🚨 Unemployment Benefits Fraud

Today Korean Social News for Beginners | 2025.11.10

0️⃣ 23 Billion Won Uncovered and Repeat Recipients Issue

📌 "Quit 21 Times"... 23 Billion Won Lost to Unemployment Fraud, Warning Lights Flash

💬 This year, the scale of unemployment benefits fraud exceeded 23 billion won, raising serious concerns about the system's credibility. Cases have increased where people repeatedly quit and rejoin the same workplace to collect unemployment benefits. One worker was found to have received over 100 million won through 21 separate claims. The recovery rate remains around 66%, meaning about one-third of fraudulent benefits are never recovered, exposing major gaps in system management. The Ministry of Employment and Labor has implemented measures including intensive reporting periods, waiving additional charges for voluntary reports, and offering rewards for informants. The National Assembly is calling for stronger management of repeat recipients and systematic improvements to prevent fraud, urging fundamental reforms to the unemployment benefits system.

💡 Summary

• Unemployment benefits fraud exceeding 23 billion won has weakened trust in the system.
• Types of fraud are becoming more diverse, including repeat claims from the same workplace and false job search activities.
• The recovery rate is only 66%, leaving a significant portion of fraudulent payments uncollected.

1️⃣ Definition

Unemployment benefits fraud refers to receiving unemployment benefits without proper qualification or through false and improper methods under the Employment Insurance Act. Unemployment benefits are a government program designed to help workers who lost their jobs involuntarily maintain their living while preparing for reemployment. Fraud occurs when people abuse this system to receive benefits improperly.

Common types of fraud include: First, working while receiving unemployment benefits. Second, intentionally repeating quitting and rejoining the same workplace to collect benefits. Third, not engaging in genuine job search activities or falsely reporting them. Fourth, claiming involuntary termination when the person actually quit voluntarily. If caught, fraudsters must return the improperly received amount and can be charged up to 5 times the amount as additional penalties, and may face criminal prosecution.

💡 Why is this important?

• Unemployment benefits are a social safety net for people truly in need.
• When resources are wasted on fraud, people who genuinely need help cannot receive adequate support.
• Strict management is necessary for the system's sustainability and credibility.
• Fraud must be eliminated to protect honest unemployed workers.

2️⃣ Current State and Problems of Fraud

📕 Scale and Severity of Fraud

• This year's fraud exceeded 23 billion won. Key facts include:

  • Unemployment benefits fraud detected through October 2025 exceeded 23 billion won.
  • Both the number of cases and amounts are increasing compared to the same period last year.
  • One worker was found to have quit and rejoined the same workplace 21 times, receiving over 100 million won.
  • Fraud methods are becoming more sophisticated and varied, making detection more difficult.

• Low recovery rates mean serious financial losses. Major problems include:

  • The recovery rate after detecting fraud remains around 66%.
  • About 34%, or one-third of fraudulent amounts, are never recovered.
  • Forced collection is difficult when fraudsters cannot be located or have no assets.
  • Recovery procedures are complex and time-consuming, reducing effectiveness.

📕 Gaps in Repeat Recipient Management

• Repeat claims from the same workplace are a serious problem. Key examples include:

  • Some workers conspire with employers to intentionally repeat quitting and rehiring.
  • A pattern emerges: work briefly, quit, collect unemployment benefits, then return to the same job.
  • The current system cannot effectively prevent this type of repeat abuse.
  • This abuse is particularly common in certain industries or seasonal jobs.

• Dependency on unemployment benefits is increasing. Major concerns include:

  • Some workers tend to rely on unemployment benefits rather than actively seeking reemployment.
  • Loose job search requirements allow people to receive benefits with only superficial efforts.
  • Low motivation to find work during the benefit period delays return to the job market.
  • This increases the burden on employment insurance finances and threatens system sustainability.

📕 Various Types of Fraud

• Many cases involve hiding employment status while collecting benefits. Common types include:

  • Actually working at another company but not reporting it while continuing to receive unemployment benefits.
  • Working as a freelancer or day laborer but falsely reporting unemployment status.
  • Starting a self-employed business but claiming to be job-seeking to receive benefits.
  • While some cases are caught through cross-verification with National Pension records, many blind spots remain.

• People disguise voluntary resignation as involuntary termination. Key issues include:

  • Actually quitting by choice but falsely claiming termination due to company circumstances.
  • Conspiring with employers to arrange formal layoffs or dismissals to qualify for benefits.
  • This abuses the "involuntary termination" requirement for unemployment benefits.
  • Many cases go undetected because proof is difficult during investigations.

