Government spending often faces scrutiny for waste, fraud, and abuse, with fraud alone costing taxpayers billions annually. A 2024 Government Accountability Office report estimated at least $500 billion in annual losses due to fraudulent activities. Often, fraud is conflated with wasteful spending, but in this case, this is real, criminal fraud, costing taxpayers billions if not trillions of dollars each year.
Foreign actors, including nation-states and criminal organizations, increasingly target government programs. Hackers, often linked to countries like China, Russia, Poland, Armenia, and Egypt, use sophisticated, ever-evolving tactics to bypass security measures. Some are reportedly employed by their governments, engaging in schemes ranging from check and mail fraud to hacking systems using stolen American identities. SIM swapping, where mobile carriers are tricked into transferring an individual’s phone number to a hacker-controlled SIM card, is another popular form of fraud. Death row inmates, unlikely to be notified of identity theft, and elderly individuals are among the most vulnerable. What makes this easier is that nearly every American’s Social Security number is now available on the dark web, often for as little as two dollars.
A report from identity management firm Socure revealed that foreign actors account for 2% to 12% of applications for government money or services. Nearly 25% of fraud attempts target multiple agencies simultaneously, with fraudsters favoring stolen identities over fake ones at a 4:1 ratio.
Online scams, including ransomware and investment fraud, cost Americans $16 billion in 2024, a 33% increase from 2023, according to the FBI. In spring 2025, the Department of Justice arrested 13 members of an Armenian crime syndicate responsible for millions in losses from online retail and illegal firearms scams. In May 2025, 14 additional arrests targeted another Armenian cyber gang that stole $25 million in COVID-19 relief and small business loan funds.
Linda Miller, a Government Accountability Office official, said disaster funding is a prime target for cybercriminals. Fraudsters monitor disasters to buy American identities and exploit relief funds, costing taxpayers billions and leaving victims with little recourse.
Fraud surged during the COVID-19 pandemic as the government distributed trillions in relief funds. In 2021, Bryan Vorndran, head of the FBI’s Cyber Division, reported that a Chinese hacking group, employed by the Chinese government, infiltrated six state government systems and stole funds. Miller estimates that nearly $1 trillion, about one-fifth of COVID-19 relief funds, was lost to scams, making it the largest fraud in history.
The massive scale of fraud in government programs, draining billions and possibly trillions from taxpayers each year, calls for immediate action. Foreign actors exploiting stolen identities and launching cyberattacks on disaster relief funds reveal glaring weaknesses in the system. Bolstering cybersecurity, tightening identity checks, and improving oversight of relief programs are vital to protect public money and rebuild confidence. Without quick changes, fraud will continue to siphon off resources and hurt vulnerable Americans.
Alternatively, tackling government fraud demands a collective effort. The $1 trillion lost in COVID-19 relief funds, alongside persistent schemes by foreign hackers and crime groups, highlights the need for stronger protections. Investing in cutting-edge technology, working with global partners to fight cybercrime, and raising awareness about identity theft can help secure taxpayer funds. Taking decisive steps now is crucial to stop further financial losses and support those affected by these crimes.