Unemployment benefits are meant to offer relief to those who meet the state requirements for the program. In each state, you have to file a claim for each week you want to collect benefits by answering questions about your eligibility. If you intentionally lie, misrepresent or conceal information during the filing process in order to collect unemployment benefits, you have to repay those benefits. Depending on the severity of the offense, you may also receive penalty weeks of unemployment, monetary fines or jail time.
Having to pay back benefits overpayment is a standard procedure, whether you intentionally collected unemployment payments or it was some sort of clerical error. You receive a benefit overpayment notice in the mail detailing how much you owe in back unemployment benefits. The repayment details differ depending on the state in which you live, so check with your state's labor office. If you don't pay the money back in the time given to you or set up a payment plan, the debt goes to a collection agency and possibly on your credit report.
In some states, if you show intent to defraud the unemployment insurance plan, you can be assessed penalty weeks. These are future weeks that you may qualify for unemployment benefits but won't receive payment as a punishment for overcollecting past benefits. Penalty weeks are different from benefit repayment in many cases. You have to pay back what you fraudulently collected and then serve several weeks of unemployment with no payment at all.
In cases where the state labor department finds that you have intentionally set out to defraud the unemployment program, you can sometimes be criminally prosecuted for insurance fraud. If your case goes to criminal court, a judge reviews the evidence against you to determine whether you're guilty of intent to defraud. If the judge feels the severity of the crime warrants it, you may be assessed monetary fines. These fines are in addition to paying back overpayment of benefits and must be paid to the court.
In the most extreme cases of unemployment insurance fraud, you can receive jail time. This is usually reserved for those who demonstrate multiple counts of fraud or defraud the state of large amounts of ill-gotten benefits. The amount of possible jail time varies by the state law and at the discretion of the judge presiding over the case. Check with your state's labor department if you have questions about specific laws for your state. (See Resources) You could receive between one and five years of jail time, depending on the state.