💡 Major Problems with Unemployment Benefits Fraud

1. Waste of Resources: Hundreds of billions of won leak annually through fraud, increasing employment insurance financial burden
2. Damaged Trust: Reduced support for honest unemployed workers and overall system credibility decline
3. Moral Hazard: When fraud is widespread, it encourages a culture of system abuse
4. Insufficient Management: Weak detection and recovery systems make effective sanctions difficult
5. Labor Market Distortion: Reduced job search motivation worsens labor mismatches and workforce shortages

3️⃣ Fraud Prevention and System Improvement Measures

✅ Government Crackdown Measures

• Running intensive reporting periods. Key details include:

  • The Ministry of Employment and Labor regularly operates intensive fraud reporting periods.
  • Voluntary reporters are exempted from additional charges that can reach up to 5 times the fraud amount.
  • Informants who report fraud receive rewards of 20% of the fraud amount, up to 5 million won annually.
  • Reports can be submitted anonymously through various channels including online and phone.

• Strengthening cross-verification systems. Key measures include:

  • Cross-checking with National Pension and health insurance enrollment records to verify employment status.
  • Linking with National Tax Service income data to identify income generation.
  • Upgrading employment insurance computer systems to automatically detect suspicious patterns.
  • Building fraud prevention systems using big data and AI.

✅ Strengthening Repeat Recipient Management

• Limiting repeat claims from the same workplace. Key measures include:

  • Restricting eligibility when someone repeatedly claims from the same workplace beyond a certain number.
  • Strictly reviewing cases where people reapply for benefits shortly after reemployment.
  • Penalizing both employers and workers who conspire for repeat fraud.
  • Strengthening monitoring of seasonal jobs and specific industries.

• Tightening job search requirements. Key tasks include:

  • Requiring genuine reemployment efforts rather than superficial job search activities.
  • Strengthening job search verification procedures and strictly cracking down on false reports.
  • Making participation in employment support programs mandatory to actively support reemployment.
  • Suspending or reducing benefits when job search activities are insufficient.

✅ Strengthening Recovery and Penalties

• Improving systems to increase recovery rates. Key measures include:

  • Simplifying and expediting forced collection procedures.
  • Strengthening authority to investigate and seize fraudsters' assets.
  • Establishing solid recovery plans and managing compliance even for installment payments.
  • Strengthening sanctions including credit information registration even when recovery is impossible.

• Increasing penalties to raise awareness. Key tasks include:

  • Applying graduated heavier penalties based on fraud amount and frequency.
  • Making criminal prosecution the principle for malicious and organized fraud.
  • Publicly disclosing fraud cases to apply social criticism and sanctions.
  • Holding employers jointly liable when they participate in fraud.

4️⃣ Related Terms Explained

🔎 Unemployment Benefits System

• Unemployment benefits support living stability and reemployment for unemployed workers.
  • Unemployment benefits provide living expenses for a certain period to workers enrolled in employment insurance who lost their jobs involuntarily. The official name is "Job-seeking Allowance" based on Article 40 of the Employment Insurance Act. To receive benefits, workers must meet requirements including involuntary termination, 180 days or more of employment insurance enrollment during the 18 months before leaving, and active reemployment activities.
  • Payment amounts and periods vary based on length of service, age, and average wage before termination. First, daily payment is 60% of pre-termination average wage, with minimum and maximum amounts set. Second, payment periods range from 120 days to maximum 270 days depending on length of service and age. Third, those aged 50 or older or with disabilities can receive benefits for longer periods.
  • During the benefit period, recipients must actively engage in reemployment activities. They must conduct job searches on Worknet weekly or biweekly and report their activities, and participate in employment support programs required by employment centers. Benefits can be suspended if someone refuses employment or doesn't engage in job search activities without valid reasons. Since unemployment benefits are for workers genuinely seeking reemployment, meeting requirements and sincerely conducting job searches is crucial.

🔎 Employment Insurance Act Fraud Sanctions

• The Employment Insurance Act specifies strict sanctions for fraud.
  • Article 61 of the Employment Insurance Act mandates return of improperly received amounts and additional charges when benefits are obtained through false or improper methods. If fraud is confirmed, the entire received amount must be returned, plus additional charges up to 5 times the fraud amount.
  • Additional charge standards include: First, 2 times the fraud amount for simple negligence. Second, 3 times for intentional fraud. Third, up to 5 times for repeated or organized fraud. However, charges can be waived or reduced for voluntary reports.
  • Criminal prosecution is also possible. Article 116 of the Employment Insurance Act stipulates imprisonment of up to 1 year or fines up to 10 million won for those who receive benefits through false or improper methods. Especially when fraud amounts are large or cases are organized and repeated, people can actually be criminally prosecuted and punished. Additionally, confirmed fraud can restrict future unemployment benefit eligibility for a certain period, requiring great caution.

