the U.S. lost more than $400 billion to fraudulent claims during the pandemic, Axios first reported Thursday. He also said up to 50% of all benefits offered through unemployment may have been stolen.
Haywood Talcove, CEO of the data and analytics firm LexisNexis Risk Solutions, estimated that at least 70% of the money stolen by fraudsters ultimately went overseas. He also said the remainder largely went to domestic street gangs, who have accounted for a greater share of credit card and insurance fraud in recent years.
Talcove told Axios that stolen unemployment benefits carried abroad largely ended up in the hands of foreign criminal groups in countries like China, Nigeria and Russia. He noted that many of these groups “are definitely backed by the state.”
NEW: Criminals may have stolen as much as half of the unemployment benefits the U.S. has been pumping out over the past year, with the bulk likely ending up in the hands of foreign crime syndicates. https://t.co/ciURI3ijny
— Axios (@axios) June 10, 2021
Criminals who commit unemployment fraud will often steal personal information or scam individuals into voluntarily handing over their personal information. Once an unemployment claim is made and the money is deposited, low-level criminals called “mules” are given debit cards to withdraw the money from ATMs — which can be sent abroad using Bitcoin or other methods.
At the start of the pandemic last year, the U.S. government and states were unprepared for the major spike in unemployment claims. Almost 7 million Americans were filing for unemployment every week during the first wave of the pandemic in April.
Congress passed legislation multiple times expanding state unemployment insurance relief in order to keep the economy afloat. The most recent COVID-19 relief package, which President Joe Biden signed into law in March, included a $300 billion expansion of unemployment benefits. (RELATED: Obama’s Top Economist: Unemployment Benefits, Not Lack Of Childcare, Could Be Harming Recovery)
The unprecedented number of unemployment claims meant states were unable to crack down on criminals and fraudsters as they could prior to the pandemic, Axios reported. California officials, for example, said in January that unemployment fraud last year cost taxpayers in the state up to $31 billion.