A bill to create a federal task force to recover unemployment insurance fraud that occurred during the COVID-19 pandemic has passed the House.
The COVID Unemployment Fraud in Banks Act, introduced by Rep. Beth Van Duyne, Texas Republican, passed Congress’ lower chamber with unanimous consent Monday.
To expedite the return of UI funds to the Treasury Department, the legislation creates a federal task force to collect unspent money and extends the statute of limitations for prosecuting pandemic-era UI fraud from five to 10 years.
Under the bill, a federal task force would collaborate with state agencies to identify federal pandemic UI payments issued on prepaid debit cards held by financial institutions or sitting frozen in local financial institutions and return them to the federal government.
House Ways and Means Committee Chair Rep. Jason Smith said that on their own, states are not doing enough to reconcile these accounts and recover taxpayer dollars.
“By establishing a federal task force, governments at the federal and state levels will be better coordinated and able to finally close the book on the return of these unused unemployment insurance benefits,” the Missouri Republican said in a statement. “By also extending the statute of limitations for prosecuting pandemic-era UI fraud, we will give law enforcement the time they need to go after fraudsters who stole from American taxpayers and from those the UI program is meant to serve.”
In February, the Department of Labor’s inspector general found nearly $1 billion in unspent COVID-19 UI funds frozen and held by financial institutions nationwide due to suspected fraud. Through analyzing 6.5 million prepaid debit cards used to distribute COVID-era unemployment insurance benefits, investigators found $720 million still loaded on unused cards and $192 million transferred to state unclaimed property offices.
To prevent these dormant taxpayer dollars from being permanently lost, the Labor Department and its internal watchdog demanded that financial institutions freeze and preserve all affected accounts through Dec. 31, 2026.
Under COVID-19 relief funding, the Department of Labor’s UI program expenditures totaled about $900 billion.
While the department’s internal watchdog estimated in 2022 that total pandemic UI fraud losses may have exceeded $45 billion that year, the Government Accountability Office found in 2022 that improper payments totaled $78.1 billion in the 2021 fiscal year.
Previously, the statute of limitations for prosecuting pandemic UI fraud began to expire in March of last year.
Ms. Van Duyne said that the bill, co-sponsored by Reps. Tom Suozzi, New York Democrat, and Rep. Randy Feenstra, Iowa Republican, ensures that “fraudsters are held accountable before these dollars become even harder to recover.”
“Every dollar going to fraud is a dollar that does not go to Americans who truly need it, and it is not too late to recover stolen unemployment insurance funds. But, Congress must act now,” she said in a statement.
Contact the author
Please read our comment policy before commenting.