According to the Ministry of Labor, citizen benefits are intended to guarantee the livelihood of employable people who cannot find work or cannot live solely on their income. But many people abuse the social benefits system, which has existed for more than a year, like Hartz IV before it, to fraudulently obtain social benefits.
More recently, the case of a Ukrainian family caused outrage. It is said that during one year she received around 40,000 euros in social benefits from Germany. After his escape, the family applied for citizenship in Germany, but after a few months returned to his homeland. German authorities did not realize for months that they were no longer there. FOCUS online reported in detail on the case.
“Fake” Ukrainians have also recently made headlines when it comes to monetary fraud on citizens. In Baden-Württemberg, cases multiplied in which people posed as war refugees in order to apply for citizenship benefits in Germany. They didn't even speak Ukrainian.
The Ilm district of Thuringia reported a particularly audacious scam last year: of some 2,400 Ukrainian refugees, 52 were already registered in other EU countries. According to the MDR, some of them would have received social benefits twice. Consequently, it is alleged that benefits in the form of accommodation, medical care, citizens' money and initial equipment costs were fraudulently obtained.
Monetary fraud on citizens by predominantly German clans and citizens
But it is not only Ukrainians or “fake” war refugees who want to steal money from the citizens of this country. In Germany, and also in Austria, there are also frauds by gangs from southeastern Europe, according to economist Friedrich Schneider from the University of Linz to the newspaper ZDFheute.
This should not be underestimated. But frequently focusing on one group of perpetrators is misleading. “According to estimates, two-thirds of undeclared work, including social fraud, is committed by locals, by Germans who, for example, receive child benefits without authorization,” says the expert.
Monetary fraud on citizens: Hartz IV was already vulnerable
Social security fraud has a tradition in Germany. Hartz IV was already vulnerable and was massively exploited. This is demonstrated by the data from recent years.
Between 2018 and 2022, employment offices discovered and reported around 166,000 cases of possible benefit fraud by Hartz IV or recipients of citizen benefits, “Bild” reports. The tactic: Benefit recipients are said to have hidden income from the authorities, for example from employment insurance or pensions (so-called “overpayment cases”).
The scam was discovered through an automated comparison of data between different authorities, such as employment offices and pension insurance companies.
Cooperation between authorities plays a central role in the fight against social fraud. The Würzburg pension insurance company centrally compares data from various institutions on a quarterly basis, such as the tax office, the employment agency, the family fund and the Bafög office. If irregularities are discovered, the pension insurance provider will send the information to the relevant employment office.
The data comparison is carried out using a computer program and includes, among others, information from the Deutsche Post AG (Pension Service), the German Pension Insurance, the Pension Insurance Data Center or the Federal Employment Agency.
In total, authorities transmitted 9.1 million records over four years to uncover possible hidden income.
82,000 cases of “excessive payments” in 2022 alone
In 2022 alone, the federal government carried out 1.3 million data comparisons based on a parliamentary request by the Left Party, in which around 82,000 cases of possible “overpayments” were identified.
Of these, almost 40,000 cases were referred to judicial authorities and customs for further examination to combat undeclared work. Undeclared work is one of the most widespread forms of social fraud.
What sanctions do fraudsters of citizens' money face?
In nearly 18,000 cases, Hartz IV recipients had all aid withdrawn because they had not declared their income. However, there may also be more severe penalties.
According to the basic offense (§ 263 StGB), social fraud is punishable by a prison sentence of up to five years or a fine. First-time offenders who have no criminal record or are on probation are usually fined.
For more serious crimes, such as commercial fraud, gang membership, causing large economic losses or involvement of public officials, the penalty can increase to up to ten years in prison.
Of the 40,000 cases investigated, around 4,200 were sanctioned with fines. 93 people were sentenced to prison.
A cheeky pensioner drove a Porsche, traded diamonds and got paid at the employment office
This is what happened to a retiree from the district of Starnberg in Upper Bavaria. As the newspaper Süddeutsche Zeitung reports, the man drove a Porsche, traded diamonds and negotiated real estate. He also received social benefits worth 46,264 euros from the Starnberg employment office.
The 68-year-old did not report any income from self-employment. He also concealed a business account and an inheritance of €80,000 in his social benefit claims. Finally, the Starnberg district court sentenced him to a ten-month suspended sentence and to pay 1,000 euros to the German Children's Association for welfare fraud.
In another case, a Hartz IV beneficiary had to spend 22 months in prison because he had improperly received social benefits worth more than 6,000 euros without disclosing his employment. His activity was revealed through automated data matching.
Social Security Fraud Causes Billions of Dollars in Damage
Anyone who believes that they can simply return social benefits received unduly to avoid punishment is mistaken. The crime is considered committed when the benefit is paid. However, reimbursement may be taken into positive consideration when determining the penalty and may result in a reduction of the penalty.
Officials only roughly quantify the financial damage caused by social fraud. The Federal Agency reported estimated financial losses of around €272.5 million due to fraud cases for 2022, ZDFheute reports.
Customs, for its part, recorded damages worth more than 87.9 million euros due to the illegal receipt of unemployment benefits and citizen benefits.
The economist Schneider criticizes these figures. He pointed out to “ZDFheute” that, while these figures are significant, they do not take into account the number of unreported cases. Schneider also points out the fluid boundaries between welfare fraud and undeclared work: “Welfare fraud also begins when I employ someone undeclared to care for the sick or elderly for my parents or grandparents.”
According to Schneider's calculations, the annual damage caused by social and tax fraud amounts to a total of 113 billion euros.