Penalty for Unemployment Benefits Fraud

Unemployment fraud occurs when you deliberately give false or misleading information to a state unemployment division for the purpose of obtaining unemployment benefits or larger benefits than you would otherwise be entitled. This criminal act has several penalties which may be levied by the state and they range widely depending on how much money you illegally obtained and if you have a previous history of unemployment fraud.

If you have received unemployment benefits in error you may be compelled to repay the entire amount if it is determined you received these payments as the result of deliberate fraud. An interest rate is also charged on the balance of your illegally obtained benefits if you are not able repay the entire amount immediately and must instead create a repayment plan. This could mean you end up paying the state back more than you originally received in unemployment compensation.

In addition to repaying the money you illegally received in unemployment benefits, you may also be barred from collecting future benefits. The total time you are barred from collecting unemployment compensation depends on the amount of money you received illegally and how long you received the illegal benefits. If you become unemployed and still owe money to the state's unemployment division, any benefits you may receive will instead be paid to the state's unemployment division until your balance is paid in full plus any interest.

Unemployment fraud is a crime and if you defraud the state of large sums of unemployment benefits or are a repeat unemployment fraud offender you may face criminal charges. The penalties vary by state but usually involve fines ranging from $100 to $500 and jail time ranging from 90 days to up to five years for each offense. Many states consider large-scale unemployment fraud a felony. A felony conviction can remain on your record for up to seven years.

Having a criminal record can severely affect almost every aspect of your life. A criminal conviction may bar you from certain types of employment such as law enforcement and health care. A criminal record may also make it more difficult to secure employment even in fields where you are not immediately disqualified. You may be restricted from voting depending on the state you live in and you may not be able to legally obtain a firearm. Some landlords avoid a renter who has a criminal record which may make it difficult to find a home.