Court filing

Audit Report — ETA Needs to Improve Its Oversight of States' Efforts to Identify UI Fraud Using Suspicious Email Accounts

Filed September 16, 2025 in DOL OIG Unemployment Insurance; one of 15 filings from this case.

Record facts

Court	U.S. Department of Labor, Office of Inspector General (contracted to Regis and Associates, P.C.)
Filed	2025-09-16

Full text

REPORT TO THE
EMPLOYMENT AND TRAINING
ADMINISTRATION

COVID-19: ETA NEEDS TO IMPROVE ITS
OVERSIGHT OF STATES’ EFFORTS TO
IDENTIFY UI FRAUD USING SUSPICIOUS
EMAIL ACCOUNTS

DATE ISSUED: SEPTEMBER 16, 2025
REPORT NUMBER: 19-25-007-03-315

This report was prepared by Regis & Associates, P.C. (Regis)
under contract to the U.S. Department of Labor, Office of
Inspector General, and, by acceptance, it becomes a report of
the Office of Inspector General.

U.S. Department of Labor
Assistant Inspector General for Audit
AUDIT SERIES: HIGH-RISK AREAS FOR POTENTIAL
UI FRAUD, AUDIT THREE OF FOUR

BRIEFLY…

COVID-19: ETA Needs to Improve Its
Oversight of States’ Efforts to
Identify UI Fraud Using Suspicious
Email Accounts

Why We Did the Audit
As of September 2022, the OIG had
reported a cumulative $45.6 billion paid
in four high-risk areas of unemployment
insurance (UI) fraud the OIG had
identified; claimants using suspicious
email accounts—$16.3 billion—was the
third largest area. The OIG shared its
data and methodology for identifying
those claimants with the Employment
and Training Administration (ETA). ETA
is responsible for providing states with
UI program direction and oversight; the
states are responsible for ensuring UI
payments go only to eligible claimants
and for making determinations of fraud.

Based on the OIG’s concerns regarding
UI benefits paid in each of the high-risk
areas, the OIG began a series of four
audits; this is the third in the series.
Specifically, for claimants using
suspicious email accounts, we
contracted with Regis & Associates,
P.C. (Regis) to answer the following
question:

To what extent have ETA and state
workforce agencies (SWA)
addressed potentially fraudulent
CARES Act UI claims filed using
suspicious email accounts?

Read the Full Report
For more information, go to:
https://www.oig.dol.gov/public/reports/o
a/2025/19-25-007-03-315.pdf.

What We Found
Regis found the 10 SWAs selected for testing confirmed some
claimants filed fraudulent UI claims using suspicious email
accounts. However, ETA took limited action to ensure states
properly addressed the potentially fraudulent UI claims. While ETA
transmitted claimant data associated with potentially fraudulent UI
claims to the 53 SWAs and Guam, including instructions and
requirements on investigations and due process, ETA did not
perform the following oversight actions:

•
monitor nor require states to report the results of research
or investigations of potentially fraudulent UI claims, which
would have assisted ETA in identifying high-risk areas for
UI fraud;
•
ensure the National Association of State Workforce
Agencies’ Integrity Data Hub (IDH) effectively provided
states with useful information to assist in identifying UI fraud;
or
•
ensure states consistently established and reported
fraudulent overpayments distributed to imposter claimants
or identify systemic weaknesses that resulted in states
reporting zero fraudulent overpayments when UI fraud risk
was at its height during the pandemic.

These deficiencies occurred because ETA considered its oversight
responsibilities to be limited. Specifically, ETA: (1) did not consider
monitoring the results of states’ research and investigations as part
of its responsibilities, (2) measured IDH effectiveness by the
number of claims submitted to and flagged by the IDH rather than
by the outcomes of states’ fraud investigations, and (3) did not
detect states’ information technology systems or staffing were
insufficient to establish or report fraudulent overpayments.

The OIG selected 168 claimants that filed potentially fraudulent UI
claims across 10 SWAs for Regis to test. Regis determined
$591,045 in UI benefits were paid, and the states confirmed
$83,376 (14 percent) was fraudulent.

What We Recommended
Regis did not make any new recommendations in this report. To
address the issues identified in this report and improve ETA’s
oversight of states’ efforts to identify fraudulent UI claims, Regis
made three recommendations to ETA in the first report of this
series, with which ETA generally agreed. That report, including
ETA’s responses to the recommendations, is available at:
https://www.oig.dol.gov/public/reports/oa/2025/19-25-004-03-
315.pdf.

U.S. Department of Labor – Office of Inspector General

-i-

TABLE OF CONTENTS
INSPECTOR GENERAL’S REPORT .................................................................... 1
CONTRACTOR PERFORMANCE AUDIT REPORT ............................................ 5
RESULTS ............................................................................................................. 6
ETA Needs to Improve Its Oversight of States’ Efforts to Identify UI
Fraud Using Suspicious Email Accounts .................................................... 7
CONCLUSION .................................................................................................... 27
RECOMMENDATIONS ....................................................................................... 28
Analysis of ETA’s Comments ................................................................... 28
EXHIBIT: TESTING RESULTS, FRAUDULENT AND NONFRAUDULENT
PAYMENTS FOR THE 10 SWAS ....................................................................... 30
APPENDIX A: SCOPE AND METHODOLOGY .................................................. 32
APPENDIX B: AGENCY’S RESPONSE TO THE REPORT ............................... 37

U.S. Department of Labor
Office of Inspector General

Washington, DC 20210

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INSPECTOR GENERAL’S REPORT
Lori Frazier Bearden
Acting Assistant Secretary
for Employment and Training

U.S. Department of Labor
200 Constitution Avenue NW
Washington, DC 20210

The U.S. Department of Labor (DOL or Department) Office of Inspector General
(OIG) contracted with the independent certified public accounting firm of
Regis & Associates, PC (Regis) to conduct a performance audit of the
Employment and Training Administration’s (ETA) and state workforce agencies’
(SWA or state)0F1 efforts to address potentially fraudulent unemployment insurance
(UI) claims filed using suspicious email accounts.1F2

The OIG monitored Regis’ work to ensure it met professional standards and
contractual requirements. Regis’ independent audit was conducted in
accordance with generally accepted government auditing standards.

Regis was responsible for the auditors’ evaluation and the conclusions
expressed in the report while the OIG reviewed Regis’ report and supporting
documentation.
Purpose
Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act and
subsequent legislation,2F3 Congress provided expanded UI benefits to workers
who were unable to work due to the COVID-19 pandemic. UI is a joint federal-

1 This report uses “state” or “SWA” to refer to the body that administers the UI program within the
state, district, or territory. For the 50 states, as well as the U.S. Virgin Islands, Puerto Rico, and
the District of Columbia, that administrative body is a SWA. Therefore, there are 53 SWAs.
2 Suspicious email accounts are email domains that have been associated with fraudulent
activity.
3 The CARES Act expanded UI benefits through December 31, 2020. On December 27, 2020, the
Continued Assistance for Unemployed Workers Act of 2020 extended the CARES Act
UI programs through March 14, 2021. On March 11, 2021, the American Rescue Plan Act of
2021 further extended the CARES Act UI programs through September 6, 2021.

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state program with each state administering a separate UI program under its own
laws while following uniform guidelines established by federal law.

According to ETA, which is responsible for providing UI program leadership,
direction, and assistance to SWAs, as of January 2023, about $888 billion was
paid in pandemicrelated UI benefits. In addition, from January 2021 through
July 2022, ETA made $562.6 million available to support the 53 SWAs and
Guam with fraud detection and prevention, including identity verification and
overpayment recovery activities in pandemic-related UI programs.

The OIG conducts independent oversight of the UI program through audits to
strengthen the integrity and efficiency of the program and through criminal
investigations to detect and deter large-scale fraud. Applying the Department’s
Fiscal Year 2022 estimated improper payment rate of 21.52 percent to pandemic
UI expenditures, the OIG estimated at least $191 billion (22 percent) of the
$888 billion in pandemic UI benefits could have been paid improperly, with a
significant portion attributable to fraud.

As of September 2022, the OIG—aided by data analytics—had identified
$45.6 billion in potentially fraudulent UI benefits paid in four specific high-risk
areas, involving claims with Social Security numbers:

1. filed in multiple states,
2. of deceased persons,
3. used to file with suspicious email accounts, and
4. of federal prisoners.3F4

That $45.6 billion included $16.3 billion paid against claims filed using suspicious
email accounts between March 2020 and October 2020.

When the OIG identifies antifraud measures that may help the UI program, it
shares them with the Department and SWAs, as appropriate. As of
September 2022, the OIG had shared its claimant data and methodology on
potential fraud in the four high-risk areas with ETA for distribution to the 53 SWAs
and Guam. The states are responsible for ensuring UI benefits are paid only to
eligible claimants and for making determinations of fraud. Based on our concerns
regarding UI benefits paid in each of the four high-risk areas, we began a series
of four audits; this is the third in the series. Specifically, for UI claims filed using
suspicious email accounts, we contracted with Regis to answer the following
question:

4 Alert Memorandum: Potentially Fraudulent Unemployment Insurance Payments in High-Risk
Areas Increased to $45.6 Billion, Report No. 19-22-005-03-315 (September 21, 2022), available
at: https:///www.oig.dol.gov/public/reports/oa/2022/19-22-005-03-315.pdf

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To what extent have ETA and SWAs addressed potentially fraudulent
CARES Act UI claims filed using suspicious email accounts?

To answer this question, Regis reviewed the actions taken by ETA and
SWAs—from April 7, 2021, through September 15, 2022—to address the
OIGidentified potentially fraudulent UI claims filed using suspicious email
accounts from March 2020 through October 2020. Using a risk-based approach,
the OIG selected 168 claimants for Regis to test from the States of Idaho, Maine,
Nebraska, New Jersey, Oregon, Pennsylvania, South Carolina, South Dakota,
Utah, and Virginia (10 SWAs).4F5 Regis also reviewed the 10 SWAs’ policies,
processes, and results of relevant actions taken. However, Regis did not make
determinations of fraud or evaluate whether the states made the correct
determinations. In addition, Regis surveyed the remaining 43 SWAs and Guam;
25 SWAs (57 percent) responded. Regis also reviewed updated guidance and
UI payment reporting activities that extended outside of the audit period. See
Appendix A for additional details on scope and methodology.
Results
Regis found the 10 SWAs confirmed some claimants filed fraudulent UI claims
using suspicious email accounts. However, ETA took limited action to ensure
states properly addressed the potentially fraudulent UI claims filed using
suspicious email accounts.

