KDOL is permitted, under K.S.A. 44-706, to assess a "penalty in the amount equal to 25 percent of the amount of benefits unlawfully received" upon "an individual who has knowingly made a false statement or representation or who has knowingly failed to disclose a material fact to obtain or increase [UI] benefit..." These are generally referred to as "fraud" cases. The failure to fully report or accurately disclose wages or earnings for any time benefits are paid or delivered is fraud. KDOL actively investigates fraud. Fraud can lead to prosecution.

If a fraud determination has been made, interest accrues from the date of a final determination. Interest at the statutory rate of 18 percent per year may accrue on penalties assessed.

Non-fraud overpayments accrue interest on unpaid balances remaining unpaid two years after the date the overpayment was established.