H.R. 8873, Recover COVID Unemployment Fraud in Banks Act

Bill Summary

H.R. 8873 would require the Secretary of Labor, in consultation with the Attorney General, the Inspector General of the Department of Labor (DOL), and the Secretary of the Treasury, to designate a national recovery coordinator. The coordinator would convene a task force to review federal unemployment compensation issued on prepaid debit cards during the COVID-19 pandemic that is held—or frozen—by financial institutions or states because of suspected fraud. The task force would develop model processes for recovering fraudulent payments and would issue guidance to financial institutions and state agencies responsible for unclaimed property.

Similar activities are underway, and states and the federal government are already required to investigate and attempt to recover fraudulent payments. The Office of Inspector General of DOL has issued memoranda to the department’s Employment and Training Administration directing it to ensure that states take action to recover and return pandemic funds frozen by banks to the Treasury. In addition, in Executive Order 14395 the President established a task force to address fraud in federal benefit programs.

The bill also would extend the statute of limitations from 5 years to 10 years for federal criminal prosecution and civil enforcement actions for fraud related to the temporary unemployment programs enacted during the pandemic. Under current law, the 5-year statute of limitations for those offenses began expiring in March 2025.

Estimated Federal Cost

The estimated budgetary effects of H.R. 8873 are shown in Table 1. The costs of the legislation fall within budget functions 370 (commerce and housing credit), 500 (education, training, employment, and social services), 600 (income security), 750 (administration of justice), and 800 (general government).

Basis of Estimate

CBO assumes that the bill will be enacted in 2026. Estimated outlays are based on historical patterns for existing and similar activities.

Direct Spending

CBO estimates that enacting H.R. 8873 would decrease direct spending by $5 million over the 2026-2036 period (see Table 2).

Task Force to Recover Pandemic Unemployment Compensation. H.R. 8873 would establish a task force to develop procedures for recovering fraudulent payments of pandemic unemployment compensation held by financial institutions or in state accounts. The task force would include six representatives from five agencies: one from the Consumer Financial Protection Bureau (CFPB), two from DOL (including one representative from the department’s Office of Inspector General), one from the Department of Justice (DOJ), one from the Department of the Treasury, and one from the Federal Deposit Insurance Corporation (FDIC). The administrative costs of the CFPB and the FDIC are classified as direct spending.

CBO estimates that the cost of the salary, benefits, and travel expenses for one employee of the FDIC to participate in the task force would be less than $500,000 over the 2026-2036 period.

The CFPB is permanently authorized to spend amounts transferred from the combined earnings of the Federal Reserve to carry out its responsibilities, subject to a statutory cap that was most recently lowered by the 2025 reconciliation act. CBO expects that the CFPB will spend all the transferred funds up to its cap in each year over the 2026‑2036 period for its current activities, so CBO does not attribute any increase in direct spending for the CFPB to legislation that increases its responsibilities. Any spending by the CFPB to implement the bill would necessitate a decrease in spending for other activities of the agency. (Costs associated with other agencies’ participation in the task force are discussed under “Spending Subject to Appropriation.”)

States’ Administrative Costs. CBO expects that extending the statute of limitations would lead states to continue to refer cases of suspected fraud to DOL and to provide information about those cases to the department’s Office of Inspector General and federal law enforcement agencies. CBO also expects that DOL would reimburse states for any related expenses they incur. Under current law, DOL has permanent authority to provide any amounts necessary for those activities for pandemic‑related programs. Using information from DOL, CBO estimates that under the bill the department would provide $5 million in additional funding to states, increasing direct spending by the same amount over the 2026-2036 period.

Increased Recoveries. By extending the period for which DOJ could pursue prosecutions, CBO expects that enacting H.R. 8873 would increase the amount of fraudulent benefit payments recovered. Those recoveries are recorded in the federal budget as reductions in direct spending. On the basis of discussions with DOL and DOJ and an analysis of fraud recoveries under current law, CBO estimates that extending the statute of limitations would allow the federal government to recover an additional $10 million over the 2026-2036 period.

Revenues

CBO expects that extending the statute of limitations also would increase collections of criminal and civil penalties, which are recorded in the budget as revenues. Criminal penalties are deposited into the Crime Victims Fund and spent without further appropriation. Using information from the Sentencing Commission about collections for similar offenses, CBO estimates that the increase in penalty collections and associated direct spending under H.R. 8873 would be less than $500,000 over the 2026-2036 period.

Spending Subject to Appropriation

CBO estimates that creating the task force and extending the statute of limitations as required by H.R. 8873 would increase spending subject to appropriation by $6 million over the 2026‑2031 period. Such spending would be subject to the appropriation of the estimated amounts (see Table 3).

Task Force to Recover Pandemic Unemployment Compensation. The costs for representatives from DOL, DOJ, and the Treasury Department to participate in the task force established by H.R. 8873 would be subject to the availability of appropriated amounts. CBO estimates that the salaries, benefits, and travel expenses for those representatives would cost $1 million over the 2026-2031 period; most of that spending would occur in 2027.

Office of Inspector General’s Administrative Costs. CBO estimates that extending the statute of limitations would result in more potential fraud cases being referred to the Office of Inspector General of DOL and that the office would continue to investigate cases it might otherwise have dropped. Using information from DOL, CBO estimates that the additional workload would cost $5 million over the 2026-2031 period.

Uncertainty

CBO’s estimates of the budgetary effects of extending the statute of limitations are subject to uncertainty. The amount of recoveries that would be collected under the bill depends on actions related to cases for fraud identified in pandemic-related unemployment programs. The number of cases that will be prosecuted under current law or under the bill is uncertain, as is the amount of fraud established and the share of that fraud that the government will ultimately collect. This estimate reflects the middle of the distribution of possible outcomes in CBO’s judgment.

Pay-As-You-Go Considerations

The Statutory Pay-As-You-Go Act of 2010 establishes budget-reporting and enforcement procedures for legislation affecting direct spending or revenues. The net changes in outlays that are subject to those pay-as-you-go procedures are shown in Table 4.

Increase in Long-Term Net Direct Spending and Deficits

CBO estimates that enacting H.R. 8873 would not increase net direct spending or on-budget deficits in any of the four consecutive 10-year periods beginning in 2037.

Mandates

The bill contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act.

Previous CBO Estimate

On February 24, 2025, CBO transmitted a cost estimate for H.R. 1156, the Pandemic Unemployment Fraud Enforcement Act, as ordered reported by the House Committee on Ways and Means on February 12, 2025. Section 3 of H.R. 8873 is similar to section 2 of H.R. 1156: Both sections would extend the statute of limitations for fraud related to pandemic unemployment compensation. CBO’s estimate of recoveries under H.R. 8873 is greater because it accounts for the amount of pandemic unemployment fraud established and collected since last February, which is larger than CBO anticipated. H.R. 8873 would establish a task force to review funds issued on prepaid debit cards that are frozen in banks and state accounts because of suspected fraud; H.R. 1156 would not. H.R. 1156 would rescind funding for program integrity activities; H.R. 8873 includes no such provision.

Estimate Prepared By

Federal Costs: 
Jeremy Crimm (for the Department of Justice)
Justin Latus (for the Department of Labor)

Mandates: Andrew Laughlin

Estimate Reviewed By

Elizabeth Cove Delisle
Chief, Income Security Cost Estimates Unit

Justin Humphrey
Chief, Finance, Housing, and Education Cost Estimates Unit

Kathleen FitzGerald
Chief, Income Security Cost Estimates Unit

Christina Hawley Anthony
Deputy Director of Budget Analysis

Estimate Approved By