ETA is responsible for providing oversight of UI fraud risk management and
states’ management should report internal control deficiencies to ETA—
consistent with the Government Accountability Office’s Standards for Internal
Control in the Federal Government. Specifically, the standards state the
oversight body is responsible for overseeing the strategic direction of the entity
and obligations related to the accountability of the entity. This includes
overseeing management’s design, implementation, and operation of an internal
control system. Further, management should report deficiencies identified in the
internal control system to the oversight body.

5 The OIG selected this sample based on the highest per capita benefits paid. The OIG calculated
per capita benefits using the number of claimants flagged for filing claims using suspicious email
accounts and the benefit amounts paid against these claims. The OIG then ranked the SWAs by
the per capita amount, largest to smallest, and selected the top 10 SWAs. The OIG also
controlled for repetition of SWAs within the four high-risk areas. Therefore, the OIG did not select
the same SWAs if they appeared in a higher ranked risk area, resulting in the selection of
10 different SWAs for each of the four high-risk audits. The OIG ranked the high-risk areas from
highest to lowest: multistate claimants, deceased persons’ Social Security numbers, suspicious
email accounts, and federal prisoners’ Social Security numbers.

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ETA transmitted the OIG’s claimant data and methodology to the 53 SWAs and
Guam in April 2021, including instructions and requirements on investigations
and due process. However, ETA did not perform the following oversight actions:

• monitor nor require states to report the results of research or
investigations of potentially fraudulent UI claims, which would have
assisted ETA in identifying high-risk areas for UI fraud;

• ensure the National Association of State Workforce Agencies’ Integrity
Data Hub (IDH) effectively provided states with useful information to assist
in identifying UI fraud; or

• ensure states consistently established and reported fraudulent
overpayments distributed to imposter claimants or identify systemic
weaknesses that resulted in states reporting zero fraudulent
overpayments when UI fraud risk was at its height during the pandemic.

These deficiencies occurred because ETA considered its oversight
responsibilities to be limited. Specifically, ETA: (1) did not consider monitoring
the results of states’ research and investigations as part of its responsibilities,
(2) measured IDH effectiveness by the number of claims submitted to and
flagged by the IDH rather than by the outcomes of states’ fraud investigations,
and (3) did not detect states’ information technology systems or staffing were
insufficient to establish or report fraudulent overpayments.

Without knowledge of the states’ investigative results of potentially fraudulent UI
claims, ETA’s ability to assess UI program performance, identify highrisk areas,
and provide states with additional tools and guidance to prevent fraudulent
overpayments was impaired. In addition, without ETA establishing an
outcomebased metric for IDH cross-matches, ETA was unable to determine the
IDH’s effectiveness in assisting states with identifying fraud.

We selected 168 claimants that filed potentially fraudulent UI claims across
10 SWAs for Regis to test. Regis determined $591,045 in UI benefits were paid,
and states confirmed $83,376 (14 percent) was fraudulent.

We appreciate the cooperation and courtesies ETA extended us during this audit.

Laura B. Nicolosi
Assistant Inspector General for Audit

U.S. Department of Labor – Office of Inspector General

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CONTRACTOR PERFORMANCE AUDIT REPORT

MANAGEMENT CONSULTANTS &
CERTIFIED PUBLIC ACCOUNTANTS

Independent Auditors’ Performance Audit Report on Unemployment Insurance
Claims Filed Using Suspicious Email Accounts

Lori Frazier Bearden
Acting Assistant Secretary
for Employment and Training
U.S. Department of Labor
200 Constitution Avenue NW
Washington, DC 20210

We were engaged by the U.S. Department of Labor (DOL or Department) Office
of Inspector General (OIG) to conduct a performance audit of the Employment
and Training Administration’s (ETA) oversight of state workforce agencies’
(SWA or state)5F6 efforts to address potentially fraudulent unemployment insurance
(UI) claims filed using suspicious email accounts.6F7

Specifically, we conducted the audit to answer the following question:

To what extent have ETA and SWAs addressed potentially fraudulent
Coronavirus Aid, Relief, and Economic Security (CARES) Act UI claims
filed using suspicious email accounts?

To answer this question, we reviewed the actions taken by ETA and SWAs—
from April 7, 2021, through September 15, 2022 (the audit period)—to address
the OIG-identified potentially fraudulent UI claims filed using suspicious email
accounts from March 2020 through October 2020. Using a risk-based approach,
the OIG selected 168 claimants for us to test from the States of Idaho, Maine,
Nebraska, New Jersey, Oregon, Pennsylvania, South Carolina, South Dakota,
Utah, and Virginia (10 SWAs). We also reviewed the 10 SWAs’ policies,
processes, and results of relevant actions taken. However, we did not make

6 This report uses “state” or “SWA” to refer to the body that administers the UI program within the
state, district, or territory. For the 50 states, as well as the U.S. Virgin Islands, Puerto Rico, and
the District of Columbia, that administrative body is a SWA. Therefore, there are 53 SWAs.
7 Suspicious email accounts are email domains that have been associated with fraudulent
activity.

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determinations of fraud or evaluate whether the states made the correct
determinations. In addition, we surveyed the remaining 43 SWAs and Guam;
25 SWAs (57 percent) responded. We also reviewed updated guidance and UI
payment reporting activities that extended outside of the audit period. See
Appendix A for additional details on scope and methodology.
RESULTS
We found the 10 SWAs confirmed some claimants filed fraudulent UI claims
using suspicious email accounts. However, ETA took limited action to ensure
states properly addressed the potentially fraudulent UI claims filed using
suspicious email accounts.

ETA is responsible for providing oversight of UI fraud risk management and
states’ management should report internal control deficiencies to ETA—
consistent with the Government Accountability Office’s (GAO) Standards for
Internal Control in the Federal Government. Specifically, the standards state the
oversight body is responsible for overseeing the strategic direction of the entity
and obligations related to the accountability of the entity. This includes
overseeing management’s design, implementation, and operation of an internal
control system. Further, management should report deficiencies identified in the
internal control system to the oversight body.

ETA transmitted the OIG’s claimant data and methodology associated with
potentially fraudulent UI claims to the 53 SWAs and Guam in April 2021,
including instructions and requirements on investigations and due process.
However, ETA did not perform the following oversight actions:

• monitor nor require states to report the results of research or
investigations of potentially fraudulent UI claims, which would have
assisted ETA in identifying high-risk areas for UI fraud;

• ensure the National Association of State Workforce Agencies’ (NASWA)
Integrity Data Hub (IDH) effectively provided states with useful information
to assist in identifying UI fraud; or

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These deficiencies occurred because ETA considered its oversight
responsibilities to be limited. Specifically, ETA: (1) did not consider monitoring
the results of states’ research and investigations as part of its responsibilities,
(2) measured IDH effectiveness by the number of claims submitted to and
flagged by the IDH rather than by the outcomes of states’ fraud investigations,
and (3) did not detect states’ information technology (IT) systems or staffing were
insufficient to establish or report fraudulent overpayments.

Without knowledge of the states’ investigative results, ETA’s ability to assess UI
program performance, identify high-risk areas, and provide states with additional
tools and guidance to prevent fraudulent overpayments was impaired. In
addition, without ETA establishing an outcome-based metric for IDH
crossmatches, ETA was unable to determine the IDH’s effectiveness in assisting
states with identifying fraud.
ETA Needs to Improve Its Oversight of
States’ Efforts to Identify UI Fraud Using
Suspicious Email Accounts
ETA is the federal agency responsible for providing states UI program direction
and oversight. ETA provided states with claimant data associated with potentially
fraudulent UI claims, recommended states use the IDH’s cross-match, and
required states to report aggregated fraudulent overpayment data. However,
after taking these actions, ETA did not sufficiently monitor states’ fraud detection
and reporting activities to ensure improvements to the integrity of the UI program.
This occurred because ETA considered its oversight responsibilities to be limited,
resulting in an impairment of its ability to assess performance of the UI program
and identify high-risk areas.
ETA Neither Monitored Nor Required States to
Report Results of Research or Investigations
In April 2021, ETA transmitted to 53 SWAs and Guam a list of claimants who
filed potentially fraudulent UI claims using suspicious email accounts, as
identified by the OIG. ETA sent the list with investigative instructions and due
process requirements. ETA officials confirmed the agency had received
electronic notifications that all 53 SWAs and Guam received the email and
downloaded the claimant files. However, only 8 of the 10 SWAs selected for
detailed review confirmed they received their respective claimant lists from ETA’s

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April 2021 transmission. The remaining two SWAs (New Jersey and Virginia)
could not confirm whether they received the list.

Through Unemployment Insurance Program Letter (UIPL) No. 23-20,7F8 ETA
strongly recommended states use the IDH’s Suspicious E-Mail Domains for the
regular UI, Pandemic Unemployment Assistance (PUA), and Pandemic
Emergency Unemployment Compensation (PEUC) programs. States that use the
IDH’s Suspicious E-Mail Domains tool receive flags for further investigation on
claims that contain email domains frequently associated with fraudulent activity.
However, we found Pennsylvania had not implemented the IDH Suspicious Email
Domain cross-match as an internal control tool to investigate the claimant list.

ETA would likely have been aware of the issues in New Jersey, Virginia, and
Pennsylvania if it had been monitoring the states’ results for trends and emerging
issues. However, after distributing the list, ETA did not monitor nor require the
states to report the results of any research or investigations performed, which
would have assisted ETA in identifying high-risk areas for UI fraud. GAO’s
Standards for Internal Control in the Federal Government prescribes
management should report deficiencies identified in the internal control system to
the oversight body, which—in the case of the UI system—is ETA.

The 10 SWAs informed us that they did not communicate the results of
subsequent research or investigations to ETA, even though their investigations
had confirmed the occurrence of fraudulent transactions. We submitted detailed
testing questionnaires to the 10 SWAs for each of the selected 168 UI claimants
to determine the SWAs’ actions taken to address the potentially fraudulent
CARES Act UI claims filed using suspicious email accounts. Each SWA’s
response indicated whether the claims had been determined by the state to be
fraudulent or nonfraudulent.

We found the 10 SWAs paid $591,045 in UI benefits and the states confirmed
$83,376 (14 percent) was fraudulent. This included $61,978 (74 percent) paid
against claims using suspicious email accounts and $21,398 (26 percent) paid
against claims filed for other fraudulent reasons, including identity fraud (see
Exhibit, Tables 2 and 3).

