Department of Labor Announces Funding to Strengthen Unemployment Insurance Program Integrity and Combat Fraud

The U.S. Department of Labor (DOL) has issued a new program letter outlining strategies, tools, and services to mitigate unemployment insurance (UI) fraud risks and reduce improper payments. The letter also highlights the availability of up to $200 million in additional funding under the American Rescue Plan Act (ARPA) to support states in strengthening UI program integrity. The funds will be allocated for activities such as identity verification, fraud prevention and detection, and overpayment recovery efforts in all UI programs.

State Workforce Agency Administrators are requested to review the funding opportunity described in the letter and ensure that relevant staff is aware of the required and recommended strategies. States are encouraged to develop a grant application outlining their intended use of the funds and submit it by the specified deadline. The application should address how the funds will be utilized to enhance UI program integrity, including ID verification, fraud prevention and detection, and overpayment recovery efforts.

The Department acknowledges the increasing challenges of UI fraud and improper payments faced by state UI agencies in recent years, particularly during the COVID-19 pandemic. The availability of additional funding aims to further support states in their efforts to combat fraud, reduce improper payments, and recover overpayments. The Department emphasizes the importance of evidence-based ID verification, cross-matching, and data analytics in preventing and detecting fraudulent activities.

The letter provides guidance on various aspects of UI program integrity, including ID verification, fraud prevention and detection activities, and overpayment recovery. It stresses the need for a risk-based approach in determining which claims require evidence-based ID verification. States are encouraged to continuously evaluate and adapt their fraud prevention and detection activities, considering equity and access for legitimate claimants.

The guidance also recommends the use of various integrity controls, such as the UI Integrity Center’s Integrity Data Hub, digital authentication, device fingerprinting, fraud risk scoring, and cross-matching with databases such as the National Directory of New Hires and the Social Security Administration’s Unemployment Insurance Query. States are urged to assess potential barriers and ensure equitable access when implementing fraud prevention and detection technologies.

The DOL’s program letter underscores the significance of UI program integrity and provides states with guidance and funding opportunities to strengthen their efforts. By implementing effective strategies, tools, and services, states can mitigate fraud risks, reduce improper payments, and ensure equitable access to UI benefits for eligible individuals. The Department remains committed to supporting states in their ongoing efforts to improve UI program integrity and combat fraud.