Stopping Fraudulent Payments Act
- Sponsor
- Sen. Ernst, Joni [R-IA]
- Committees
- Homeland Security and Governmental Affairs Committee (primary)
- Last action
- Jun 10, 2026
Bottom line
This bill aims to enhance the federal government's ability to prevent fraud and improper payments by implementing a system of payment pauses and segmentation, balancing fraud prevention with timely disbursement and payee protections.
What it actually does
This bill amends title 31 of the U.S. Code to authorize federal agencies and the Department of the Treasury to temporarily delay, condition, or segment federal payments that present an elevated risk of fraud or improper payment. It establishes procedures for agencies to review such payments, notify payees, and resolve disputes within specific timeframes, while also providing liability protections for officials acting in good faith and requiring the Treasury to issue implementing regulations.
Proponents argue
Proponents argue that the bill is a critical tool to combat the pervasive issue of fraud and improper payments within federal programs, which costs taxpayers billions annually. They contend that by allowing agencies to proactively review suspicious payments before disbursement, the government can save significant funds, protect program integrity, and ensure that payments go to eligible recipients. The bill's provisions for payee notification and dispute resolution are seen as safeguards against undue delays for legitimate payments.
Opponents contend
Opponents might argue that while fraud prevention is important, this bill could lead to significant delays in legitimate payments, particularly for vulnerable populations or small businesses reliant on timely federal funds. They may raise concerns about the potential for bureaucratic overreach, the burden on agencies to implement complex new procedures, and the possibility of erroneous fraud-risk indicators causing hardship for payees. The 30-day review period, even with a 7-day contestation period, could be seen as too long for critical disbursements.
The bill is relatively short and clearly structured, making it accessible for an informed reader to understand its core provisions within a reasonable timeframe.
Section 2(a), adding new 31 U.S.C. 3337(a)
Agency Authority to Pause Payments for Fraud Risk
This provision mandates that federal agencies must temporarily delay, condition, or segment a payment request if an agency official determines there's an elevated risk of fraud or improper payment. This determination can be based on fraud-risk indicators, estimated financial loss, or notification from a State or local government for federally-funded, State-administered programs.
Supporters argue
Supporters argue this provision empowers agencies to act as the first line of defense against fraud, allowing for proactive intervention before funds are disbursed, thereby preventing financial loss to the government.
Critics contend
Critics might express concern that this broad authority could lead to inconsistent application across agencies or potential delays in legitimate payments if fraud-risk indicators are overly broad or poorly defined.
Tradeoffs
Balances the need for fraud prevention at the agency level with the potential for administrative burden and the risk of delaying legitimate payments.
Section 2(a), adding new 31 U.S.C. 3337(b)
Treasury's Role in Directing Payment Pauses via Do Not Pay System
This provision requires the Secretary of the Treasury to promptly notify agencies to return certified payment vouchers and issue a corrective action order within two days if the Do Not Pay system identifies an elevated risk of fraud or improper payment. This acts as a centralized backstop for fraud detection.
Section 2(a), adding new 31 U.S.C. 3337(d)
Payee Rights and Agency Responsibilities for Paused Payments
When a payment is paused, agencies must notify the payee (and relevant State or local government if applicable) within two days. This notification must explain why the payment was paused and outline the process for review. Agencies must also provide a tailored process for payees to contest inaccuracies or provide clarifying information. Payments must be issued within 30 days of the initial pause determination, or within 7 days if the payee successfully contests the action, provided no elevated risk remains.
Section 2(a), adding new 31 U.S.C. 3337(e)
Allowing Routine Payment Portions to Proceed
Agencies are directed to allow the routine, historically consistent portion of a payment to proceed while only temporarily holding the anomalous, unusually large, or high-risk portion for review. This aims to minimize disruption for legitimate, regular payments.
Section 2(a), adding new 31 U.S.C. 3337(f)
Waiver for Active Criminal Investigations
The head of an agency, in consultation with the Secretary of the Treasury and the Attorney General, may waive any provision of this new section on a case-by-case basis if a federal law enforcement authority (including an agency Inspector General) notifies them that the action would jeopardize an active criminal investigation or legal proceeding related to fraud against the Federal Government.
Section 2(a), adding new 31 U.S.C. 3337(g)
Protection for Officials Acting in Good Faith
This provision states that no federal officer or employee shall be personally liable for actions taken in good faith under this section. It also clarifies that an action taken under this section does not constitute a final determination of eligibility, liability, or wrongdoing for a payee.
Section 2(a), adding new 31 U.S.C. 3337(i)
Regulatory Framework for Payment Pause Authority
Within 180 days of enactment and annually thereafter, the Secretary of the Treasury, in consultation with the Director of OMB, must issue regulations and establish procedures to administer the requirements of this section. These regulations must specify the minimum seniority for agency officials making corrective action determinations, procedures for Treasury's Do Not Pay system determinations, agency dispute/appeal procedures for Treasury orders, and minimum information for payee notifications.
These subsections amend existing sections of title 31 (3325(a), 3527, 3528) to integrate the new payment pause authority. Specifically, they modify the responsibilities and relief from liability for disbursing officials, accountable officers, and certifying officials to account for actions taken in compliance with the new Section 3337. For instance, certifying officials are now explicitly responsible for complying with corrective action orders, and accountable officers can be relieved of liability for losses resulting from good faith efforts to comply with Section 3337.
Section 2(b), (c), (d), (e)
Why it matters:This is standard legislative practice to ensure new statutory provisions are properly integrated into the existing legal framework and to clarify the duties and protections of federal personnel.
Case for: Proponents argue these amendments are essential for the practical implementation of the new payment pause authority, providing necessary legal clarity and protection for federal employees who will be executing these new responsibilities. Without them, officials might hesitate to act.
Case against: No specific opposition is typically raised against these technical conforming amendments, as they are necessary for the bill's functionality.
Estimated impact: Clarifies legal responsibilities and protections for potentially thousands of federal employees involved in payment processing, ensuring the new fraud prevention measures can be effectively implemented without undue personal risk to staff.