When Franklin D. Roosevelt signed the Social Security bill in 1935, a number of protective institutions came into being in the US. Among these, the Unemployment Insurance Program was drafted to help employable people who have lost their jobs.
In the event that someone loses their job for reasons outside of their control, the Unemployment Insurance and Benefits programs implemented by both the federal government and individual states in the US provide economic relief to compensate. However, this relief is not unconditional and it is not provided indefinitely. Unemployment Insurance is ultimately paid by state governments, with varying qualifying standards, using funds collected through special payroll taxes.
Unemployment Insurance across the country has historically been greatly needed, with unemployment rates at the height of US prosperity (1929) having rivaled those of Great Britain at its lowest historic point. Without unemployment benefits, many would face severe challenges in-between jobs, even though they might still be willing to work.
So, what is unemployment fraud and how did it start? Individuals looking to take advantage of the social welfare system could bend the rules when reporting their employment status, location, physical condition, or even their identity. These attempts at unemployment fraud are surprisingly successful, with exorbitant cumulative costs for the system at large. In fact, in 2020, the Mississippi Department of Employment Security (MDES) reported that it paid out $3.4 million from fraudulent unemployment claims.
This kind of fraud wastes federal funds given to the state that might have been better allocated had fraudsters not claimed them and is far too common.