Benefits fraud — where criminals use your identity to collect SNAP, unemployment, Medicaid, or other government benefits — surged during the pandemic and remains a major threat. Here's how to detect and report it.
Government benefits fraud exploded during the COVID-19 pandemic, when the federal government distributed trillions of dollars in emergency relief with limited verification. The Secret Service estimated that $100 billion or more in pandemic unemployment benefits were paid to fraudulent claimants. But benefits fraud didn't end with the pandemic — it remains one of the fastest-growing forms of identity theft, targeting SNAP, Medicaid, Social Security, and state unemployment programs.
Benefits fraud works because government agencies often have weaker identity verification than financial institutions. A thief with your name, SSN, and date of birth can file for unemployment in your name in many states, redirect SNAP benefits to a new EBT card, or enroll in Medicaid and receive medical services billed to your identity. The fraud may go undetected for months — until you try to apply for benefits yourself and discover someone else is already receiving them.
Signs of benefits fraud: receiving a 1099-G tax form for unemployment benefits you never received (the IRS requires states to report all unemployment payments); being denied benefits because the system shows you're already enrolled; receiving EBT cards or benefit correspondence you didn't apply for; or seeing Medicaid claims on your Explanation of Benefits for services you never received.
If you receive a 1099-G for unemployment you didn't receive — a common sign of pandemic-era fraud that's still surfacing — report it to your state's unemployment agency immediately. Most states have dedicated fraud reporting portals. The IRS also has guidance for handling fraudulent 1099-Gs: you may need to file a paper return with documentation explaining the discrepancy, or request a corrected 1099-G from the state.
For Medicaid fraud: request your Medicaid Explanation of Benefits and review it for services you didn't receive. Report fraudulent claims to your state's Medicaid fraud control unit — every state has one, and they take benefits fraud seriously. For SNAP fraud: contact your state's SNAP agency and report the fraudulent account. Request that the fraudulent EBT card be deactivated and a new one issued to you.
Prevention: create accounts with your state's unemployment and benefits agencies before a thief does — many states now allow you to lock your unemployment account to prevent fraudulent claims. Enroll in the IRS IP PIN program to prevent fraudulent tax filings. Monitor your Social Security earnings record for unauthorized wages. File your taxes as early as possible each year — if a thief files a fraudulent return in your name, filing first prevents the fraud from succeeding.
Safety 1st Editorial Team
This article is credited to Safety 1st Editorial Team. Safety 1st Consumer Protection has republished this content with attribution.