States have seen billions of unemployment benefits overpayments during pandemic, watch reports show
The Government Accountability Office report states that the Department of Labor reported that “states have identified more than $ 3.6 billion in PUA overpayments from March 2020 to February 2021.” In addition, states have identified $ 2.6 billion in regular unemployment insurance overpayments in the last three quarters of 2020.
The report notes that “overpayments do not necessarily result from fraud, although some may be”. States generally have to compel people to repay overpayments, but they can also waive this requirement if they find that a person has not been at fault. For example, in October, the Colorado Department of Labor and Employment forgave $ 1.4 million in PUA overpayments to 9,000 Coloradans after recognizing that confusing forms for construction workers may have led some people to overestimate their income.
The figures reported by GAO represent a much higher overpayment amount than previously known. When GAO addressed the issue in a january report, he found that Ministry of Labor data showed $ 1.1 billion in PUA overpayments between March and December 2020, and he recommended that the agency collect the data from states.
GAO’s January report also reiterated and expanded on concerns about fraud in an emergency relief program run by the Small Business Administration (SBA) called the Economic Injury Disaster Loan (EIDL) program, which offers up to $ 10,000 to businesses and nonprofits. At the end of December, the SBA had approved 3.6 million low interest loans worth $ 197 billion.
GAO said the SBA’s independent auditor said in December that the agency “was unable to provide adequate documentation to support a significant number of EIDL-related transactions and account balances due to inadequate processes and controls ”.
The auditor also found more than 6,000 EIDL loans worth more than $ 212 million “issued to potentially ineligible borrowers,” GAO found.
Between May 2020 and February, the Justice Department announced charges against more than 50 defendants in more than 30 EIDL loan fraud cases, GAO said. In February, at least five people had pleaded guilty to federal charges of program fraud.
The SBA told the watchdog that it is working to better document its processes and controls for future audits, and that it agrees with a GAO recommendation that it put in place a monitoring plan to disaster loans.