Benefit fraud is also referred to as welfare fraud, and occurs when an individual gets benefits from the state that they are not entitled to receive, or deliberately chooses to not report any changes in their personal circumstances. This is also referred to as withholding information or providing inaccurate or false details. This may happen on a small scale or a larger, more coordinated scale.
When benefit fraud is suspected, there is typically an investigation that revisits the claimant, their family and friends to collect new information and compare it to existing materials on file. Investigators may contact utility companies, banks and places of employment, if applicable. If it is determined there is benefit or welfare fraud there are several things that may happen: benefits may be cut back, any amounts overpaid will need to be given back, a penalty is paid in lieu of prosecution, or possible confiscation of possessions or homes may occur.
Common benefit or welfare fraud schemes involve claiming for dependents that do not exist, not reporting income, not reporting an extra household member, or faking their inability to work due to some illness. Those collecting benefits may be collecting them under their own name, but they do not qualify for them, or may be collecting for someone else who never gets the funds.
Punishment in the U.S. for welfare or benefit fraud varies from state to state, but may range from suspension of benefits for a year to time in jail and stiff fines.