Welfare fraud is the act of illegally using state welfare systems by knowingly withholding or giving information to obtain more funds than would otherwise be allocated.
This article deals with welfare fraud in various countries of the world, and includes many social benefit programs such as food assistance, housing, unemployment benefits, Social Security, disability, and medical. Each country's problems and programs are varied. Obtaining reliable evidence of welfare fraud is notoriously difficult.Mathieu Lefebvre, Pierre Pestieau, Arno Riedl, Marie Claire Villeval: Tax Evasion, Welfare Fraud, and "The Broken Windows" Effect: An Experiment in Belgium, France and the Netherlands CESifo Working Paper 3408, April 2011. Apart from the obvious methodological problems, research reveals that interviewing performance is often mediocre, and may be anecdotal, misunderstood, or collected from opinionated or biased caseworkers.(Dave Walsh and Ray Bull: Benefit Fraud Investigative Interviewing: A Self-Report Study of Investigation Professionals' Beliefs Concerning Practice Journal of Investigative Psychology and Offender Profiling, vol. 8 issue 2, June 2011.) Interviews with non-citizen welfare recipients, where the interviewer has succeeded in gaining a high level of trust, have shown that a very high percent fail to report incomes.Shiri Regev-Messalem: (2013), Claiming Citizenship: The Political Dimension of Welfare Fraud. Law and Social Inquiry, vol. 38 Issue 4 (Fall 2013).Kaaryn S. Gustafson: Cheating Welfare: Public Assistance and the Criminalization of Poverty p. 160. NYU Press, 2012. Official figures of the prevalence of welfare fraud based on government investigation tend to be low – a few percent of the total amount of welfare spending. Statistical research indicates that the vast majority of fraud is committed by businesses serving the recipients of government benefits. Welfare or benefits fraud committed by recipients is usually of very modest sums, and is committed by people who struggle with poverty; but once started it often continues after reaching financial stability.Martin James Tunley: Need, greed or opportunity? An examination of who commits benefit fraud and why they do it Security Journal vol. 24 issue 4 (November 2010).B. Kazemier, R. Van Eck, C.C. Koopmans: "Economische aspekten van belasting – en premie ontduiking en misbruik van sociale uitkeringen." In D.J. Hessing & H.P.A.M. Arendonk (Eds.): Sociale-Zekerheidsfraude: Juridische, ekonomische en psychologische aspecten van fraud in het sociale-zekerheidsstelsel, pp. 123-90. Dewenter 1990, Kluwer. Cited in D.J. Hessing, H. Elffers, H.S.J. Robben, P. Webley: Needy or greedy? The social psychology of individuals who fraudulently claim unemployment benefits Journal of Applied Social Psychology vol. 23, issue 3 (1993).
Welfare fraud in various countries Austria Welfare fraud has been estimated to over 1.1 billion Euros, or 1.32% of total expenditures for social benefits between 2011 and 2013. 25% of welfare fraud is committed by foreigners, who make up 12.5% of the population.Der Standard, March 19, 2013 p. 15. Quoted in Andreas Quatember: Statistischer Unsinn: Wenn Medien an der Prozenthürde scheitern p. 51. Springer-Verlag, 2015.
Canada In Canada, about 3.5% of total employment insurance expenditure was attributable to fraud and error in 2003. The total fraud and error rate in welfare allowances was estimated in 1994 to be 3-5%. In 2004–5, entitlement reviews designed to prevent fraud reported savings of CA$800 million in 2004–05.
Denmark A day off qualifying period before sickness benefit may be claimed was introduced in 1985. It was abolished two years later when it turned out that employees instead reported themselves sick for more than one day.Per Gunnar Edebalk: Sjukförsäkring och sjuklön. Om statliga beslut och arbetsmarknadens organisationer 1995-1992 p. 47, 53-57, 63. Historisk tidskrift 127:1 (2007)
France In France, the Caisse d'allocations familiales reported in 1994 an estimated amount to 2,000 to 3,000 fraud cases per year, which was considered low. When asked whether they would take a black market job while receiving unemployments benefits, more than 85% answered yes if the risk of audit was , close to 50% if the risk was , and 6% if the risk was .
Germany
In 2015, 978,809 sanctions were imposed on people who received unemployment benefits. 75% were moderate sanctions for failure to report information. At least one sanction was imposed on 131,520 beneficiaries, or 3% of total.Bundesagentur für Arbeit Statistik
The German government has estimated that the amounts lost through welfare fraud were 6% of the amounts lost through tax avoidance and subvention fraud.Siegfried Lamnek, Gaby Olbrich, Wolfgang J. Schäfer: Tatort Sozialstaat. Schwarzarbeit, Leistungsmissbrauch, Steuerhinterziehung und ihre (Hinter)Gründe, p. 69. Opladen 2000. Cited here.
German authorities assume that welfare fraud by relatively well-off people of Turkish origin is common, although there is no statistics concerning its scope. It is easy to register as indigent in Germany, although one may have financial assets in Turkey.Boris Kálnoky: Wie reiche Türken den deutschen Staat ausnehmen Die Welt, May 21, 2012. In Braunschweig asylum seekers were able to defraud the government of 3 to 5 million euros in some 300 cases by creating multiple identities.Kate Brady: Braunschweig, northern Germany, uncovers 300 cases of welfare fraud by asylum seekers Deutsche Welle, January 01, 2017.