8 UIPL No. 23-20, Program Integrity for the Unemployment Insurance (UI) Program and the UI
Programs Authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act of
2020 - Federal Pandemic Unemployment Compensation (FPUC), Pandemic Unemployment
Assistance (PUA), and Pandemic Emergency Unemployment Compensation (PEUC) Programs
(May 11, 2020)

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In survey responses, 19 of 25 responding states8F9 (76 percent) indicated they did
not report to ETA any results of research or investigations regarding the claimant
list. The remaining six respondents indicated they generally report fraudulent
overpayments to ETA but did not report the results of investigations specific to
the claimant list.
ETA Did Not Consider Monitoring Results of SWAs’ Investigations as Part of
Its Oversight Responsibilities
ETA did not monitor the results of the SWAs’ research and investigations of
potentially fraudulent UI claims because it did not consider such monitoring
activities to be a required part of its oversight responsibilities. This is contrary to
government standards on management reporting and managing fraud risks, as
well as recommendations from both the OIG and GAO.

ETA relied on the SWAs’ submissions of aggregated overpayment and fraud
data on the following two distinct pandemic program reports:

1. Quarterly ETA 227: Overpayment Detection and Recovery reports9F10 for
the Federal Pandemic Unemployment Compensation (FPUC) and
PEUC programs; and
2. Monthly ETA 902P: Pandemic Unemployment Assistance Activities10F11
reports for the PUA program.

ETA required states to report aggregated data on UI claims, including
established overpayments and non-monetary determinations. ETA officials
asserted it is not ETA’s responsibility to require states to report the results of their
individual investigations. Specifically, ETA officials stated the agency provides
guidance and funding to states to operate UI programs and they had no reason
to collect claimant-level results of the SWAs’ investigations, nor did they have the
capacity to evaluate or analyze such data. However, ETA is the federal agency
responsible for providing UI program direction and oversight. This responsibility
includes distributing federal funds for states’ implementation of the CARES Act
UI programs, ensuring the integrity of the UI system, and managing fraud risks.

9 During a survey, we asked 43 SWAs and Guam if they reported results of investigations to ETA;
25 SWAs responded.
10 For FPUC and PEUC, SWAs used ETA 227 to report quarterly program activities, including the
establishment of overpayments, recoveries of overpayments, criminal and civil actions involving
overpayments obtained fraudulently, and an aging schedule of outstanding benefit overpayment
accounts.
11 For PUA, SWAs used ETA 902P to report monthly data on PUA activities, including application
and payment, denials and appeals, and overpayments.

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ETA agreed with the OIG’s finding in a previous COVID-19 report11F12 that there
was a significant increase in fraudulent activity in the UI program. In addition,
ETA subsequently provided the OIG’s list of claimants to the SWAs and informed
the SWAs it would collaborate with them to combat the sophisticated imposter
fraud affecting the UI system. Accordingly, ETA accepted and demonstrated its
monitoring responsibilities. Given this prior action, ETA’s decision not to monitor
the results of the SWAs’ research and investigations of potentially fraudulent
claims filed using suspicious email accounts did not align with its proposed
collaborative effort to combat imposter fraud expressed to the SWAs.

Further, ETA’s oversight responsibility to ensure the integrity of the UI system
includes managing its fraud risk environment. In October 2021,12F13 GAO
recommended DOL designate a dedicated entity and document its
responsibilities for managing the process of assessing fraud risks to the UI
program consistent with leading practices as provided in its Fraud Risk
Framework (see Figure 1). In addition, GAO recommended DOL should have,
among other things, clearly defined and documented responsibilities and
authority for managing fraud risk assessments and for facilitating communication
among stakeholders regarding fraud-related issues.

12 Alert Memorandum: The Employment and Training Administration (ETA) Needs to Ensure
State Workforce Agencies (SWA) Implement Effective Unemployment Insurance Program Fraud
Controls for High-Risk Areas, Report No. 19-21-002-03-315 (February 22, 2021), available at:
https://www.oig.dol.gov/public/reports/oa/2021/19-21-002-03-315.pdf
13 GAO, COVID-19: Additional Actions Needed to Improve Accountability and Program
Effectiveness of Federal Response, GAO-22-105051 (October 27, 2021), available at:
https://www.gao.gov/products/gao-22-105051

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Figure 1: GAO’s Framework for Managing Fraud Risks in Federal Programs

Source: GAO, A Framework for Managing Fraud Risks in Federal Programs,
Report No. GAO15593SP (July 2015), available at:
https://www.gao.gov/assets/gao-15-593sp.pdf

GAO has closed this recommendation based on actions taken by the
Department. On January 6, 2023, the DOL Secretary designated DOL’s Chief
Financial Officer (CFO) as the dedicated entity responsible for managing the
process of assessing fraud risks in the UI program. This designation is consistent
with leading practices as provided in GAO’s Fraud Risk Framework. However,
the designation came almost 3 years after the onset of the pandemic. The
beginning of the pandemic was the most critical time for administering new
temporary programs and states struggled to process the highest level of claims in
the history of the UI program.

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ETA, with the advisory support of the Office of the Chief Financial Officer (OCFO)
Fraud Risk Working Group, also developed a UI Fraud Risk Profile in
August 2023. However, this was 8 months after the CFO was designated as the
antifraud risk entity. In April 2024, ETA published “Building Resilience: A Plan to
Transform Unemployment Insurance.” This plan details seven transformation
activities, including bolstering state UI programs against fraud. The plan also
listed ongoing and completed strategies, as well as legislative reform proposals.

In May 2024, the OIG and OCFO met to discuss OCFO’s role and responsibilities
as related to the UI program. OCFO officials stated OCFO did not specialize in UI
programs; rather, OCFO advised ETA on UI fraud risk management. According
to OCFO officials, the UI Fraud Risk Profile is a living document. Further, they
stated ETA identified the risks it contains based on high-risk areas reported in
previous GAO and OIG reports, as well as data ETA regional offices collected
from the states. Altogether, ETA identified 18 UI fraud risks in the UI Fraud Risk
Profile, including:

• applicants fraudulently filing claims and receiving benefits across multiple
states,
• deceased persons’ identities used to file for UI benefits,
• suspicious email addresses or devices used to file UI claims, and
• incarcerated individuals or prison inmates applying for UI benefits while
misrepresenting their eligibility.13F14

In the UI Fraud Risk Profile, ETA and OCFO included responses to mitigate each
fraud risk. According to OCFO officials, the challenges to mitigating the risks
included the 53 SWAs having: (1) statutory authority to use or not use the IDH
services and (2) varying laws that define fraud.

Nonetheless, ETA developed a UI Integrity Strategic Plan through which it
updated, oversaw, and communicated its UI antifraud strategies. According to
ETA, the strategic plan continuously evolves and includes strategies and
antifraud controls to combat emerging fraud schemes and address the highest
residual risks identified in the UI Fraud Risk Profile. ETA requires states to
submit Integrity Action Plans every 6 months to capture ongoing and planned
actions to mitigate each fraud risk and reduce improper payments. Further,
according to the plan, ETA tracks and evaluates each fraud risk mitigation
strategy and action quarterly to determine their effectiveness in mitigating each
UI fraud risk and the level of risk that remains.

14 In some cases, fraud perpetrators have stolen inmates’ personally identifiable information to
apply for and receive UI benefits.

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ETA officials stated, if ETA determined a risk response effectively decreased the
UI fraud risk to an acceptable tolerance level, the agency would update the risk
ratings in the UI Fraud Risk Profile. Accordingly, these updates could reprioritize
the remaining UI risks. If UI risks are reprioritized, ETA would revise the
associated control strategies in the UI Integrity Strategic Plan to target higher
priority risks. However, if ETA determined a risk response was not effective
enough to lower a risk to an acceptable risk tolerance level, the agency would
develop additional control strategies. These additional strategies would be added
to the UI Integrity Strategic Plan and tracked on a quarterly basis until the control
was fully implemented.

This process would be repeated until ETA determined the risk response
effectively decreased the risk to an acceptable tolerance level. As new fraud
threats emerge, ETA would: (1) update the UI Fraud Risk Profile and
(2) incorporate and track additional risk response activities to mitigate the newly
identified risks in the UI Integrity Strategic Plan. However, ETA could not provide
documented evidence that it performed quarterly evaluations of strategies and
actions to determine their effectiveness in mitigating each fraud risk and the
remaining levels of risk.

On June 27, 2024, ETA, through Training and Employment Notice No. 32-23,
announced the launch of the WorkforceGPS UI Fraud Risk Management
webpage.14F15 ETA and OCFO developed the webpage to encourage states to
share feedback with their ETA regional office, including states’ best practices in
fraud risk management that could assist other states in operating their UI
programs.

In GAO’s Framework for Managing Fraud Risks in Federal Programs, GAO
emphasized it is critical that the antifraud entity be located within the agency and
not the OIG, so the OIG can retain independence to serve its oversight role.15F16
However, since June 2020, the OIG has been the leading federal entity collecting
pandemicrelated UI claimant data from states nationwide, performing risk
assessments, and identifying high-risk areas. As previously noted, the OIG
provided ETA and states with claimant data associated with high-risk potentially
fraudulent UI claims and its methodology. These efforts should not be deferred to
the OIG’s independent oversight. As the oversight agency for UI programs, ETA
is responsible for establishing a routine program integrity function. With the
support of the CFO as the designated antifraud entity, ETA needs to: (1) perform

15 Accessible with account creation request at:
https://ui.workforcegps.org/resources/2024/05/01/18/20/Unemployment_Insurance_Fraud_Risk_
Management
16 GAO, A Framework for Managing Fraud Risks in Federal Programs, GAO-15-593SP
(July 2015), available at: https://www.gao.gov/assets/gao-15-593sp.pdf

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its own data analytics and risk assessments, (2) identify high-risk areas, and
(3) update the UI Fraud Risk Profile.

In a September 2023 OIG report,16F17 the OIG identified the importance of data
analytics in providing effective UI program oversight and combating fraud. In
addition, the OIG recommended ETA create an integrity program that
incorporates a data analytics capability and regularly monitor state UI claims data
to detect and prevent improper payments, including fraudulent payments, and
identify trends and emerging issues that could negatively impact the UI program.

