The fraudsters live luxuriously, enriching themselves at the expense of society, and mercilessly exploit people looking for work in Germany - especially from Bulgaria and Romania. The scheme works as follows - the fraudsters lure people from Eastern Europe by giving them fake work contracts with very low wages. The victims apply for social benefits in Germany, with which they can raise their income level. But then they are forced to provide most of the money to criminal groups.
Social benefit fraud is possible mainly in cities with cheap housing, which is often in an extremely poor condition, explains ARD. The landlords of these “holes“ and the fraudulent employers are often the same people or maintain close contact. The Federal Ministry of Labor, however, notes that these criminal schemes are not observed nationwide because the housing conditions in question do not exist everywhere. In the Ruhr area - for example, in cities with many dilapidated buildings such as Duisburg and Gelsenkirchen - these scams are common practice. There, the police and customs regularly carry out searches and arrests on charges of such crimes.
Different types of scams
"I think there is a combination of several different factors that are operating simultaneously", Duisburg Mayor Sören Link told ARD. "On the one hand, there are already established migrant communities here. So it is relatively easy for newcomers to settle in. There is also a relatively large amount of cheap housing compared to other cities. There may be other reasons, but I think these are the main arguments”, says Link.
According to the employment offices, there are various forms of welfare fraud: for example, non-existent employers, false working hours, undeclared work. These schemes have also become possible thanks to the free movement of workers within the EU, which has been applied to Bulgaria and Romania since 2014. Anyone who works and lives in an EU member state has the right to apply for welfare there.
More and more cases of fraud
New data from the German government confirms that the number of such frauds is increasing: in 2024, 421 cases of alleged welfare fraud were registered, which were linked to organized crime groups. The previous year, 229 such cases were registered. By May 2025 alone, 225 cases had been detected. "However, these figures do not reflect the actual situation, as not all frauds can be detected and registered. It is therefore clear that the true number of abuses is significantly higher", says a spokesman for the German Ministry of Labor.
The situation in Gelsenkirchen is similar to that in Duisburg. People are housed in dilapidated buildings, apply for social benefits, but are then forced to give much of the money allocated to the fraudsters. “The free movement of workers means that if someone arrives in Germany and starts a job, but unfortunately loses it later, they are entitled to receive social benefits. But to come here and have thousands of euros for the whole family without having worked - that raises a rather unpleasant socio-political discussion," Gelsenkirchen Mayor Karin Welge told ARD.
"Mafia structures"
More than half of the city of Gelsenkirchen's budget goes to social benefits. Labor Minister Berbel Bass openly speaks of "mafia structures" that must be broken up. The labor offices are already implementing numerous measures to detect and prevent organized fraud with social benefits, ARD also writes.
“The documents used to apply for social benefits are carefully checked for possible discrepancies, people's identities are checked, employees are sent to suspicious addresses, information and anonymous signals are analyzed", says a spokeswoman for the labor ministry.
The mayor of Duisburg Sören Link expects rapid improvements in the fight against social fraud: "In the interests of honest taxpayers, I expect action to be taken here too." According to him, it is high time for the state to "show that it is not a toothless tiger".
Author: Jens Eberl ARD