Senator James Lankford of Oklahoma is introducing new legislation aimed at addressing widespread fraud in the nation’s unemployment insurance system, a problem lawmakers say was exposed during the COVID-19 pandemic when massive relief programs were rolled out quickly.
The proposed legislation, called the Stop Unemployment Fraud Act, is designed to reform the joint federal–state Unemployment Insurance (UI) program by strengthening identity verification and tightening oversight of benefits. Lankford said the goal is to ensure that unemployment assistance goes only to individuals who legitimately qualify.
“Making the government more efficient isn’t a partisan issue, it’s an American issue,” Lankford said in a statement announcing the bill.
The proposal would require individuals applying for unemployment benefits to verify their identity before payments are issued. It would also require states to use the Integrity Data Hub, a national fraud detection system that cross-checks unemployment claims to identify suspicious or duplicate applications.
Under the legislation, benefits could not be distributed until eligibility has been fully verified. The bill would also reinforce job search requirements and direct the Department of Labor to more closely monitor whether states are enforcing those requirements.
Another component of the proposal would encourage states to recover improper payments issued during the pandemic-era unemployment programs, when billions of dollars were distributed quickly as businesses shut down and layoffs surged.
In the House of Representatives, Pennsylvania Republican Rep. Lloyd Smucker is introducing the companion
version of the bill. Twelve Republican lawmakers have already signed on as co-sponsors in the House, while Republican Senators Mike Crapo of Idaho, Bill Cassidy of Louisiana, and Steve Daines of Montana are backing the Senate version.
“Bad actors stole more than $100 billion in pandemic-era unemployment benefits, and recent discoveries in Minnesota illustrate that vulnerabilities in the unemployment system continue to persist,” Smucker said.
Lankford and Smucker have previously collaborated on efforts to investigate unemployment fraud. In March 2025, they sent a letter to Labor Secretary Lori Chavez-DeRemer urging action to address what they described as lingering weaknesses created during the previous administration’s handling of the unemployment system.
“During COVID, fraudsters exploited loopholes in the unemployment system and stole billions while taxpayers were left with the bill,” Lankford said. “This legislation strengthens verification, improves coordination between states, and ensures benefits go to the Americans who actually qualify, not criminals exploiting the system.”
Several states continue to face scrutiny over pandemic-era unemployment payments. Maryland, for example, has reported that roughly $760 million in benefits were overpaid, with as much as $1.3 billion potentially issued incorrectly. The state has sent more than 180,000 repayment notices, though some recipients claim their identities were stolen and used fraudulently.
A 2025 audit also flagged California, New York, and Massachusetts for issuing about $305 million in improper payments, with California singled out for paying benefits to individuals later determined to be ineligible. During a February hearing with Treasury Secretary Scott Bessent, California Republican Rep. Young Kim pointed to roughly $32 million in unemployment fraud cases within her state alone.
The push for reforms comes as the Trump administration has emphasized eliminating government waste. During his State of the Union address, President Donald Trump declared a nationwide “war on fraud” and appointed Vice President JD Vance to coordinate efforts to crack down on misuse of federal funds.
Supporters of the Stop Unemployment Fraud Act argue the reforms are necessary to restore trust in the system and protect taxpayer dollars.
“Congress bears ultimate responsibility for protecting taxpayer dollars,” Smucker said. “The Stop Unemployment Fraud Act will help states recover stolen funds and strengthen safeguards to ensure the long-term integrity of this program.”