In response to the OIG’s report, ETA cited limited funding as the reason for not
being able to staff a data analytics team. In addition, ETA stated creating a data
analytics capability and monitoring state UI claims data would duplicate DOL’s
ongoing investment in the UI Integrity Center,17F18 including the IDH. As an
alternative, ETA stated it would leverage ongoing investments in the UI Integrity
Center’s IDH and work with the center to improve IDH data analytics capabilities
to better identify fraud trends. However, states are not required to participate in
the IDH and those that do participate do so to varying degrees, which has limited
the IDH’s effectiveness. As of September 21, 2023, 51 of the 53 SWAs18F19 used
IDH services to some degree. The OIG’s recommendations remained
unimplemented as of September 4, 2025. We are not reissuing these
recommendations but emphasize the importance of addressing them to resolve
the deficiencies identified within this report.
ETA Encouraged the Use of NASWA’s IDH
CrossMatch without Ensuring Its Effectiveness in
Assisting States with Detecting Fraud
In UIPL No.23-20, ETA strongly recommended states employ multiple
techniques, including the use of the IDH’s Suspicious Email Domain
cross-match, to validate UI claims and uncover suspicious or fraudulent
characteristics. We found 9 of the 10 SWAs (90 percent) responded they used
the IDH Suspicious Email Domain cross-match to identify UI claims filed using
suspicious email accounts. These responses align with the survey responses
where 19 of 25 respondents (76 percent) stated they used the IDH Suspicious

17 Alert Memorandum: ETA Needs to Incorporate Data Analytics Capability to Improve Oversight
of the Unemployment Insurance Program, Report No. 19-23-012-03-315 (September 25, 2023),
available at: https://www.oig.dol.gov/public/reports/oa/2023/19-23-012-03-315.pdf
18 The UI Integrity Center, established by the Department and operated by NASWA, is designed
to: (1) assist states in their efforts to more effectively prevent, detect, and recover improper and
fraudulent payments and (2) improve program integrity by developing and promoting innovative
program strategies.
19 Guam does not have an IDH agreement.

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Email Domain cross-match. However, ETA did not ensure the IDH cross-match
was effective in assisting states with detecting fraud.

According to NASWA’s data, claims filed using suspicious email accounts from
March 2020 through October 2020 were flagged on 291,844 occasions.
However, the number of flags alone did not indicate the effectiveness of the IDH
cross-match tool in assisting states with detecting fraudulent UI claims filed using
suspicious email accounts.

In a previous audit report,19F20 the OIG found greater oversight of IDH performance
was needed if ETA’s and states’ reliance on the tool for program integrity,
including fraud identification, was to continue. The OIG recommended ETA
complete an evaluation of the effectiveness of the IDH system, including the
methodology used in cross-matching data.

In response to the OIG’s recommendation, ETA contracted with a consulting firm
to perform a study20F21 of the IDH to answer the following questions:

1. How do participating states use the IDH to detect and prevent fraud?
2. How effective do states consider the IDH to be in detecting and preventing
fraud?
3. What options are available to inform continuous improvement and
effectiveness of the IDH?

The consulting firm found states lacked consistency in how and when they used
the IDH, which made it difficult to measure the tool. According to the IDH study,
data sharing is the most significant value in the IDH. However, when states,
particularly larger states, do not contribute data to the IDH, other states do not
benefit and the IDH loses its value. The consulting firm also found many states
only reported initial UI claims data to the IDH and did not contribute continued
claims information.
ETA Measured IDH’s Effectiveness by the Number of Claims Submitted and
Flagged Rather than by the Outcomes of SWAs’ Investigations
The purpose of the IDH is not to identify fraud, but rather to provide states with
information to help them accurately identify potentially fraudulent claims, with a
minimum number of false positives and false negatives. A false positive would be
a legitimate claim incorrectly flagged for review, and a false negative would be a
fraudulent claim not flagged as suspicious. However, ETA did not establish a

20 COVID-19: ETA Can Improve Its Oversight to Ensure Integrity over CARES Act UI Programs,
Report No. 19-23-011-03-315 (September 22, 2023), available at:
https://www.oig.dol.gov/public/reports/oa/2023/19-23-011-03-315.pdf
21 Exploratory Study of the Integrity Data Hub (IDH) Final Internal Report (March 2024)

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performance metric to effectively assess how well the IDH results achieved this
goal because the current metrics focus on inputs and outputs21F22 rather than the
outcomes (fraud or nonfraud) of states’ fraud investigations. The SWAs are not
required to report investigative outcome data back to the IDH system. Without
ETA establishing an outcome-based metric for IDH cross-matches, ETA is
unable to determine how effective the IDH is in assisting states with identifying
fraudulent claims.

In a September 2022 OIG report,22F23 the OIG recommended ETA work with
NASWA to: (1) update the IDH Participant Agreement to require states to submit
the results of their UI fraud investigations and (2) ensure IDH cross-matches are
effective at preventing the types of fraud detected during the pandemic and
regularly update the IDH system using the results of state fraud investigations.

ETA offered to revise its required UI-related reports as an alternate approach to
meet the intent of the OIG’s recommendations. The revised reports would
capture: (1) the tools or interventions, including the IDH, a state used to detect
potential fraud issues and (2) the aggregated data for outcomes (e.g.,
determination, overpayment amounts) of the issues such tools or inventions
detect. ETA stated revising its required UI-related reports would be more
effective. Specifically, the revisions would allow ETA to gather information on IDH
outcomes to track the results of investigations and determinations based on the
use of the IDH and other information. ETA estimated completing this alternative
approach to the recommendations in Fiscal Year 2024. However, as of
September 4, 2025, these OIG recommendations remain unimplemented. We
are not reissuing these recommendations but emphasize the importance of
addressing them to resolve the deficiencies identified within this report.
ETA Did Not Ensure States Consistently
Established and Reported Fraudulent
Overpayments or Identify Systemic Weaknesses
that Resulted in States Reporting Zeros
We found states did not consistently establish and report fraudulent
overpayments to ETA, including those resulting from identity fraud. Three of the
10 SWAs (Maine, Pennsylvania, and Virginia) did not establish nor report
overpayments related to imposter claimants unless an investigation subsequently

22 Inputs are the number of claims submitted to the IDH, and outputs are the number of claims
flagged by the IDH.
23 COVID-19: ETA and States Did Not Protect Pandemic-Related UI Funds from Improper
Payments Including Fraud or from Payment Delays, Report No. 19-22-006-03-315
(September 30, 2022), available at:
https://www.oig.dol.gov/public/reports/oa/2022/19-22-006-03-315.pdf

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identified the imposter. However, the non-identification of an imposter does not
negate the fact that an overpayment was made. Without complete overpayment
reporting, ETA cannot sufficiently perform its oversight role and effectively direct
its resources to address identity fraud. Table 1 lists the 10 SWAs’ responses
regarding whether they established and reported overpayments related to
imposter claimants.

Table 1: Summary of 10 SWAs’ Processes for Establishing and Reporting
Overpayments Disbursed to Imposter Claimants

SWA
Did the SWA have a
process for establishing
overpayments disbursed
to imposter claimants?
Did the SWA have a
process for reporting
overpayments disbursed to
imposter claimants?
Maine
No
No
Pennsylvania
No
No
Virginia
No
No
Idaho
Yes
Yes
Nebraska
Yes
Yes
New Jersey
Yes
Yes
Oregon
Yes
Yes
South Carolina
Yes
Yes
South Dakota
Yes
Yes
Utah
Yes
Yes
Source: Regis-generated, based on responses from the 10 SWAs

According to Maine, Pennsylvania, and Virginia officials, since the perpetrators of
identity fraud did not have UI accounts, the states did not establish or report
overpayments. The officials indicated that, if the states were to establish
overpayments, it would unduly impact the victims of identity fraud.

According to the Maine SWA, since it could not establish overpayments against
identity fraud victims, it was awaiting additional guidance from ETA on how to
establish imposter fraud overpayments. In April 2021, ETA issued guidance in
UIPL No. 162123F24 that instructed states to take precautions to protect the rights of
and mitigate negative consequences to identity fraud victims. Maine officials
stated the UIPL No. 16-21 guidance led to many questions; however, the officials
were unable to provide us with specific questions or concerns regarding the

24 UIPL No. 16-21, Identity Verification for Unemployment Insurance (UI) Claims (April 13, 2021)

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guidance. Based on our review of UIPL No. 16-21, we determined the guidance
sufficiently provided instructions for states to establish and report fraudulent
overpayments without penalizing the victim.

Further, the Pennsylvania and Virginia SWAs also initially lacked a process for
establishing and reporting fraudulent overpayments disbursed to imposters;
however, these SWAs did not respond that there was a lack of ETA guidance on
the process.

The Pennsylvania officials stated, in May 2024, the SWA began assigning
pseudo accounts for overpayments made to imposters. Further, the officials
stated the Pennsylvania SWA implemented a process to establish these
overpayments on the ETA 227 and 902P reports. However, as of June 26, 2025,
Pennsylvania officials did not have a process for reporting these overpayments.

The Virginia SWA officials indicated it was working on implementing a system to
assign pseudo accounts to the imposter claims, which would enable the SWA to
establish overpayments, and subsequently report them on the ETA 227 and
902P reports. According to Virginia officials, they did not have an anticipated
implementation date.

Since April 2020, UIPL Nos. 15-20,24F25 16-20,25F26 and 17-2026F27 have required SWAs
to report FPUC, PUA, and PEUC overpayments, including fraud, on ETA 227 (for
FPUC and PEUC) and 902P (for PUA) reports. We acknowledge that, for the first
3 months the programs were in existence, there may have been legitimate
reasons the states lacked activity to report. However, the applicable UIPLs did
not waive the reporting requirements for that period. Therefore, we analyzed the
UI reporting activity for the 10 SWAs from April 2020 through September 2022,
including the first 3 months for which states were required to report.

As of January 2025, we found that, from April 2020 through September 2022, the
10 SWAs reviewed periodically reported zero fraudulent overpayments related to:
(1) the FPUC and PEUC programs on ETA 227 reports and (2) the PUA program
on ETA 902P reports. However, it is unlikely there were no fraudulent
overpayments disbursed for multiple quarters, considering the: (1) high UI fraud

25 UIPL No. 15-20, Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020—
Federal Pandemic Unemployment Compensation (FPUC) Program Operating, Financial, and
Reporting Instructions (April 4, 2020)
26 UIPL No. 16-20, Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020—
Pandemic Unemployment Assistance (PUA) Program Operating, Financial, and Reporting
Instructions (April 5, 2020)
27 UIPL No. 17-20, Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020—
Pandemic Emergency Unemployment Compensation (PEUC) Program Operating, Financial, and
Reporting Instructions (April 10, 2020)

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risks associated with the quick implementation of the new, high-dollar value
pandemic programs; (2) evolving guidance; and (3) rapid increase in UI claims.
As part of ETA’s oversight role, it should have identified systemic weaknesses
that resulted in states reporting zero fraudulent overpayments when UI fraud risk
was at its height during the pandemic.

