Summary
Federal auditors told Congress that fraud is causing the U.S. government to lose about half a trillion dollars every year. Much of the fraud occurs in programs run by states, especially after large pandemic-related spending revealed ongoing weaknesses in oversight.
Key Facts
- Fraud costs the U.S. government between $233 billion and $521 billion annually, based on data from 2018 to 2022.
- Many federal programs, like Medicaid, unemployment insurance, and nutrition aid, are run by state agencies, which increases fraud risk.
- In 2025, the federal government is expected to send $1.2 trillion in grants to state and local governments.
- The COVID-19 pandemic led to rapid spending of $4.5 trillion in relief funds, often with fewer checks, increasing fraud opportunities.
- Unemployment insurance fraud during the pandemic may have totaled $100 billion to $135 billion, about 15% of benefits paid.
- Fraud happens at many levels, from individual applicants to organized criminal groups exploiting government programs.
- Decentralized control and multiple layers of contractors make it harder to oversee how federal money is spent.
- Efforts to recover lost funds often return only a small part of the stolen money.
