The Biden-Harris administration released a three-part proposal on March 2 asking Congress for $1.6 billion to help provide Federal agencies and local governments with more funding to handle pandemic-related fraud claims, modernize identity verification systems, and support victims of identity theft.
The spending proposal reconfirms President Biden’s commitment to boost the Federal government’s efforts to combat fraud in government relief programs during the COVID-19 pandemic – which have run as high as $60 billion in state unemployment insurance programs, and $5 billion in relief programs administered by the Small Business Administration.
According to the White House, previous pandemic relief spending bills totaling $5 trillion “were essential to mitigating the health and economic impact of this unprecedented pandemic.” Those programs attracted fraudsters, and the administration is now calling on Congress to give the Federal government additional funding to recover stolen money and to take steps to cut down on further instances of fraud.
“There must be a bipartisan response to punish those who engaged in major and systemic fraud against the American people during a time of national emergency, to put in place stronger fraud and identity theft prevention going forward, and to hold harmless those Americans who were innocent victims of identity theft,” the White House stated.
In addition, the proposal previews some key items in the administration’s fiscal year 2024 budget proposal, which it expects to release next week – including a package of legislative reforms to prevent, detect, and recover improper payments more effectively.
Investing in Resources for Federal Law Enforcement
With the increasing number of pandemic-related fraud cases – especially concerning major acts of fraud in the Pandemic Unemployment Insurance and pandemic small business programs –Federal inspectors General (IGs) have led investigations that have recovered or prevented billions of dollars of fraud.
But Federal law enforcement agencies need both the time to prosecute serious and sophisticated fraud cases, and the resources to hire for multi-year assignments.
“Absent additional resources, the oversight community would be unable to investigate and prosecute the known caseload before the statute of limitations expires and to pursue sophisticated cases that will require more time and resources,” the White House stated.
President Biden is proposing $600 million in funding to provide Federal law enforcement with the resources and the time needed to go after the most serious pandemic fraud. Part one of the proposal asks that Congress:
- Triple the COVID-19 Fraud Strike Force Teams ($300 million) that were created by the Department of Justice (DoJ) “Chief Pandemic Fraud Prosecutor,” which President Biden announced in his State of the Union address.
- Increase the statute of limitations to 10 years for serious, systemic pandemic fraud including pandemic unemployment insurance programs.
- Pass bipartisan legislation supported by the oversight community to increase the cap in the Fraud Civil Remedies Act from $150,000, to $1 million.
- Ensure that the Department of Labor IG can easily access multi-state data to detect instances of multi-state fraud where the same identity is inappropriately used to apply for benefits in multiple states.
- Provide at least $300 million for the Pandemic IG and the Pandemic Response Accountability Committee (PRAC) investigative staff to bring on the resources needed to recover billions of dollars in fraudulent payments.
Investing in Fraud Prevention Systems
The pandemic exposed significant vulnerabilities in government benefits systems, especially in preventing systemic identity theft. President Biden’s proposal builds upon the lessons learned during the pandemic and will ensure robust fraud prevention and identity theft prevention investments totaling at least $600 million. Specifically, President Biden proposes to:
- Prevent future fraudulent claims by expanding the PRAC’s Pandemic Analytics Center of Excellence – a cutting-edge analytic platform that provides analytic, audit, and investigative support to the IG community.
- Expand the Department of Treasury’s Do Not Pay Service and increase checking tax transcripts, which will boost the Treasury’s ability to identify, prevent, and recover improper payments and related fraud activity.
- Call on Congress to pass a law making clear that skipping payment integrity verifications for loans and grants above $25,000 should not happen again – even in an emergency.
- Provide at least $300 million to prevent identity theft in public benefits; this includes supporting the modernization of agency identity verification systems and supporting enhancements to lessen the impact on victims of identity theft.
- Invest $150 million to ensure that effective oversight and the best practices and lessons learned from the pandemic are institutionalized.
- Formalize “Gold Standard” meetings – a more cooperative and early prevention model for fraud.
- Strengthen the unemployment systems’ program integrity and fraud prevention through new legislation and deployment of American Rescue Plan funding. In addition, $1.6 billion in American Rescue Plan funds are to be available to states to modernize IT systems, improve access, and prevent fraud and identity theft.
Major Investments to Support Victims of Identity Theft
The continuous evolution of identity theft schemes causes significant tax and credit harm to the victims and equally serious challenges in resolving those harms – such as ruined credit scores, disqualification for home mortgages, and denied access to public benefits.
To better support victims of identity theft President Biden is proposing $400 million in new funding to:
- Pilot an identity theft Early Warning System: Funding will be provided to and administered by the General Services Administration to evaluate, create government-wide recommendations, and pilot an Early Warning System which would notify individuals and entities when their identity information is being verified to access public benefits and allow them to stop potentially fraudulent transactions before they occur and report it to law enforcement.
- Provide one-stop remediation experience for victims: Funding will be allocated to support the Federal Trade Commission’s enhancement of IdentityTheft.gov, to provide individuals with a single portal to both report identity crimes and receive personalized identity theft recovery assistance.
- Offer grants for additional services to victims: Additional funding – administered by DoJ’s Office for Victims of Crime – would be available to state and local non-profits and legal services organizations to provide direct services to victims.
Actions Already Taken By Congress
Members of Congress have made some moves to boost the Federal government’s effort to handle pandemic-related fraud. Specifically, a top priority for the Republican-led House in the 118th Congress is the recovery of pandemic-era unemployment insurance (UI) fraud.
For example, on March 1 House Republicans introduced legislation that would help recover billions of dollars of UI benefits estimated to have been stolen by fraudsters during the pandemic.
The Protecting Taxpayers and Victims of Unemployment Fraud Act was introduced by House Ways and Means Committee Chairman Jason Smith, R-Mo., and House Oversight and Accountability Committee Chairman James Comer, R-Ky.