Unemployment benefits fraud in North Carolina reportedly totaled nearly $50 million during a recent four-year period, according to state audits.
The North Carolina Office of the State Auditor on Wednesday released two reports finding that $47.2 million of the $168.8 million in unemployment benefit overpayments made by the Department of Commerce between April 2021 and March 2025 were fraudulent.
The audits found that the Department of Commerce's Division of Employment Security recovered only $12.2 million of those fraudulent overpayments during the same period, leaving tens of millions of taxpayer dollars unrecovered.
State Auditor Dave Boliek sharply criticized state officials over the findings, arguing that years of inadequate oversight allowed the problem to persist.
"Government waste comes in many forms, and in this case, it's occurring through unemployment insurance," Boliek said in the report.
"Not only was there a higher rate of improper unemployment benefits, but there was also more than $47 million in fraud overpayments made during the scope of our audit."
Boliek said state government could no longer ignore longstanding deficiencies in the unemployment system.
"The North Carolina State Auditor's Office will continue to serve as our state's fiscal watchdog, assessing programs and sounding the public alarm to push for improvement," he said. "Ignoring problems for years and missing basic public expectation cannot continue to be tolerated."
According to the audits, North Carolina's improper payment rate for unemployment benefits has routinely exceeded both the federal 10% benchmark and the national average over the past nine years.
The reports identified work-search requirement errors, benefit-year earnings mistakes, and separation determination errors as the primary causes of overpayments.
The findings were released the same day the U.S. Department of Labor intensified its nationwide anti-fraud campaign.
Acting Labor Secretary Keith Sonderling warned governors in all 50 states and U.S. territories that they could lose federal administrative funding if they fail to strengthen safeguards against fraud, waste, and abuse in unemployment insurance programs.
"We are officially putting governors on notice," Sonderling said. "The American people will no longer tolerate the blatant waste, fraud, and abuse of their hard-earned tax dollars."
Labor Department Inspector General Anthony D'Esposito also issued a warning, saying states that fail to protect taxpayer funds should "expect consequences."
The Trump administration's effort is part of a broader push led by Vice President JD Vance's Task Force to Eliminate Fraud.
Federal officials have argued that unemployment systems became major targets for fraud during the COVID-19 pandemic, with the Government Accountability Office estimating nationwide unemployment fraud totaled between $100 billion and $135 billion.
North Carolina's audit findings are likely to add pressure on states to modernize technology systems, improve identity verification measures, and tighten oversight as federal officials increase scrutiny of unemployment insurance programs nationwide.