🔎 Repeat Recipient Management System

• Repeat recipient management prevents abuse of the unemployment benefits system.
  • Repeat recipients are people who receive unemployment benefits multiple times within a short period. The problem is particularly serious when people repeatedly get hired and fired from the same workplace to collect benefits. This goes against the system's purpose and burdens employment insurance finances.
  • The government is currently strengthening repeat recipient management. First, conducting detailed investigations when someone repeatedly receives benefits from the same workplace beyond a certain number. Second, sanctioning both sides when employers and workers conspire for repeat benefits. Third, strictly reviewing voluntary resignation status when people reapply for benefits shortly after reemployment. Fourth, strengthening monitoring of seasonal jobs and specific industries.
  • Future improvement directions include limiting the number of claims from the same workplace. For example, restricting additional benefits or reducing amounts if someone receives benefits 3 or more times from the same workplace within 5 years. Also considering stricter review of reemployment efforts when people repeatedly receive benefits after short-term work. However, careful system design is needed to avoid disadvantaging workers who repeatedly lose jobs for legitimate reasons.

🔎 Intensive Reporting and Reward System

• The intensive reporting system is a key government policy to eliminate fraud.
  • The Ministry of Employment and Labor regularly operates intensive unemployment benefits fraud reporting periods. During these periods, benefits are provided for voluntary reports or third-party reports to eliminate fraud.
  • Benefits for voluntary reporting include: First, while the fraud amount must be fully returned, additional charges (up to 5 times) are waived. Second, exemption from criminal prosecution means no criminal record. Third, future disadvantages like unemployment benefit restrictions can be reduced. Voluntary reports can be made through various methods including employment center visits, online, or phone.
  • A third-party reward system is also operated. If fraud is detected through a report, reporters receive rewards of 20% of the fraud amount, up to 5 million won annually. Reports can be made anonymously, and reporter identities are thoroughly protected. Reports can be submitted through the Ministry of Employment and Labor website, employment centers, or by calling 1350. Submitting concrete evidence (pay stubs, work proof, etc.) increases detection likelihood. These systems strengthen social monitoring of fraud and contribute to improving system credibility.

5️⃣ Frequently Asked Questions (FAQ)

Q: What should I do if I get a part-time job while receiving unemployment benefits?

A: You must report to the employment center immediately, and benefits may be reduced or suspended based on income.

• If income is generated through part-time work or day labor while receiving unemployment benefits, you must immediately report to your local employment center. Working without reporting constitutes fraud and becomes subject to recovery and additional charges later. Reporting methods include employment center visits, phone calls, or online reporting, and you must accurately report the work period and income amount.
• Unemployment benefit payments are adjusted when income is generated. First, if monthly income is below a certain amount, you can continue receiving benefits but at reduced amounts. Second, if monthly income exceeds the standard amount, benefits are not paid for that period. Third, benefit eligibility ends if you get regular full-time employment. The important thing is to report honestly without hiding anything. Detection likelihood is high through National Pension or health insurance enrollment records and National Tax Service income data, and penalties are much greater if caught later.

Q: Is there any way to receive unemployment benefits after quitting voluntarily?

A: It's generally impossible, and false reporting results in fraud penalties.

• Unemployment benefits are only available for involuntary termination, meaning layoffs, dismissal, contract expiration, or job loss unrelated to your own wishes. Voluntary resignation by submitting a resignation letter generally disqualifies you. Some exceptions exist. For example, when workplace relocation makes commuting impossible, when wage delays or labor condition violations are severe, or when unavoidable circumstances like family care exist, you may receive benefits if these are recognized as valid reasons. However, this requires submitting supporting documents and passing employment center review.
• Disguising voluntary resignation as involuntary termination to receive unemployment benefits is clear fraud. Even if you conspire with employers to arrange formal layoffs or dismissals, this can be uncovered during investigations. In such cases, you must return all received benefits, face additional charges up to 5 times the amount, and can receive criminal prosecution. Future unemployment benefit eligibility is also restricted. Never report falsely, and if you have valid reasons, prepare sufficient supporting documents and apply honestly.

Q: How do I report unemployment benefits fraud I witnessed?

A: You can report through the Ministry of Employment and Labor website, employment centers, or phone (1350), and receive rewards.

• If you witness or learn of unemployment benefits fraud, you can report through several channels. First, access the Ministry of Employment and Labor website (www.moel.go.kr) to report online. Second, visit or call the nearest employment center to report. Third, call the Ministry of Employment and Labor consultation center at 1350 (no area code). While reports are normally made with real names, anonymous reporting is also possible. However, anonymous reports may make reward payment difficult.
• Submitting concrete evidence with reports increases detection likelihood. For example, photos or videos of someone actually working while receiving benefits, pay stubs, employment contracts, witness statements, etc. are helpful. If reports are confirmed as true and fraud is detected, reporters receive rewards of 20% of the fraud amount, up to 5 million won annually. Reporter identities are thoroughly protected, and legal protection ensures no disadvantages from reporting. Since fraud violates the rights of people who should legitimately receive unemployment benefits, actively reporting when witnessed is advisable.

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