For FPUC, the following three SWAs reported zero fraudulent overpayments on
the quarterly ETA 227 reports and one SWA did not submit the reports:

• Maine reported zero FPUC fraudulent overpayments for the four quarters
ending June 30, 2020, through March 31, 2021;

• Oregon reported zero FPUC fraudulent overpayments for the quarter
ending June 30, 2020;

• Pennsylvania reported zero FPUC fraudulent overpayments for the four
quarters ending June 30, 2020, through March 31, 2021; and

• New Jersey did not submit ETA 227 reports for the 10 quarters ending
June 30, 2020, through September 30, 2022.

For PEUC, the following seven SWAs reported zero fraudulent overpayments on
the quarterly ETA 227 reports and one SWA did not submit the reports:

• Maine reported zero PEUC fraudulent overpayments for the three quarters
ending June 30, 2020, through December 31, 2020;

• Nebraska reported zero PEUC fraudulent overpayments for the two
quarters ending June 30, 2020, and March 31, 2022.

• Oregon reported zero PEUC fraudulent overpayments for the quarter
ending June 30, 2020;

• Pennsylvania reported zero PEUC fraudulent overpayments for the
quarter ending June 30, 2020;

• South Dakota reported zero PEUC fraudulent overpayments for the three
quarters ending June 30, 2020, September 30, 2020, and
September 30, 2022;

• Utah reported zero PEUC fraudulent overpayments for the quarter ending
June 30, 2020;

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• Virginia reported zero PEUC fraudulent overpayments for the quarter
ending June 30, 2020; and

• New Jersey did not submit ETA 227 reports for the 10 quarters ending
June 30, 2020, through September 30, 2022.

For PUA, all 10 SWAs reported zero fraudulent overpayments on the monthly
ETA 902P reports as follows:27F28

• Idaho reported zero PUA fraudulent overpayments for the 2 months
ending April 2020 and May 2020;

• Maine reported zero PUA fraudulent overpayments for the 19 months
ending April 2020 through July 2021, October 2021, January 2022, and
February 2022;

• Nebraska reported zero PUA fraudulent overpayments for the 6 months
ending April 2020, May 2020, November 2021, December 2021,
March 2022, and September 2022;

• New Jersey reported zero PUA fraudulent overpayments for the
28 months ending April 2020 through July 2021, September 2021, and
November 2021 through September 2022;

• Oregon reported zero PUA fraudulent overpayments for the 4 months
ending April 2020 through August 2020;

• Pennsylvania reported zero PUA fraudulent overpayments for the
7 months ending April 2020 through September 2020, and
December 2020;

• South Carolina reported zero PUA fraudulent overpayments for the
3 months ending April 2020, May 2020, and August 2021;

• South Dakota reported zero PUA fraudulent overpayments for the
10 months ending April 2020 through June 2020, July 2021,
November 2021, December 2021, April 2022, May 2022, July 2022, and
August 2022;

28 PUA fraudulent overpayments excluded fraudulent payments made as a result of identity theft.
States are required to report overpayments made as a result of identity theft separately on the
ETA 902P report.

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• Utah reported zero PUA fraudulent overpayments for the 9 months ending
April 2020 through July 2020, September 2020, and June 2022 through
September 2022; and

• Virginia reported zero PUA fraudulent overpayments for the month ending
February 2022.

Previous OIG reports identified states’ pervasive non-reporting of overpayments,
including fraud, for CARES Act UI programs due to antiquated IT systems. In
May 2021,28F29 the OIG recommended ETA assist states with claims,
overpayments, and fraud reports to create clear and accurate information. In
August 2022,29F30 the OIG similarly recommended ETA work with states to ensure
submission of missing reports and information before the commencement of
ETA’s Fiscal Year 2022 financial statement audit.

In response to the August 2022 report, ETA agreed with the OIG that complete
and accurate reporting is important to the administration and oversight of the
temporary UI programs created under the CARES Act and related subsequent
legislation. To address the issue, ETA: (1) provided states training on reporting
accurate data and submitting ETA 227 and ETA 902P reports, (2) required
corrective action plans for states with challenges in reporting as part of their
State Quality Service Plans,30F31 and (3) conducted state-specific technical
assistance.

Also, ETA made $562.6 million available to support the 53 SWAs and Guam with
fraud detection and prevention, including identity verification and overpayment
recovery activities in pandemic-related UI programs.

As of February 2025, more than 2 years since the OIG’s August 2022
recommendation, 1 of the 10 SWAs (New Jersey) is still establishing and
reporting fraudulent overpayments for the pandemic UI programs. New Jersey
officials stated reporting fraudulent overpayments will remain an issue until they
implement a modernized IT system. The officials did not have an anticipated

29 COVID-19: States Struggled to Implement CARES Act Unemployment Insurance Programs,
Report No. 19-21-004-03-315 (May 28, 2021), available at:
https://www.oig.dol.gov/public/reports/oa/2021/19-21-004-03-315.pdf
30 Alert Memorandum: The Employment and Training Administration Needs to Ensure State
Workforce Agencies Report Activities Related to CARES Act Unemployment Insurance
Programs, Report No. 19-22-004-03-315 (August 2, 2022), available at:
https://www.oig.dol.gov/public/reports/oa/2022/19-22-004-03-315.pdf
31 The annual State Quality Service Plan is the principal vehicle the state UI programs use to
plan, record, and manage improvement efforts. The State Quality Service Plan serves as the
programmatic plan portion of the grant document through which states receive federal UI
administrative funding.

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completion date for reporting fraudulent overpayments for FPUC, PEUC, and
PUA.

We commend ETA for continuing to work with the New Jersey SWA to identify
and report fraudulent overpayments in the CARES Act UI programs. However,
these efforts to establish and report fraudulent overpayments have been ongoing
for more than 2 years and, based on the absence of a completion date, could
take longer.
Antiquated IT Systems or Staffing Challenges Caused States’ Fraudulent
Overpayment Reporting Issues
The SWAs did not consistently establish and report fraudulent overpayments
because some SWAs did not have the IT system capability to establish and
report fraudulent overpayments distributed to imposter claimants without flagging
the victims’ Social Security numbers (SSN), thus penalizing the victims. Without
this IT system capability, the overpayment reporting on the ETA 227 and 902P
reports was inconsistent among states and likely understated. However, the
association of the fraudulent activity with victims’ SSNs does not negate the
SWAs’ responsibility to report all overpayments, including those due to identity
fraud.

ETA issued guidance to the SWAs to protect identity fraud victims and ensure
the owners of SSNs are not held responsible. Specifically, UIPL No. 16-21 notes,
when a state determines identity fraud has occurred, it must take precautions to
protect the rights of and mitigate the negative consequences to the identity fraud
victim, including:

• ensuring that if a future claim is filed under the victim’s SSN, the claimant
undergoes a secondary identity verification process, while minimizing the
burden on the victim;
• ensuring the owner of the SSN is not held responsible for any
overpayment or, whenever possible, is not issued a Form 1099G at the
end of the year;
• excluding the overpayment from the Treasury Offset Program and
suspending Benefit Payment Control collection activity; and
• refraining from initiating any legal actions against the actual owner of the
SSN.

The UIPL recommends an option that states can use to mitigate negative
impacts on a victim: establishing a pseudo claim record and transferring all claim
information regarding the imposter’s claim to the pseudo claim once the state
makes a fraud determination. The pseudo claim record removes the fraudulent

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activity from the victim’s SSN. This allows the victim to file UI claims in the future
and preserves data from the fraudulent activity to be used for future analytics.

According to UIPL No. 20-21, Change 1,31F32 states that may not have the
administrative capability to move fraudulent activity to a pseudo claim may
choose to temporarily mark the overpayment as “uncollectible.” This ensures
victims are not negatively impacted while the state develops a process to
disassociate fraudulent activity from the victim’s SSN. However, this temporary
“uncollectible” classification does not constitute waiving recovery of the
overpayment. Therefore, the overpayment should still be reported to ETA on
ETA 227 or 902P reports.

Additionally, due to IT system programming challenges, staffing challenges, or
data entry errors, we found 7 of the 10 SWAs experienced difficulties that led
them to report zero fraudulent overpayments for the FPUC, PEUC, or PUA
programs, as follows:
Idaho
Idaho officials stated no PUA fraudulent overpayments were established due to
the program being new and staff being reassigned to assist with the large influx
of benefit payments.
Maine
Maine officials stated the SWA’s IT system had issues tracking FPUC
overpayments to the underlying weekly program entitlements for quarters ending
June 30, 2020, through March 31, 2021. According to Maine officials, as of
October 2024, the issue was resolved and amended reports were submitted to
ETA. In addition, Maine officials stated that, due to the unprecedented volume of
incoming claims, the SWA experienced staffing challenges that led to reassigning
its investigators to process claims. Therefore, Maine did not have sufficient
investigator resources to identify, establish, and report PUA overpayments.
Nebraska
Nebraska officials stated fraud investigations were deferred as they focused
resources on processing the increased UI claims. The agency officials stated
Nebraska retroactively reviewed claims for zero PUA overpayments and they
were reported in subsequent reports.

