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Designing and Evaluating AI-Powered Predictive Models for Detecting Unemployment Insurance Fraud: A Data-Driven Approach to Enhancing the Integrity of U.S. Public Benefit Systems

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  • Designing and Evaluating AI-Powered Predictive Models for Detecting Unemployment Insurance Fraud: A Data-Driven Approach to Enhancing the Integrity of U.S. Public Benefit Systems

Ivan Zimbe 1, Vincent Onaji 2, Justin Njimgou Zeyeum 3, Kehinde Ayano 4 and Omoniyi David Olufemi 5, *

1 Department of Computer Science, Maharishi Intl. University, Fairfield, Iowa, USA.

2 Department of Computer Science, Purdue University, Fort Wayne, United States.

3 Business Administration, Ohio Dominican University, Ohio, United States.

4 Department of Computer Science, Indiana Wesleyan University.

5 Department of Computer Science & Engineering, University of Fairfax, Virgina, USA.

Review Article

International Journal of Science and Research Archive, 2025, 16(01), 2276-2336

Article DOI: 10.30574/ijsra.2025.16.1.2134

DOI url: https://doi.org/10.30574/ijsra.2025.16.1.2134

Received on 10 June 2025; revised on 15 July 2025; accepted on 17 July 2025

 

The unprecedented surge in Unemployment Insurance (UI) claims, particularly following the COVID-19 pandemic, has exposed critical vulnerabilities in public benefit systems, leading to staggering financial losses attributable to fraudulent activities. Traditional fraud detection methods, predominantly reliant on static, rule-based systems and post-payment audits, are ill-equipped to counter the sophisticated, large-scale, and adaptive nature of modern fraud schemes. This paper introduces the Predictive Anomaly and Network Detection for Operational Risk Abatement framework, a novel, multi-modal machine learning architecture designed for real-time fraud mitigation in UI systems. PANDORA integrates three specialized analytical modules: (1) a supervised learning component utilizing an XGBoost classifier trained on historical fraud data to generate claim-level propensity scores; (2) an unsupervised anomaly detection component employing an Isolation Forest algorithm to identify novel and emergent fraud typologies not present in historical data; and (3) a graph neural network (GNN) module for uncovering complex, collusive fraud rings through network analysis of claimant, employer, and infrastructural data. These modules operate in concert, feeding into an ensemble meta-learner that calculates a unified Composite Risk Score (CRS) for each claim. This score facilitates a dynamic, risk-based triage system, enabling real-time decision-making: auto-approval, manual review, or immediate denial. We present a simulated implementation using a large-scale synthetic dataset modeled on real-world claim characteristics, demonstrating that PANDORA achieves a 28% improvement in F1-score and a 42% reduction in false positive rates compared to traditional benchmarks. The framework's design addresses critical considerations including model interpretability through SHAP (SHapley Additive exPlanations), scalability, and a continuous learning feedback loop, presenting a robust and adaptive solution to a pressing public administration challenge.

Machine Learning; Unemployment Insurance; Fraud Detection; Anomaly Detection; Predictive Modeling; Public Administration; Big Data; Deep Learning, Explainable AI (XAI); Real-Time Systems; Supervised Learning; Unsupervised Learning; Graph Neural Networks

https://journalijsra.com/sites/default/files/fulltext_pdf/IJSRA-2025-2134.pdf

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Ivan Zimbe, Vincent Onaji, Justin Njimgou Zeyeum, Kehinde Ayano and Omoniyi David Olufemi. Designing and Evaluating AI-Powered Predictive Models for Detecting Unemployment Insurance Fraud: A Data-Driven Approach to Enhancing the Integrity of U.S. Public Benefit Systems. International Journal of Science and Research Archive, 2025, 16(01), 2276-2336. Article DOI: https://doi.org/10.30574/ijsra.2025.16.1.2134.

Copyright © 2025 Author(s) retain the copyright of this article. This article is published under the terms of the Creative Commons Attribution Liscense 4.0

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