A criminal network engaging in welfare fraud was revealed in 2016. It is suspected to have been led by a parliamentarian who provided Bulgarians and Romanians with false work contracts and collected millions of Euros.Philine Lietzmann: Millionenschaden durch falsche Aufstocker: Welche Strafe droht den Hartz-IV-Betrügern? Focus Online, September 12, 2016.
Ireland Informal briefing reports from the Department of Social Protection in Ireland revealed that reports of welfare frauds increased by 2500% between 2008 and 2013. The Irish Examiner earlier noticed, "gone are the days when this crime – and that's the correct term – was greeted with knowing nods, winks and grudging admiration for certain people who knew the system inside out and 'could get away with it."Niam Hourigan: Rule-breakers – Why 'Being There' Trumps 'Being Fair' in Ireland: Uncovering Ireland's National Psyche Gill & Macmillan, 2015.
Israel Social Security estimates that fraud or error accounts for 5% of its budget annually. In 2005, the head of the agency estimated that 7,000 of the 150,000 income maintenance recipients succeed in defrauding the system every year. In a 2013 study, 34 of 49 welfare recipients unequivocally admitted to fraud.
A Channel 10 report contended that thousands of haredim who nominally study Torah full-time are in essence working illegally. When their reporter Dov Gilhar advertised in Bnei Brak for workers for a fictitious company, it turned out that most applicants intended to exploit the benefits they receive as yeshiva students, although they would work. Nine out of ten "candidates" who were filmed by the hidden cameras exhibited extensive knowledge of defrauding the system.Exposed: Haredim registered in yeshivas, working on the sly Ynet, July 25, 2012.Channel 10: 1,000s of Chareidim Working Illegally Yeshiva World, July 26, 2012. Several haredi yeshivas have been engaging in fraud by enrolling fictitious students in order to receive the living stipends for full-time Torah students. Hundreds of fake students were reported, and millions of shekels received.Yair Altman: Police: Haredi ID fraud spanned years Ynet, November 22, 2010.5 nabbed for alleged involvement in yeshiva fraud Jerusalem Post August 31, 2014.Yonah Jeremy Bob: NIS 52 million fraud case against haredi NGOs for false claims, forgery Jerusalem Post, November 27, 2016. A report from the Education Ministry and the accountant general of the Finance Ministry concluded that the number of 120,000 yeshiva students claimed by the haredi schools was exaggerated by five to ten thousand.Yuval Elizur, Lawrence Malkin: The War Within: Israel's Ultra-Orthodox The Overlook Press, 2014.
Netherlands In the Netherlands, surveys on fraudulent behavior in disability and old age benefits among others are undertaken. They show that between 10 and 20% of claimants show some form of fraudulent behavior. Large-scale survey research indicates that welfare fraud is more common in the Netherlands than in Britain or America. One study revealed a 17% participation in the black economy by welfare benefit recipients, while another found a 28% participation rate. The vast majority of these earned less than 1,500 guilders ($700) a year from this activity.
Norway In 2011, the Norwegian Labour and Welfare Administration had over 100 Somali women who had divorced their husbands to claim extra income support as the sole provider for the family, then had more children to their ex-husbands. Each family had defrauded state agencies out of an average 80 thousand euro. On average, sole providers receive 1,500 euro monthly per child. The welfare system is based on trust.
Sweden The Swedish National Audit Office estimated the annual losses due to fraud or error to be from 5.3 billion kronor ($793 million) to 7.4 billion ($1.1 billion) in 1995. In 2007, the Delegation Against Incorrect Payments estimated that 20 billion crowns ($2.2 billion) were being overpaid due to fraud or error, fraud comprising half of the sum. It was found that 4-6% of unemployment benefits were being paid to people who were in fact working but did not report their work.20 miljarder i felaktiga bidrag Svenska Dagbladet, November 9, 2007.
Linked processing of the data for housing allowances and for sickness insurance has taken place in Sweden since 1979. This has created, in the words of Eckart Kuhlborn, "a crime prevention eldorado" by making it possible to identify households which have reported different incomes. A check of 70% of the households that received both kinds of payments showed that 2.7% had given false information about their incomes. The next year, the figure had decreased to 1.2%, possibly due to more widespread understanding of the risk of being caught.Eckart Kuhlhorn: Housing Allowances in a Welfare Society: Reducing the Temptation to Cheat In R.V. Clarke (ed.), Situational Crime Prevention: Successful Case Studies. 2nd ed. Guilderland, N.Y., 1997. Harrow and Heston.
According to Statistics Sweden, 40,000 foreigners are registered in Sweden but no longer live there. They can continue to receive benefits, although they live abroad. When the authorities in Tensta decided that benefit recipients have to turn up at the welfare office in order to receive their money, one third did not turn up.Åke Wedin and Eskil Block: Flyktingpolitik i analys, Torsby 1993, Cruz del Sur. Quoted here .
United Kingdom
The United Kingdom Department for Work and Pensions (DWP) defines benefit fraud as when someone obtains state benefit without being entitled to or deliberately failing to report a change in personal circumstances. The DWP claim that fraudulent benefit claims amounted to around £900 million in 2008–09.Reporting benefit fraud at Directgov.