32 UIPL No. 20-21, Change 1, Additional State Instructions for Processing Waivers of Recovery of
Overpayments under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, as
Amended (February 7, 2022)

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New Jersey
New Jersey officials stated the SWA’s antiquated UI IT system was unable to
compile accurate data for the FPUC, PEUC, and PUA programs. The officials
stated New Jersey is in the process of modernizing its system and anticipates full
completion by late Calendar Year 2026.
Oregon
Oregon officials stated the SWA’s IT system was not programmed to establish
and report FPUC and PUA overpayments from April 2020 through August 2020.
State officials indicated the CARES Act programs were new and had different
laws, rules, and processes, which contributed to the delay in programming
IT system requirements. This issue was resolved in August 2020 and Oregon
reported overpayments on the ETA 227 and 902P reports beginning the quarter
and month ending September 30, 2020.
Pennsylvania
Pennsylvania officials stated the SWA had to reassign staff to process the large
increase in claims and this resulted in insufficient program integrity staff to
establish and report FPUC, PEUC, and PUA fraudulent overpayments. In
addition, Pennsylvania officials stated IT system limitations resulted in the SWA
reporting zero FPUC fraudulent overpayments.
South Carolina
South Carolina officials stated they did not establish PUA fraudulent
overpayments in May 2020. In addition, the officials stated there was likely an
isolated data entry error that resulted in the SWA reporting zero PUA fraudulent
overpayments in August 2021. As a result of our inquiry, South Carolina officials
performed a subsequent review and stated they adjudicated 61 PUA fraud cases
and established $69,169 in fraudulent overpayments.
Three SWAs Responded with No Reporting Issues
Two SWAs (South Dakota and Utah) responded that they did not detect
fraudulent overpayments in the earlier quarters; therefore, they did not establish
or report any fraudulent PEUC and PUA overpayments. However, considering
the high UI fraud risks associated with the largest percentage of initial payments
and benefits being disbursed from April 2020 through September 2020, it is
unlikely that there were no fraudulent overpayments disbursed by the two SWAs
during that period. In addition, one SWA (Virginia) responded that there was

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insufficient time to investigate, establish, and report PEUC fraudulent
overpayments.

South Dakota officials stated the SWA did not detect PEUC fraudulent
overpayments for three quarters and PUA fraudulent overpayments for
10 months. South Dakota disbursed 40,651 initial payments totaling
$121.8 million during the pandemic program eligibility period (April 2020 through
September 2021). From April 2020 through September 2020, South Dakota
disbursed 33,176 initial payments (82 percent) totaling $84.3 million (69 percent)
(see Figure 2).

Figure 2: South Dakota’s First Benefit Payments,
April 2020 through September 2021

Source: Analysis using ETA monthly program and financial data

Utah officials stated the SWA did not establish PEUC fraudulent overpayments
for 3 months and PUA fraudulent overpayments for 9 months. Utah disbursed
165,240 initial payments totaling $744.5 million during the pandemic program
eligibility period (April 2020 through September 2021). From April 2020 through
September 2020, Utah disbursed 125,189 initial payments (76 percent) totaling
$503.8 million (68 percent). See Figure 3 below.

Apr -
Jun
Jul -
Sep
Oct -
Dec
Jan -
Mar
Apr -
Jun
Jul -
Sep
2020
2020
2020
2021
2021
2021
Total Benefits Paid
$56,236
$28,053
$11,295
$16,385
$6,271
$3,555
First Payments
29,402
3,774
2,424
3,178
1,186
687
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
First Payments
Total Benefits Paid (in thousands)
Reporting Period
Total Benefits Paid
First Payments

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Figure 3: Utah’s First Benefit Payments,
April 2020 through September 2021

Source: Analysis using ETA monthly program and financial data

Viriginia officials stated the first payable week for PEUC was April 4, 2020.
Therefore, the officials stated there was insufficient time to pay UI benefits and
establish an overpayment within an 11-week period, which would have ended
June 30, 2020. In addition, Virginia officials stated reporting overpayments is
based on when overpayments are established and not when the weeks’ benefits
were actually paid. We agree that overpayments are reported when they are
established; however, Virginia officials did not provide any evidence to support
their processes for establishing PEUC fraudulent overpayments would take more
than 3 months. In addition, considering some SWAs did report fraudulent
overpayments for the quarter ending June 30, 2020, we determined that it would
have been reasonable for Virginia to establish and report fraudulent
overpayments for the quarter ending June 30, 2020.
State Finality Laws May Restrict SWAs’ Ability to Establish and Report
Overpayments
The 10 SWAs reviewed were taking corrective actions to comply with fraudulent
overpayment reporting requirements. However, many states have unemployment
Apr-
Jun
Jul-
Sept
Oct-
Dec
Jan-
Mar
Apr-
Jun
Jul-
Sept
2020
2020
2020
2021
2021
2021
Total Benefits Paid $302,976 $200,833 $78,011
$74,539
$49,835
$38,269
First Payments
109,098
16,091
11,281
11,958
9,497
7,315
0
20,000
40,000
60,000
80,000
100,000
120,000
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
First Payments
Total Benefits Paid (in thousands)
Reporting Period
Total Benefits Paid
First Payments

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compensation laws, or finality laws, that limit the length of time during which they
may reconsider a prior determination on a regular UI claim, thus establishing and
reporting overpayments. In December 2023, ETA issued UIPL No. 05-24,32F33
which authorized SWAs to apply state finality laws to CARES Actfunded UI
benefits.

We are concerned that, by applying state finality laws to the pandemic-funded
UI claims, states will not have an incentive to identify overpayments and fraud.
The states already have backlogs of UI claims to review for establishment and
reporting of fraudulent overpayments. If the period for reconsideration of those
claims in the state’s finality law has elapsed, the SWA may no longer review the
claim to determine if the disbursement was proper or if an overpayment,
including a fraudulent overpayment, was made.
CONCLUSION
The OIG has estimated at least $191 billion (22 percent) of $888 billion in
pandemic UI benefits could have been paid improperly, with a significant portion
attributable to fraud. We acknowledge ETA demonstrated a responsibility toward
improving UI program integrity by: (1) transmitting the OIG’s list of potentially
fraudulent claimants33F34 to states, along with instructions and specific requirements
for conducting investigations and due process, and (2) developing a UI Fraud
Risk Profile based on risks reported by the OIG and recommendations made by
GAO.

While these actions served to guard against fraud in the UI program, SWAs could
benefit from more direction and assistance from ETA to identify and address
suspected fraudulent activity. This is even more critical when federal funds are at
stake—such as with the key UI programs authorized by the CARES Act that
provided an unprecedented level of funding and thus created an increased risk of
UI program fraud and abuse. ETA needs to take a leading role in collecting UI
claimant data from states, performing risk assessments, and identifying high-risk
areas. This would allow the agency to be better positioned to effectively assist
states with developing response activities to address everevolving fraud risks
that threaten the integrity of the UI program.

33 UIPL No. 05-24, Application of State Finality Laws Regarding Temporary Unemployment
Compensation (UC) Programs under the Coronavirus Aid, Relief, and Economic Security
(CARES) Act (December 29, 2023)
34 Potentially fraudulent claimants refer to the SSNs associated with potentially fraudulent
UI claims.

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RECOMMENDATIONS
We did not make any new recommendations in this report. To address the issues
identified in this report and improve ETA’s oversight of states’ efforts to identify
fraudulent UI claims, we made Recommendations 1 through 3 to ETA in the
series’ first report, titled COVID-19: ETA Needs to Improve Its Oversight of
States’ Efforts to Identify Multistate UI Fraud.34F35
Analysis of ETA’s Comments
In response to the draft of this report, ETA provided detail that, in its view,
clarified content within the report. We carefully reviewed ETA’s response in full.
Our report was accurate as stated; thus, while we made minor clarifying edits to
the final report, the agency’s response did not result in any material changes to
our reported results or conclusions. Synopses of ETA’s key comments on our
finding follow:

• ETA stated the draft report noted that ETA did not require the SWAs to
report the results of their investigations and actions regarding the OIG’s
claimant data. However, ETA stated it conducted extensive monitoring of
states’ administration and operation of UI programs as part of its oversight
responsibilities. ETA also stated it had established UI program
performance measures to assess the timeliness and quality of SWAs’
adjudications of UI claims. Specifically, ETA stated it analyzed states’
aggregate data on the timeliness and quality of UI eligibility determinations
and oversaw quality reviews of adjudication determinations.

In addition, ETA stated the draft report asserted that ETA’s decision not to
monitor the results of SWAs’ research and investigations of the referred
potentially fraudulent claims was insufficient for its collaborative effort to
combat imposter fraud expressed to the SWAs. However, ETA asserted it
was not its intent to follow up with each SWA on their investigations of
every claim included in the OIG’s claimant data. ETA stated it engaged in
program direction and oversight by providing guidance, funding, and
resources to support SWAs in their efforts to combat imposter fraud.

Further, ETA stated it had limited statutory authority to require states to
use certain fraud prevention tools such as IDH, but would continue to

35 COVID-19: ETA Needs to Improve Its Oversight of States’ Efforts to Identify Multistate UI
Fraud, Report No. 19-25-004-03-315 (August 4, 2025), available at:
https://www.oig.dol.gov/public/reports/oa/2025/19-25-004-03-315.pdf

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explore additional opportunities, including, but not limited to, seeking
Congressional action. ETA requested the OIG’s ongoing support in this
endeavor and welcomed more discussions with the OIG regarding specific
strategies and actions to strengthen the UI system and further bolster
fraud prevention in the program. Finally, ETA stated it will take action to
address the recommendations included in the first report in this series.

o Without knowledge of the states’ investigative results, ETA’s ability
to assess UI program performance was impaired. Further, in ETA’s
transmission of the OIG’s claimant data to the states, it informed
the SWAs that it was committed to working with states to combat
the sophisticated imposter fraud impacting the UI system. The
transmission of claimant data with investigative instructions alone
was insufficient. ETA’s monitoring of the SWAs’ investigative
results was necessary to confirm the extent to which fraud existed
in the high-risk areas identified by the OIG.

The agency’s response to the draft report is included in its entirety in Appendix B.
We appreciate the cooperation and courtesies ETA extended to us during this
audit.

Regis & Associates, P.C.
Washington, DC
September 16, 2025

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EXHIBIT: TESTING RESULTS, FRAUDULENT AND
NONFRAUDULENT PAYMENTS FOR THE 10 SWAS
Table 2: Fraudulent and Nonfraudulent Payment Breakdown of Suspicious
Email Account Claimants for 10 SWAs

State
Total
Claimants
Sampled
Total
Benefit
Payments
Number of
Nonfraudulent
Claimants35F36
Nonfraudulent
Amounts Paid
Number of
Fraudulent
Claimants36F37
Fraudulent
Amounts
Paid
Idaho
10
$23,781
6
$23,781
4
$0
Maine
10
$33,520
1
$1,632
9
$31,888
Nebraska
10
$3,940
3
$3,940
7
$0
New Jersey37F38
19
$7,432
1
$6,006
18
$1,426
Oregon
10
$164,622
10
$164,622
0
$0
Pennsylvania
38
$175,288
10
$143,388
28
$31,900
South Carolina
10
$46,915
9
$46,915
1
$0
South Dakota
10
$37,005
5
$37,005
5
$0
Utah
10
$0
2
$0
8
$0
Virginia
41
$98,542
15
$80,380
26
$18,162
Totals
168
$591,045
62
$507,669
106
$83,376
Source: Regis’ analysis based on SWAs’ responses to questionnaires

36 Nonfraudulent claimants refers to the sampled SSNs that the SWAs determined were not
associated with fraudulent UI claims. Some nonfraudulent claimants may not have received
payment due to eligibility issues.
37 Fraudulent claimants refers to the sampled SSNs that the SWAs determined were associated
with fraudulent UI claims.
38 The original sample for the New Jersey SWA consisted of 32 claimants. However, despite
initiating the application process, 13 claimants did not file claims during the audit period. As a
result, our audit procedures were performed on the remaining 19 sampled claimants whose data
is presented above.

