A 2023 investigation by the Associated Press into the more than $4 trillion in COVID relief funds found that recipients either stole or wasted at least one out of every 10 dollars that Congress authorized.
How could this happen? Could any of that $400 billion have been intercepted before it reached the hands of fraudsters and overseas organized criminal gangs?
The Pandemic Response Accountability Committee (PRAC) estimates that fraudulent payments to individuals and businesses will exceed $500 billion when all is said and done. And the maddening, jaw-dropping, incomprehensible fact of the matter is, there's a simple tool, free to use by states and federal agencies, that could have prevented much of the fraud.
It turns out that there's an app for that.
The Treasury Department's "Do Not Pay" (DNP) tool, which the Obama administration originally created, could have saved countless billions from the fraudsters. Designed as a "one-stop shop" first line of defense, its primary objective is to help federal agencies and federally funded state-administered programs verify a recipient's identity and eligibility before an award is made or a payment is disbursed.
I know exactly what you're thinking: "Do you mean to tell me that the Feds weren't verifying eligibility before mailing a check?" Amazingly, that's exactly it. The libertarian Cato Institute refers to the current system as a "pay and chase" approach.
"Rather than catching errors up front, agencies frequently default to a difficult, expensive, and largely ineffective 'pay and chase' approach," says Cato. "They issue the payment first, find the error later, and try to claw it back after the fact."
During the pandemic, government agencies were in full panic mode. They claim that they were far more concerned with getting money to people than with verifying data. It was open season on the American taxpayer, and agencies, state governments, and NGOs tasked with disbursing relief funds didn't give a crap.
DNP is ridiculously simple in concept and execution. "The DNP system is meant to stop this cycle by providing agencies with access to data sources to cross-check and verify applicant eligibility at the point of issuance," says Cato.
The system has a proven track record. In a three-year pilot that gave DNP access to the Social Security Administration’s (SSA) Death Master File, the system identified or prevented $113.5 million in improper payments at a cost of just $4.6 million—a 23-to‑1 return on investment in the first year alone. After such remarkable success, Congress permanently authorized SSA to share its full death data with DNP.
In FY 2025, DNP reportedly helped agencies prevent, detect, and recover $11.7 billion in potential improper payments.
Only 19 states use DNP, and not all of those use it wisely or across their entire disbursement programs. "Only 4 percent of eligible programs across the federal government fully utilize DNP," reports Cato.
In April, the Subcommittee on Government Operations held a hearing titled “Fraud Prevention: Understanding Fraud in Federally Funded Programs Run by the States," where several shortcomings of DNP, as well as the failure of federal and state agencies to use it, came to light.
The system screens well for deceased enrollees, but only $1.5 billion in FY 2024 overpayments were death-related. Far larger drivers of overpayments—income and financial data ($80.2 billion), employment status ($68.9 billion), and identity ($31.6 billion)—are not fully accounted for in DNP’s current databases. The Pre-Payment Fraud Prevention and Treasury Data Access Act (H.R. 8463) from Reps. James Comer (R‑KY) and Jodey Arrington (R‑TX) would help address these gaps by expanding DNP to include the National Directory of New Hires, SSN/name matching, and tax return income data for agencies to use during prepayment eligibility screening.
To be sure, there are privacy issues involved, and the government must always tread carefully when personal information of taxpayers leaves the IRS or other agencies that collect it and is used by another agency.
Only 4% of eligible programs across the federal government fully utilize DNP. Many states lack access to DNP and instead rely on outdated and fragmented data systems with significant gaps in eligibility verification. The Timely and Accurate Benefits Act (H.R. 1755) from Rep. William Timmons (R‑S.C.) would help close this gap by expanding DNP’s availability to state agencies and requiring them to use DNP or other real-time data-matching tools for fraud prevention and eligibility determinations.
Astonishingly, even when DNP finds potential fraud, agencies don't always take action.
As Rep. Comer points out, Treasury “is not fully empowered to stop” potentially improper payments flagged by DNP, leaving agencies free to disburse funds even when the tool identifies a risk. To address this, Reps. Comer and Arrington’s Stopping Fraudulent Payments Act (H.R. 8464) would require agencies that wish to proceed with a payment flagged by DNP to first take corrective action and verify the payment before certification.
First things first: give DNP access to more databases and statutory authority to use them to root out fraud and mistakes.
Federal managers claim they don't have the money or staff to check every disbursement. What do you need "staff" for to punch simple information into a search engine before cutting a check?
Congress has actively pushed legislative reforms — such as the Pre-Payment Fraud Prevention and Treasury Data Access Act — aimed at expanding DNP's data access, mandating pre-screening for state-administered federal funds, and improving fraud-risk training across the government workforce.
Fraud is not an impossible problem to address adequately. Many of those Minnesota day care centers and food aid programs were run by people who had red flags festooned on their applications if only someone had bothered to run their information through the DNP system.
In some cases, the politicians don't want to know about the fraud because then they would have to "do something about the problem." Even if it's broke, don't you dare fix it.
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