Federal Watchdog Warns $79 Billion in Pandemic Aid Potentially Lost to Identity Fraud

Oregon — The Pandemic Response Accountability Committee (PRAC) issued a new Fraud Prevention Alert detailing how insufficient identity verification across federal pandemic relief programs may have allowed billions of taxpayer dollars to flow to fraudulent applicants. The report highlights how advanced data analytics—authorized by Congress and deployed through the PRAC’s Pandemic Analytics Center of Excellence (PACE)—can significantly strengthen fraud prevention.

PRAC Chair Michael E. Horowitz said the findings underscore longstanding gaps in agencies’ ability to use data to detect wrongdoing before funds are distributed. “Our oversight work during the past five years has detailed federal agencies’ inability to use data to effectively prevent pandemic-related fraud,” Horowitz said. “By contrast, the PRAC’s sophisticated data analytics capabilities allow us to look across federal agencies and programs to identify potential fraud before it occurs by comparing agency and other data with applicant-provided information, such as IP addresses, dates of birth, bank accounts, and home addresses. As today’s report demonstrates, this data analytics capability can strengthen program integrity and prevent billions of dollars in fraud, ensuring taxpayer funds are paid to legitimate applicants.”

The alert details how PRAC analysts conducted a statistical review of identity information used in pandemic relief applications. Using a random sample of 662,000 identity records from a total pool of 67.5 million funded applications across major relief programs—including the Small Business Administration’s COVID-19 Economic Injury Disaster Loan (EIDL) program, the Paycheck Protection Program (PPP), and the Department of Labor’s pandemic unemployment insurance programs—the committee asked the Social Security Administration to validate key identity elements.

SSA reviewed whether each Social Security number was valid, whether the name and date of birth matched official records, and whether the SSN belonged to a deceased person. Nearly 24,000 of the 662,000 sampled records failed verification—an indicator that the identities were stolen, falsified, or used without authorization.

When projected across the full 67.5 million funded applications, PRAC estimates that approximately 1.4 million Social Security numbers used during the pandemic may have been questionable. The committee further estimates that the lack of effective identity checks before awarding funds in the SBA’s EIDL and PPP programs, as well as federal pandemic unemployment programs, contributed to roughly $79 billion in potential identity fraud.

This new analysis builds on a January 2023 PRAC Fraud Alert that found 69,000 questionable SSNs were used to obtain $5.4 billion in potentially fraudulent loans and grants through SBA relief efforts. By expanding the methodology to include unemployment insurance programs—totaling $888 billion in disbursements—the latest alert underscores the scale of fraud that improved identity verification could have prevented.

PRAC officials say the findings make clear that cross-agency data sharing and modern analytics offer a powerful tool for preventing fraud before it occurs. The committee is urging agencies to adopt stronger identity verification practices and expand the use of existing data resources.

The full Fraud Prevention Alert is available on the PRAC website.