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Table 3: Fraudulent Payment Breakdown of Suspicious Email Account
Claimants and Other Fraudulent Reasons38F39 for 10 SWAs

State
Number of
Fraudulent
Claimants39F40
Fraudulent
Amounts
Paid
Number of
Suspicious
Email
Account
Claimants
Total Paid to
Suspicious
Email
Account
Claimants
Number of
Claimants
with Other
Reasons
Total Paid to
Claimants
with Other
Reasons
Idaho
4
$0
3
$0
1
$0
Maine
9
$31,888
9
$31,888
0
$0
Nebraska
7
$0
0
$0
7
$0
New Jersey
18
$1,426
10
$0
8
$1,426
Oregon
0
$0
0
$0
0
$0
Pennsylvania
28
$31,900
4
$12,560
24
$19,340
South Carolina
1
$0
0
$0
1
$0
South Dakota
5
$0
2
$0
3
$0
Utah
8
$0
0
$0
8
$0
Virginia
26
$18,162
13
$17,530
13
$632
Total
106
$83,376
41
$61,978
65
$21,398
Source: Regis’ analysis based on SWAs’ responses to questionnaires

39 Other fraudulent reasons include deceased individuals, multistate claimants, out-of-state
wages, identity fraud, and suspicious banking information.
40 Fraudulent claimants refers to the sampled SSNs that the SWAs determined were associated
with fraudulent UI claims.

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APPENDIX A: SCOPE AND METHODOLOGY
Scope
The audit covered the actions taken by ETA and SWAs from April 7, 2021,
through September 15, 2022, to address OIG-identified, potentially fraudulent
CARES Act UI claims filed using suspicious email accounts from March 2020
through October 2020. To ensure currency and relevance, we also reviewed
updated ETA guidance and UI payment reporting activities that extended outside
of the audit period.
Methodology
We conducted this performance audit in accordance with generally accepted
government auditing standards. Those standards require that we plan and
perform the audit to obtain sufficient, appropriate evidence to provide a
reasonable basis for our findings and conclusions based on our audit objective.
We believe that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.

We obtained and reviewed the CARES Act and SWAs’ policies and procedures
related to the UI claims process, establishment and recovery of overpayments,
and identification of fraudulent or nonfraudulent payments. We submitted process
review and internal control questionnaires to the 10 SWAs to gain an
understanding of the SWAs’ internal control tools used to investigate potentially
fraudulent claimants. We also conducted walkthroughs to gain a better
understanding of SWAs’ internal controls that were considered significant to the
audit objective.

Additionally, we obtained and reviewed ETA’s UIPLs and guidance provided to
the states on investigation of the potentially fraudulent claims filed using
suspicious email accounts that the OIG identified. Furthermore, we submitted
detailed testing questionnaires to 10 SWAs for each of the selected 168 UI
claimants.40F41 We used the questionnaires to determine the SWAs’ actions to
address the OIG-identified potentially fraudulent CARES Act UI claims filed by
claimants using suspicious email accounts. Based on each SWA’s response, we
categorized the claims as having been determined by the state to be either

41 The OIG originally selected a sample of 181 claimants. However, 13 claimants from New
Jersey were purged from its UI system due to no claims being filed. This resulted in a total of
168 claimants being tested. The 13 claimants from New Jersey initiated the application process;
however, they did not follow through with submitting claims.

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fraudulent or nonfraudulent. We also separated fraudulent claims attributable to
the claimants who filed using suspicious email accounts from fraudulent claims
for other reasons.
Selection of SWAs
We conducted an in-depth examination of 10 OIG-selected SWAs—Idaho,
Maine, Nebraska, New Jersey, Oregon, Pennsylvania, South Carolina, South
Dakota, Utah, and Virginia. The OIG selected this sample based on the highest
per capita benefits paid. The OIG calculated per capita benefits using the number
of claimants flagged for filing claims using suspicious email accounts and the
benefit amounts paid to these claimants. The OIG then ranked the SWAs by the
per capita amount, largest to smallest, and selected the top 10 SWAs. The OIG
also controlled for repetition of SWAs within other high-risk areas. Therefore, the
OIG did not select the same SWAs if they appeared in a higher-ranked risk area,
resulting in the selection of 10 different SWAs for each of the four high-risk
audits. The OIG ranked the high-risk areas from highest to lowest: multistate
claimants, deceased persons’ SSNs, suspicious email accounts, and federal
prisoners’ SSNs. In addition, we surveyed the remaining 43 SWAs and Guam41F42
to obtain information on processes related to investigating and reporting
fraudulent UI claims filed using suspicious email accounts.
Data Reliability
We conducted tests to determine the reliability of UI claimant data provided by
the SWAs related to UI claims filed using suspicious email accounts. To assess
the reliability of the data, we performed procedures to test for completeness,
accuracy, consistency, and validity. This included corroborating the claimant data
against the SWAs’ UI systems records, including evidence of payment and other
evidence provided by the SWAs. The supporting evidence was used to confirm
whether the claims were paid, the determination made on whether a claim was
fraudulent or nonfraudulent, and the status of any ongoing fraud investigation, et
cetera.

We also provided the SWAs with questionnaires to provide responses related to
each of the selected claimants. We then reviewed the responses to ensure they
were consistent with the supporting documentation. When necessary, we held
meetings and requested additional documentation to substantiate the validity of
the claimant data and responses provided.

42 We sent out surveys to 43 SWAs and Guam. We excluded the 10 SWAs subject to in-depth
examination. Of the 43 SWAs and Guam surveyed, 25 SWAs (57 percent) responded.

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Internal Controls
We obtained an understanding of SWAs’ internal controls, including information
technology and systems, that were considered significant to the audit objective.
We used our understanding of the internal controls to help design audit
procedures relevant to the audit objective and not to provide assurance on the
internal controls. Consequently, we did not express an opinion on ETA’s or
SWAs’ internal controls. Our consideration of internal controls for SWAs to
address the risks associated with fraudulent claims filed using suspicious email
accounts would not necessarily disclose all matters that might rise to the level of
significant deficiencies.
Sampling
We used sampling in this audit to evaluate ETA’s and SWAs’ efforts to address
potentially fraudulent UI claims filed using suspicious email accounts. We
extracted a random stratified sample of claimants from the selected states to
determine whether corrective actions were taken. We determined the sample
size using statistical sampling that factored a desired precision of 5 percent, a
confidence level of 95 percent, and an expected error rate of 10 percent to select
sample claimants from the population. Per statistical sample size standards, we
used 10 as the sample size for states with a calculated sample size less than 10.
Criteria
• Coronavirus Aid, Relief, and Economic Security Act, Public Law 116-136
(March 27, 2020)
• Continued Assistance for Unemployed Workers Act of 2020,
Subchapter VI, Section 261, Mixed Earner Unemployment Compensation
(December 27, 2020)
• American Rescue Plan Act of 2021, including Title IX, Subtitle A, Crisis
Support for Unemployed Workers, Public Law 117-2 (March 11, 2021)
• GAO-14-704G, Standards for Internal Control in the Federal Government
(September 2014)
• GAO-15-593SP, A Framework for Managing Fraud Risks in Federal
Programs (July 2015)
• GAO-15-105051, COVID-19: Additional Actions Needed to Improve
Accountability and Program Effectiveness of Federal Response
(October 2021)
• UIPL No. 15-20, Coronavirus Aid, Relief, and Economic Security (CARES)
Act of 2020—Federal Pandemic Unemployment Compensation (FPUC)
Program Operating, Financial, and Reporting Instructions (April 4, 2020)

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• UIPL No. 16-20, Coronavirus Aid, Relief, and Economic Security (CARES)
Act of 2020—Pandemic Unemployment Assistance (PUA) Program
Operating, Financial, and Reporting Instructions (April 5, 2020)
• UIPL No. 17-20, Coronavirus Aid, Relief, and Economic Security (CARES)
Act of 2020—Pandemic Emergency Unemployment Compensation
(PEUC) Program Operating, Financial, and Reporting Instructions
(April 10, 2020)
• UIPL No. 23-20, Program Integrity for the Unemployment Insurance (UI)
Program and the UI Programs Authorized by the Coronavirus Aid, Relief,
and Economic Security (CARES) Act of 2020 - Federal Pandemic
Unemployment Compensation (FPUC), Pandemic Unemployment
Assistance (PUA), and Pandemic Emergency Unemployment
Compensation (PEUC) Programs (May 11, 2020)
•
UIPL No. 16-21, Identity Verification for Unemployment Insurance (UI)
Claims (April 13, 2021)
• UIPL No. 20-21, Change 1, Additional State Instructions for Processing
Waivers of Recovery of Overpayments under the Coronavirus Aid, Relief,
and Economic Security (CARES) Act, as Amended (February 7, 2022)
• UIPL No. 05-24, Application of State Finality Laws Regarding Temporary
Unemployment Compensation (UC) Programs under the Coronavirus Aid,
Relief, and Economic Security (CARES) Act (December 29, 2023)
• Training and Employment Notice No. 32-23, Unemployment Insurance
(UI) Fraud Risk Management Resources (June 27, 2024)
Prior Relevant Coverage
During the last 4 years, the OIG has issued 10 reports of significant relevance to
the subject of this report, as follows:

1. Alert Memorandum: The Employment and Training Administration (ETA)
Needs to Ensure State Workforce Agencies (SWA) Implement Effective
Unemployment Insurance Program Fraud Controls for High-Risk Areas,
Report No. 19-21-002-03-315 (February 22, 2021), available at:
https://www.oig.dol.gov/public/reports/oa/2021/19-21-002-03-315.pdf;

2. COVID-19: States Struggled to Implement CARES Act Unemployment
Insurance Programs, Report No. 19-21-004-03-315 (May 28, 2021),
available at:
https://www.oig.dol.gov/public/reports/oa/2021/19-21-004-03-315.pdf;

