Welfare and Benefit Fraud Statistics Show a Disturbing Pattern

For some reason I’ve been getting a lot of questions and statements from people that feel that there is a tremendous amount of benefit or welfare fraud taking place.

Is there fraud in benefit systems? Without a doubt I’m positive there is. But the level of welfare or public benefit fraud is a much disputed figure. So to find out what the truth is, I went hunting for the facts.

There are many urban myths about the levels of benefit fraud, and I’m certain some will post hotly contested arguments in the comments about the levels of benefits fraud they have either witnessed or heard about.

First, let me state, if you are personally aware of anyone that is defrauding any benefit system, rather than just complain about their actions, you should instead be reporting them to the benefit program. Until you do that you really have no excuse to complain about a system you leave broken.

What Do the Facts Tell Us?

In general, facts about welfare fraud are hard to come by, but those that can be found do not support widespread benefit fraud. For example:

Unemployment Insurance

Congressional testimony from 2002 stated the level of unemployment insurance fraud was 1.9 percent of all unemployment insurance benefits. – Source

Los Angeles Welfare Fraud

The Department of Public Social Services reports they handle about 1.5 million cases involving benefits. During fiscal year 2004/2005 there were 60,634 reports of fraud, the department completed 52,930 investigations and 425 people were convicted of welfare fraud. Fraud or misrepresentation (not defined) was found on 10,789 cases.

The county reports that currently the level of found fraud or misrepresentation occurs on 5,000 to 8,000 cases. Based on current levels of aid, that represents about half of one percent of all cases. – Source, Source

Food stamp or SNAP fraud seems to exist at only relatively low measured levels.

Food Stamps / SNAP

According to 2011 data, the fraud rate for SNAP (Supplemental Nutrition Assistance Program), what we used to call food stamps, is minimal as well.

According to the Center on Budget and Policy Priorities the levels of SNAP over and underpayments is declining.

To put the statistics in context, an overpayment is defined as “they either went to ineligible households or went to eligible households but in excessive amounts, and more than 98 percent of SNAP benefits were issued to eligible households.” – Source

In 2011, for example, the overpayment error rate was 2.99 percent and the underpayment rate was 0.81 percent. The combined error rate was thus 3.80 percent. But the net loss to the federal governmentfrom errors was only 2.18 percent.

Relatively few SNAP errors represent dishonesty or fraud by recipi­ents. The overwhelming majority result from honest mistakes by recipients, eligibil­ity wor­kers, data entry clerks, or com­puter program­mers. In recent years, states have reported that almost 60 percent of the dollar value of overpay­ments and more than 90 percent of the dollar value of underpayments were their fault, rather than recipients’ fault. Much of the rest of overpayments resulted from innocent errors by households facing a program with complex rules.

Medicaid Fraud

According to recent numbers there are more than 58 million people that receive coverage through Medicaid. According to 2011 statistics there were a total of 10,685 fraud investigations and 824 convictions from 1,011 indictments. – Source

Even if we just use the total investigations started, the reported level of Medicaid fraud comes out to 0.018 percent.

So What is Disturbing?

The disturbing part of all the claims of benefit and welfare fraud is that there appears to be little support to backup the urban tales.

Logically some amount of waste, fraud, or abuse must exist. But evidence of massive fraud can’t be found.

Some also believe that many welfare recipients cheat.

“The myth of the Cadillac-driving welfare queen” who defrauds the system lingers even though there’s no proof of it, said Erin O’Brien, a poverty expert at the University of Massachusetts, Boston.

In fact, welfare fraud among Philadelphia’s 95,456 recipients is “minute,” according to Peter Berson, assistant chief of the government fraud unit in the Philadelphia District Attorney’s Office.

The 200 to 400 cases of welfare fraud in the city each year – down 50 percent since 2002 because of better enforcement and fewer recipients – are not nonworking women having babies to game the government, but working women receiving welfare and working at other jobs without reporting the income, Berson said. –  Source

If more people reported known fraud then maybe the numbers of investigated and pursued fraud cases would actually be higher than the facts show that it is.

And I’m sure that the number of fraud cases might be higher with an increased budget applied for investigations and enforcement. But in the face of pressures to reduce government I don’t see how that is likely to happen.

Until proven otherwise, there is just no evidence of widespread or rampant benefit fraud. But benefit fraud stories do make for an interesting read.


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Damon Day - Pro Debt Coach

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30 thoughts on “Welfare and Benefit Fraud Statistics Show a Disturbing Pattern”

    • The very first thing that caught my eye is the low number of fraud cases. I don’t know where you have done your research but whatever you received bogus figures. Each state has a financial figure of (avrg.) 1.3 million in fraud cases each year. Total US fraud cases total 1.5 billion per year and that number is soaring out of control this past year. Fla. made one bust for 13 million, I think there was 5 other cases of record welfare fraud. Take each state and scour their court records. You’ll find a lot more than what you wrote about but it still isn’t even close to what they reported. In Penn. last year alone lost over 2 1/2 million by Sept.! Our gov. lies. And they are covering up. Don’t believe me, do some real research. http://thegardenisland.com/news/welfare-fraud-adds-up-to-jail-time-for-cheaters/article_b6542bba-95ed-5fa0-9abd-6859d2c679ab.html

      • Please provide links to the state figures you mentioned from the state. Let’s get the facts from the source. The link you provided actually seems to confirm the point of the article. Your link states in 2001 only 170 cases were submitted in the year and 9 were convicted in the state. Again, the point is that in the grand scheme the amount of fraud is relatively low, not that there are not cases of fraud.

    • Bogus article…it’s more profitable to property management companies to ignore or not investigate the rampant welfare fraud…aka unauthorized occupants or the infamous live-in boyfriends, live-in baby sitters, etc.

  1. Exactly! I remember going to a doctor, recommended by a friend, after a minor car accident. He suggested I stay home from work for six months and collect benefits. All I had was a sore shoulder that healed in a couple of weeks. When I went to pay, the staff had difficulty figuring out how to handle someone actually paying. I went back to work the next day.


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