Stop Unemployment Fraud Act

The Stop Unemployment Fraud Act aims to overhaul the administration of unemployment benefits to reduce fraud and ensure payments only reach eligible individuals. The bill proposes a shift away from the "pay and chase" model—where benefits are often distributed before eligibility is fully confirmed—by requiring states to verify a claimant's identity using government-issued documentation before any funds are released. It would also mandate that states cross-check claimant information against various federal and state databases, including records of new hires, incarcerated individuals, and death records, to prevent duplicate or illegal payments.

Beyond identity checks, the legislation proposes to strengthen work-search requirements, requiring claimants to demonstrate active efforts to find employment as a condition of receiving aid. To encourage better enforcement, the bill would allow states to keep up to 5% of the fraudulent funds they successfully recover. These retained funds would be earmarked for improving state technology, detecting future improper payments, and strengthening the overall integrity of the unemployment insurance system.