Social Security fraud statistics are difficult to pin down. They are found inside a larger category of fraudulence called “improper payments,” which is broken into a number of subcategories.

That said, fraud exists within the Social Security system. With more than 64 million people in the U.S. receiving some form of Social Security benefits, either through retirement or disability, fraud is inevitable, and it costs taxpayers billions annually.

Key Takeaways

  • Social Security fraud costs American taxpayers billions of dollars each year.
  • Fraudulent activities include collecting disability benefits when not disabled or collecting Social Security income owed to somebody else.
  • Social Security fraud is a serious crime that comes with penalties and fines.

According to the most recent statistics available, between 2004 and 2017, the Social Security Administration (SSA) admits to improper payments totaling $1.3 trillion. Retirement, survivors, disability insurance, and Supplemental Security Income were all involved. The use of fake or stolen Social Security numbers to obtain fraudulent tax refunds from the IRS also costs taxpayers billions each year, the IRS reports.

Improper Payments

An improper payment is when Social Security remits funds in the wrong amount to the wrong person for the wrong reason. Social Security recognizes the following six types of improper payments:

  • Insufficient documentation
  • Inability to authenticate eligibility
  • Administrative or process errors
  • Medical-necessity errors
  • Failure-to-verify-data errors
  • Issues with program design or structure

However, when an improper payment is a result of fraud, it is listed under “other reasons.”

Fraud can be a component of an improper payment made under one of the six root causes defined by the SSA, which is, in part, why fraud is so difficult to isolate.

Defining Fraud

According to the SSA, any of the following is considered fraud.

  • Making false statements on a claim. This includes when applying for Social Security benefits and providing information that you know to be untrue.
  • Concealing facts or events. Failure to reveal information that could affect your eligibility is also fraud.
  • Misuse of benefits by a representative payee. If a relative or friend mishandles benefits for someone who is incapacitated, that act is considered fraud.
  • Buying or selling real or fake Social Security cards or numbers. People who steal Social Security numbers and use them to obtain benefits illegally are committing fraud.
  • Criminal behavior by SSA employees. This could involve using insider access to obtain illegal benefits or to help another person obtain illegal benefits.
  • Impersonation of an SSA employee. Older people are often exploited by criminals who claim to be SSA representatives and ask for personal information, including Social Security numbers.
  • Bribery of an SSA employee. SSA employees are not allowed to accept gifts or money in exchange for services. If they do, they have committed fraud.
  • Violating standards of conduct. All SSA employees are bound by standards of conduct.
  • Workers’ compensation misrepresentation. When someone receiving SSA benefits becomes entitled to workers’ compensation, it must be reported to the SSA.
  • Misuse of grant or contract funds. Waste or mismanagement in the processing of SSA contracts and grants.
  • Misuse of Social Security numbers for the purpose of committing terrorist acts. If anyone with links to terrorist groups or organizations facilitates this, it is fraud.

The Social Security Administration ranks third among government agencies for handling improper payments and fraud efficiently.

What Can Be Done

The government depends on citizens to help uncover fraud. The SSA is allowed to verify financial accounts via access to financial institutions, conduct a continuing disability review or cooperative disability investigation, and use data analytics to predict and detect fraud. As a deterrent, it can impose administrative sanctions and a civil monetary penalty of up to $5,000.

Social Security fraud is a serious and costly problem. Individuals can report suspected fraud to the SSA’s Office of the Inspector General (OIG), which investigates every allegation brought before it. If the OIG determines that fraud has occurred, it will pursue the case. Report suspected Social Security fraud online or call the Social Security Fraud Hotline at (800) 269-0271.