Half of states still can't screen jobless claims against prison rolls

Incarcerated people generally cannot collect unemployment benefits -- they aren't "able and available for work," the basic test every UI claimant has to meet.▸ A Department of Labor inspector general audit⧉ found $267.3 million in pandemic-era UI benefits paid on claims filed with federal prisoners' Social Security numbers anyway -- some from prisoners misrepresenting their own eligibility, some from identity thieves who stole a prisoner's SSN because no one was using it. Testing a sample of those claims in the states most exposed, auditors confirmed 20% were fraudulent. The tool built to catch this before the money goes out -- a cross-check against the Social Security Administration's prisoner database -- still isn't running in half the country, five years after the OIG first flagged the gap.

The Office of Inspector General has been mining pandemic UI payment data since 2021, sorting claims by Social Security number into four "high-risk" categories: filed in multiple states at once, filed under a dead person's SSN, filed with a suspicious email address, or filed under a federal prisoner's SSN.▸ By April 2022, those four categories totaled $45.6 billion⧉ in potentially fraudulent payments -- multistate claims alone accounted for $29 billion. Federal-prisoner claims were the smallest slice, about 0.6% of the total, but still $267.3 million paid between March and October 2020. That figure hasn't moved since 2021, not because the fraud stopped, but because the Bureau of Prisons never gave OIG updated data⧉ to check whether more claims outside that window belong on the list.

This is the fourth and final report in OIG's series, this one asking a narrower question: of the 160 highest-risk prisoner-SSN claims OIG handed to the 10 states with the most exposure⧉, how many did states actually run down?▸ Regis & Associates, the contractor OIG hired to test it, found the 10 states had paid $684,475 on those claims -- and confirmed $135,642 of it, 20%, was fraudulent. Only Tennessee traced money, $27,420, directly to a claim filed under a federal prisoner's SSN. The other $108,222 in confirmed fraud came from claims that turned out to be fraudulent for different reasons entirely -- multistate filing, identity theft, suspicious banking details -- caught along the way, not by design.

That one Tennessee confirmation doesn't mean the other nine states came up clean.▸ Auditors wrote plainly that more prisoner-SSN fraud "could have gone undetected by SWAs" -- state workforce agencies -- because ETA, the Employment and Training Administration⧉ that runs UI oversight for DOL, sent states the claimant lists in April 2021 with investigative instructions attached, then never asked what states found. In a follow-up survey, 81% of responding states said they never reported investigation results back to ETA at all. ETA's own explanation, given to auditors directly: it didn't consider that monitoring to be part of its job, and it didn't have the staff to evaluate claimant-level results even if states had sent them.

That gap shows up in the states' own paperwork.▸ Under federal reporting rules dating to April 2020, every state was required to report fraud overpayments on its pandemic UI programs -- quarterly for two of the three programs, monthly for the third -- even during the first months when caseloads were exploding fastest. All 10 sampled states told federal regulators, in at least one required report, that they'd found zero fraud on Pandemic Unemployment Assistance claims -- 92 zero-fraud months combined. Auditors call this implausible on its face, given "the high UI fraud risks associated with the quick implementation of the new, high-dollar value pandemic programs." GAO's Standards for Internal Control in the Federal Government⧉ put the duty to catch a pattern like that squarely on the oversight body -- here, ETA -- not on the states filing the reports.

The actual fix already exists.▸ The Social Security Administration runs the Prisoner Update Processing System (PUPS)⧉, a database built to suspend federal benefits for incarcerated people -- and state UI agencies can request access to cross-match their own claims against it. As of September 2022, only 23% of states (11 of 53) had that access. By December 9, 2025, three years later, it had grown to 51% -- 27 states -- with another 30% actively working on it and 19%, 10 states, not even having applied. Among the 10 states in this specific audit, the ones with the highest measured exposure to prisoner-SSN fraud, access was worse than the national rate: just 4 of 10 (40%) were connected. Washington had paused its own pursuit entirely, telling auditors it was prioritizing identity-theft controls instead -- even though ETA itself ranks incarcerated-claimant fraud as its second-highest UI fraud risk.

The agency's own numbers undercut its excuse for the pace.▸ ETA told auditors that SSA typically approves a state's access request within "about 2 weeks." Auditors checked: the five states with confirmable approval dates waited an average of 150 days -- more than ten times that claim. And approval isn't the finish line. Actually wiring PUPS into a state's UI system took an average of 546 days for the three states that finished the job. Three more states were still mid-implementation as of this report, having waited an average of 980-plus days since filing: Maryland (956 days, targeting December 2026)⧉, New Hampshire (936 days, targeting February 2026 -- a deadline that had already passed by the time this report was issued), and North Dakota (1,062 days, targeting September 2026). States blamed the same two things every time: IT systems too old to connect cleanly, and staff pulled onto higher-priority projects.

OIG made two recommendations, and ETA agreed to both⧉: make sure Congress knows a federal mandate for incarceration cross-matching is still needed (no state is currently required to do it), and work with Treasury's Bureau of the Fiscal Service, the Bureau of Prisons, and the UI Integrity Center to widen access to prisoner data through the existing Do Not Pay data-sharing system.▸ That second fix has its own obstacle already on record: the Bureau of Prisons' data-sharing rules currently only cover federal programs, not federally funded, state-run programs like UI, and ETA says it has flagged that gap to Treasury and the Bureau of Prisons as urgent -- with no resolution date attached. The pattern isn't new. GAO told DOL in October 2021 to put someone in charge of UI fraud risk; DOL didn't designate its Chief Financial Officer for the job until January 2023, and didn't publish the resulting risk profile until August 2023 -- nearly three years, all told, from GAO's recommendation to a working plan.