Unemployment benefits have been a crucial lifeline for Americans who suffered economic hardship from the COVID-19 pandemic, with an estimated one out of every four workers having relied on the system at some point. But now an Axios report is making a sensationalized charge that as much as half of that aid may have been stolen via fraud “and the bulk of the money likely ended in the hands of foreign crime syndicate.” Predictably, Fox’s “news”-side has picked up the story with little context about the issue of unemployment insurance fraud in its coverage.
The Axios report relies on only one source for the amount lost to fraud, the CEO of ID.me, a company that provides fraud prevention services, who could have an interest in pitching the highest number possible. From the Thursday report (emphasis original):
Criminals may have stolen as much as half of the unemployment benefits the U.S. has been pumping out over the past year, some experts say.
By the numbers: Blake Hall, CEO of ID.me, a service that tries to prevent this kind of fraud, tells Axios that America has lost more than $400 billion to fraudulent claims. As much as 50% of all unemployment monies might have been stolen, he says
Haywood Talcove, the CEO of LexisNexis Risk Solutions, estimates that at least 70% of the money stolen by impostors ultimately left the country, much of it ending up in the hands of criminal syndicates in China, Nigeria, Russia and elsewhere.
Axios later updated its report with a quote from White House economist Gene Sperling, who characterized the problems of unemployment fraud as “one of the most serious challenges we inherited” from the Trump administration and noted that the American Rescue Plan passed this year included $2 billion for unemployment insurance system modernization and various other anti-fraud measures.
Journalist Garrett Graff, however, has called out the report, noting that there’s “zero evidence” in it besides Blake Hall’s claim. In addition, Graff pointed out, the CEO previously provided a much lower fraud rate figure of 26% in March. (Hall replied to Graff, regarding his firm’s current work, but his explanation still doesn’t really clarify how he got to the 50% figure as applied to the entire span of the pandemic.)
Graff also criticized the story’s author, Axios chief financial correspondent Felix Salmon, for publishing “a single-sourced, self-interested story ... with no meaningful independent corroboration.”
Other fraud estimates are significantly lower
To be clear, fraud in the unemployment benefits program does exist. In fact, the Department of Labor’s Office of Inspector General has been tracking the issue for years and had been bringing the rate down in the time before the pandemic.
Meanwhile, other government assistance programs have a very low rate of fraud. For example, a 2018 report by the Congressional Research Service on errors and fraud in the Supplemental Nutrition Assistance (SNAP) Program found an overpayment rate of just over 5% in 2017. But the report attributed this overpayment mostly to either recipient or agency errors, with only about one-tenth of that due to actual fraud.
The issue with the Axios report is whether it constitutes an alarmist sales pitch containing figures wildly out of step with the more typical estimates -- by a company that provides anti-fraud services for state governments. The Associated Press reported in early March 2021 that the Labor Department’s inspector general estimated that total improper unemployment payments paid due to either fraud or errors then stood at $63 billion over the 12 months before then, a rate of roughly 10%.
California also announced in January that it had confirmed about 10% of unemployment payouts were fraudulent, plus more still pending investigation.
Simply put, there is a vast chasm between figures of $63 billion and $400 billion.
Fox News predictably hypes up the $400 billion figure without giving other context
Such nuances of the issue are being lost in the actual reporting, though — and especially in the coverage by Fox, a network whose commentators routinely downplayed unemployment statistics during the pandemic, opposed the extension of unemployment benefits as well as paycheck protection programs for workers, and actively promoted the idea of getting more people infected instead of shutting down economic activity.
And so Fox is treating the $400 billion number as gospel truth, with hardly any acknowledgment that lower estimates even exist.
On Thursday’s edition of America’s Newsroom, co-anchor Dana Perino announced a “bombshell and infuriating report, suggesting that criminals may have stolen half the COVID unemployment benefits.” Perino then spoke with Fox Business correspondent Hillary Vaughn, who repeated the Axios report and its sourcing to ID.me.
Then on Thursday’s The Faulkner Focus, anchor Harris Faulkner also cited the “bombshell report” from Axios. Faulkner then segued to declaring that “despite those stolen billions, Americans are not going back to work, though,” citing the number of unfilled job openings in the country. This rhetorical flourish was consistent with the network and other right-wing media outlets’ demonization of the unemployed, and the oversimplification of the challenges that business and workers both face in returning to safe environments.
Vaughn appeared on that evening’s Special Report with Bret Baier, essentially rehashing the Axios report — but this time, attributing it to Fox’s own reporting with some of the same sources. Vaughn also attributed the problem to the Biden administration, rather than give context that this has been a long-term concern or acknowledge that the enhanced unemployment insurance programs for the pandemic began during the Trump administration in 2020.
“Well, President Biden spent billions in taxpayer money boosting unemployment benefits for people put out of work in the pandemic,” Vaugh said. “But experts now say that criminals and fraudsters are exploiting that relief for their own spoils.”
She later added that the White House was “blaming … the Trump administration.”
And on Friday morning, America’s Newsroom co-anchor Bill Hemmer presented the story as a settled matter: “Fox Business now confirming — get this number, are you sitting down? I mean, this is stunning. Nearly half of all unemployment benefits during the pandemic were likely stolen through fraud, to the tune of $400 billion.”
Hemmer then held a discussion with former Trump economic adviser Steve Moore, who said: “This is the greatest financial heist virtually in the history of the world, if these numbers are even half accurate, and I believe they are.”Moore did acknowledge that problems in the unemployment system have been long-standing and argued that both Trump and Biden had been “asleep at the wheel.”
Former Obama economic adviser Austan Goolsbee followed up on Moore’s comment, however, by pointing out that “this 50% estimate was from a CEO whose company is about fighting fraud. So it’s not probably not as high as 50%.”
Hemmer then acknowledged that others have “said 10% is the bottom line percentage,” and he pointed to another recent Labor Department’s inspector general report that identified $5 billion in specific fraudulent reports.
But Hemmer still stuck to the network’s main thrust on the story: “So what I'm telling you guys, whether it’s $5 billion or $400 billion, it’s wrong, it’s way too much.”
That statement might be true, but we don’t see news outlets like Axios or Fox running with smaller figures that can actually be verified. Instead, they are jumping at the most alarmist numbers possible, and seemingly without any need for verification.
And sure enough, even Hemmer’s minor rhetorical concession was quickly forgotten by the rest of Fox’s purported “straight news” side. About two hours later on The Faulkner Focus, guest anchor Gillian Turner kicked off another segment with Vaughn by declaring as if it were a proven assertion: “Well, get this, over $400 billion in government unemployment benefits have reportedly been stolen by fraudsters during the pandemic.”
The segment also featured a repeating chyron, “GOP blames Dems for stolen COVID jobless benefits,” further eliding any context for both the facts that this has been a long-term problem and that the overall economic response to the pandemic began during the Trump administration.