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3. Alert Memorandum: The Employment and Training Administration Needs
to Issue Guidance to Ensure State Workforce Agencies Provide
Requested Unemployment Insurance Data to the Office of Inspector
General, Report No. 19-21-005-03-315 (June 16, 2021), available at:
https://www.oig.dol.gov/public/reports/oa/2021/19-21-005-03-315.pdf

4. Alert Memorandum: The Employment and Training Administration Needs
to Ensure States Workforce Agencies Report Activities Related to CARES
Act Unemployment Insurance Programs, Report No. 19-22-004-03-315
(August 2, 2022), available at:
https://www.oig.dol.gov/public/reports/oa/2022/19-22-004-03-315.pdf;

5. Alert Memorandum: Potentially Fraudulent Unemployment Insurance
Payments in High-Risk Areas Increased to $45.6 Billion,
Report No. 19-22-005-03-315 (September 21, 2022), available at
https:///www.oig.dol.gov/public/reports/oa/2022/19-22-005-03-315.pdf

6. COVID-19: ETA and States Did Not Protect Pandemic-Related UI Funds
from Improper Payments Including Fraud or from Payment Delays,
Report No. 19-22-006-03-315 (September 30, 2022), available at:
https://www.oig.dol.gov/public/reports/oa/2022/19-22-006-03-315.pdf;

7. COVID-19 – ETA Can Improve Its Oversight to Ensure Integrity over
CARES Act UI Programs, Report No. 19-23-011-03-315
(September 22, 2023), available at:
https://www.oig.dol.gov/public/reports/oa/2023/19-23-011-03-315.pdf; and

8. Alert Memorandum: ETA Needs to Incorporate Data Analytics Capability
to Improve Oversight of the Unemployment Insurance Program,
Report No. 19-23-012-03-315 (September 25, 2023), available at:
https://www.oig.dol.gov/public/reports/oa/2023/19-23-012-03-315.pdf;

9. COVID-19: ETA Needs to Improve Its Oversight of States’ Efforts to
Identify Multistate UI Fraud, Report No. 19-25-004-03-315
(August 4, 2025), available at:
https://www.oig.dol.gov/public/reports/oa/2025/19-25-004-03-315.pdf;

10. COVID-19: ETA Needs to Improve Its Oversight of States’ Efforts to
Identify UI Fraud Using Deceased Persons’ Social Security Numbers,
Report No. 19-25-005-03-315 (August 15, 2025), available at:
https://www.oig.dol.gov/public/reports/oa/2025/19-25-005-03-315.pdf

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APPENDIX B: AGENCY’S RESPONSE TO THE REPORT
The agency’s response to the draft report follows.

U.S. Department of Labor Employment and Training Administration

200 Constitution Avenue, N.W.
Washington, D.C. 20210

August 27, 2025

MEMORANDUM FOR:
LAURA B. NICOLOSI
Assistant Inspector General for Audit

FROM:

LORI FRAZIER BEARDEN

Acting Assistant Secretary for Employment and Training

SUBJECT:
Response to Draft Report – COVID-19: ETA Needs to Improve Its
Oversight of States’ Efforts to Identify UI Fraud Using Suspicious
Email Accounts, Report No. 19-25-XXX-03-315

The U.S. Department of Labor’s (DOL) Employment and Training Administration (ETA)
appreciates the opportunity to respond to the above-referenced draft report.

This draft report examined the extent to which ETA and State Workforce Agencies (SWA)
addressed potentially fraudulent Coronavirus Aid, Relief, and Economic Security (CARES) Act
claims filed using suspicious email accounts. The draft report does not make any new
recommendations.

ETA acknowledges that continued work is needed to reduce fraud, waste, and abuse in the
unemployment insurance (UI) program. To this end, ETA has invested in the UI Integrity
Center’s Integrity Data Hub (IDH) and dedicated resources to make significant progress,
incorporating additional data sources and working with the UI Integrity Center and SWAs to re-
evaluate risk scoring investigation prioritization. Most recently, DOL provided funding to the UI
Integrity Center to support IDH access and use of the U.S. Department of the Treasury’s Do Not
Pay data sources, enhancing the IDH’s operations and strengthening UI program integrity controls
(see Training and Employment Notices [TEN] No. 28-230F1 and 26-241F2).

ETA would like to clarify a few areas in the draft report:

• ETA has established UI performance measures and conducts extensive monitoring as part
of its regular oversight responsibilities. The draft report accurately reports on page 7 that
ETA provided the Office of Inspector General (OIG) files containing potentially fraudulent
claims to SWAs. ETA agreed to share the OIG-analyzed claims data as potential fraud tips
for the SWAs to conduct additional investigations and take appropriate actions regarding

1 TEN No. 28-23, Announcement of a New Data Sharing Partnership Between the U.S. Department of the Treasury’s
(Treasury) Bureau of the Fiscal Service (Fiscal Service) and the National Association of State Workforce Agencies’
(NASWA) Unemployment Insurance (UI) Integrity Center to provide State UI Agencies Access to Do Not Pay Working
System (DNP) Data Sources and Services through the UI Integrity Data Hub (IDH), issued May 2, 2024,
https://www.dol.gov/agencies/eta/advisories/ten-28-23.
2 TEN No. 26-24, Announcing the Addition of New Do Not Pay (DNP) Data Sources and Services Accessible to State
Unemployment Insurance (UI) Agencies through the UI Integrity Data Hub (IDH) and Upcoming Webinar, issued
May 20, 2025, https://www.dol.gov/agencies/eta/advisories/ten-26-24.

these claims. As noted in the draft report, ETA did not require the SWAs to report the
results of their investigations and actions regarding the claims data from the OIG files on a
claim-by-claim basis. However, ETA has established UI performance measures to assess the
timeliness and quality of adjudications made by SWAs. ETA also conducts extensive
monitoring of states’ administration and operation of UI programs as part of its regular
oversight responsibilities. In addition to monitoring, ETA analyzes aggregate data from
states on the timeliness and quality of UI eligibility determinations and oversees quality
reviews of adjudication determinations.

• Clarification of Expectations from this Audit. The draft report asserts on page 11 that
ETA’s decision to not require claims-level reporting of the results of SWAs’ investigations
and actions on the referred potentially fraudulent claims was insufficient for its collaborative
effort to combat imposter fraud expressed to the SWAs. However, this was not the intent
when ETA agreed to share the OIG-analyzed claims data with the states. ETA engaged in
program direction and oversight by providing guidance, funding, and resources to support
SWAs in their efforts to fight imposter fraud. When the OIG’s contractor initially engaged
with ETA on this audit in September 2022, they provided that “The scope of the audit will
focus in-depth on actions taken by ETA and 10 selected SWAs to address potentially
fraudulent CARES Act UI claims.” This was further reiterated in a questionnaire sent to
states in December 2022, asking what actions the SWA had taken to address such claims.
ETA had expected that this audit would have explored whether the states had previously
identified these claims as potentially fraudulent and had addressed them, or if such flags
from the OIG resulted in identification of new actual overpayments.

• Clarification of Comments from the Office of the Chief Financial Officer (OCFO). On page
13, the draft report paraphrases and attributes comments to DOL’s OCFO on challenges to
mitigating risks. ETA discussed these comments with OCFO. OCFO agrees that “varying
state laws that define fraud” is a recognized structural challenge. However, the statement
“SWAs’ inconsistent use of the IDH” is unclear; more accurate phrasing would be: “the 53
different state governments’ statutory authority to use, or not use, the many services offered
through the Integrity Center and IDH presents numerous challenges.” Additionally, OCFO
does not recognize the statement in the draft report that OCFO identified “irregular reporting
of UI claims data for cross-matching” as a challenge. Whether due to misunderstanding or
over paraphrasing, absent clarification, OCFO has informed ETA that it cannot confirm that
this was stated.

• Overpayments are reported in the time period after they are investigated and established,
not when the fraudulent activity occurs. On page 27, the draft report identified that three
SWAs responded with no reporting issues. Specifically, South Dakota and Utah responded
that they did not detect fraudulent overpayments in the earlier quarters; therefore, they did not
establish or report certain fraudulent CARES Act overpayments. The draft report asserts that
it is highly unlikely there were not fraudulent overpayments dispersed by the two SWAs
(South Dakota and Utah), given the high levels of fraud risks associated with the UI program
from April 2020 through September 2020. Additionally, the draft report acknowledged that
Virginia responded that there was insufficient time to investigate, establish, and report certain
CARES Act fraudulent overpayments.

UI overpayments are reported when they are established, not when the overpayment occurred.
While there was a high likelihood that UI fraud occurred from April 2020 through September
2020, to establish an overpayment a state first has to identify the potential fraud/overpayment,
conduct an investigation (such investigations are typically lengthy in cases involving identity
fraud), and issue a determination. Only after all the aforementioned activity is concluded
could a state have established and reported the overpayment. Therefore, it is likely that the
three states did accurately report not having any CARES Act overpayment activity (including
established and recovered overpayments) from April 2020 through September 2020, as many
states were still in the early stages of pandemic-related UI program implementation and
administration and responding to the significant increase in UI workload leading to
investigation backlogs. The fraudulent overpayments, specifically related to imposters or
suspicious emails, would be reportable only after they had been investigated and established—
which is likely to have occurred after September 2020.

Combating fraud is a high priority for this Administration. As noted on page 16 in the draft report,
ETA has completed an initial study to identify additional opportunities for improving the IDH.
ETA has limited statutory authority to require states’ use of certain fraud prevention tools, such as
the IDH, and will continue efforts to explore additional opportunities, including, but not limited to,
seeking Congressional action.

ETA requests the OIG’s ongoing support to continue to prevent, detect, and fight UI fraud and
welcomes further discussion with the OIG regarding specific strategies and actions to strengthen the
UI system and to further bolster fraud prevention in the program. ETA will also continue to take
action to address the recommendations included in the first report in this series, COVID-19: ETA
Needs to Improve Its Oversight of States’ Efforts to Identify Multistate UI Fraud.

REPORT FRAUD, WASTE, OR ABUSE
TO THE DEPARTMENT OF LABOR

Online
https://www.oig.dol.gov/hotline.htm

Telephone
(800) 347-3756 or (202) 693-6999

Fax
(202) 693-7020

Address
Office of Inspector General
U.S. Department of Labor
200 Constitution Avenue NW
Room S-5506
Washington, DC 20210

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Audit Report — ETA Needs to Improve Its Oversight of States' Efforts to Identify UI Fraud Using Suspicious Email Accounts

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