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Improper Payments vs. Fraud


Recent headlines state that $191 billion in pandemic unemployment insurance was lost to fraud. Not exactly. In this Department of Labor Office of Inspector General's Congressional Testimony, around $76 billion of that is classified as fraud. The rest of those funds are referred to as improper payments.

Improper payments are any payments that should not have been made or were made in an incorrect amount, and include overpayments and underpayments. All fraud is an improper payment since it should not have been paid out, but not all improper payments are fraud - they can be mistakes by an agency or the result of confusion about payment guidance.

In pandemic programs, any dollar that went to improper payments (duplicate payments, payments to deceased individuals, or fraud) is money that didn’t reach someone it could have helped.

Here are some examples that show the differences between improper payments and fraud.


Improper Payments

  • The Federal Aviation Administration managed a $9.1 billion pandemic relief grant program for airports nationwide. The agency reimbursed funds to grantees based on incorrect amounts (including overpayments and underpayments) that had insufficient or lack of documentation, resulting in $3.3 million in improper payments. This included paying for expenses from 2019, when only expenses incurred in 2020 were eligible.
  • TIGTA found that the IRS issued more than 4.4 million Economic Impact Payments totaling nearly $5.5 billion to potentially ineligible people, including deceased people. The IRS put a notice on their website asking taxpayers to voluntarily return the money, and this helped recover more than $80 million in improper payments.


Page last modified: 11/06/2023
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