Federal official say that last year at least $17 billion in benefits were given out to people who were not eligible for it.

Pasadena, CA -- (SBWire) -- 07/05/2011 --State governments are increasingly waking up to the fact of major unemployment insurance fraud and are launching investigations.

Federal official say that last year at least $17 billion in benefits were given out to people who were not eligible for it. This includes people who were never eligible for the benefits and people who kept getting checks even after finding work.

States are now coming up with unique strategies to get stop people from abusing the system. Rhode Island has hired a collection agency to get back incorrectly paid payments. It also has four investigators to track down the scammers. Since 2008, the state has lost $33 million in overpayments.

Georgia, Utah, New Jersey, Colorado, and Ohio are collaborating to stop the benefits scam. They have created a web-based system through which they can share information about unemployment insurance with states, employers, and other agencies.

Some of the people who were caught cheating the system have said that they were desperate or did not know the rules properly. The high underemployment rate is also considered one of the reasons for at least some of the fraud.

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