Mississippi paid out $118 million in improper unemployment claims, largely due to fraud and stolen identities

• A Mississippi state audit report found nearly $118 million in improper unemployment insurance payments.
• The payments occured due to stolen identities, fraud schemes, and were sent to people in jail.
• Axios reported that as much as 50% of stimulus money may have been stolen, largely due to fraud.
• See more stories on Insider's business page.

Americans received $600 weekly unemployment benefits under the CARES Act in March, but the Office of the Inspector General (OIG) found in May that a portion of those funds fell into the wrong hands due to failures in detecting fraud. Mississippi just affirmed those findings on a statewide level – with a number attached.

Mississippi State Auditor Shad White released a report on Tuesday that found the state had distributed $117,948,403 in improper unemployment insurance claims, or 5.5% of the claims distributed during fiscal year 2020. The report outlined the following characteristics of the incorrect payments:

• Payments made to individuals who never had a reduction in wages;
• Fraudulent payments due to stolen identity;
• Payments made to people in jail;
• And payments made due to international unemployment fraud.

White said in a statement that the report shows "it's more important than ever to understand the mistakes that were made when money was flowing so freely during COVID."

"Nearly every state I've talked to around the country lost millions of dollars to fraud out of their unemployment funds. Mississippi was no exception," White added. "The federal government and state governments around the country do not need to repeat those mistakes the next time we have a recession."

White is correct – a portion of stimulus funds, including unemployment benefits, have not reached the right people due to issues with fraud and technology errors. For example, the OIG found that $39.2 billion in CARES Act funds were likely wasted, citing inefficient state governments that failed to detect fraud.

And Axios reported earlier this month that as much as 50% of stimulus money may have been stolen, with Blake Hall, the CEO of ID.me, a fraud-prevention service, telling the news service that America has lost $400 billion to fraudulent claims.

Washington, Iowa, California and New York have also lost millions of stimulus dollars to fraud, Axios reported.

While the data on improper payments comes from March's CARES Act, President Joe Biden's stimulus law also included $300 weekly payments through September - although GOP-led states have been ending those unemployment benefits early.

Given that some Democrats are pushing for additional recurring stimulus payments and unemployment benefits, fraud will need to be addressed moving forward, according to the OIG. The office recommended more modernized technology to better detect fraudulent payments, along with working with states to help process claims.