Prime Minister Jacinda Ardern has distanced herself from campaign material claiming "more than two million New Zealanders" received the cost of living payment on Monday, when in fact it was closer to 1.3m.
It comes as the $116 payment - the first of three over three months - comes under criticism with potentially thousands of ineligible people receiving it.
This includes those living across the globe despite a requirement to be "present" in New Zealand, and spouses of high-income earners.
The Inland Revenue Department, which administers the payments, has explained it can only deal with the information it has, and if people are believed to be in New Zealand and meet the other criteria it will go into their bank account.
Already 2885 people have opted out of the scheme. People are also required under the law to pay the money back if ineligible, although IRD has said it will only pursue fraudulent payments.
IRD has also explained for similar reasons it cannot rule out the payment potentially going to accounts of deceased people.
A spokeswoman told the Herald they had received no reports of this occurring yet, but that they relied on data from the Department of Internal Affairs.
"If they or executors don't tell us someone has died, then we wouldn't know," she said.
As of Wednesday payments had gone to 1.3m people - about 800,000 fewer than the 2.1m originally estimated, although the scheme remains open until March next year.
IRD is seeking bank accounts for more than 150,000 people as well.
On Tuesday, a Labour campaign email asking for donations stated: "More than two million New Zealanders received $116 from the new Cost of Living Payment".
Ardern said she had not been aware of the campaign material before it was sent.
"The first I've seen of that was once it had gone out.
"I'm not privy to every communication that the Labour Party's general secretary has with Labour members and supporters.
"It's not timing or wording that I would have used."
National Party deputy leader Nicola Willis said the scheme "was doomed from the start", with officials warning the Government against it.
Willis also challenged Revenue Minister David Parker on aspects of the scheme during Question Time in the House.
Parker claimed people were "not obliged to pay it back because it's been legitimately paid to them".
However, the scheme itself says people must "immediately" repay it.
Parker said if IRD had paid based on their screening there was no obligation on the payee to return it.
Willis asked how New Zealanders who have left the country five, six, or seven years ago received the payment.
Parker said it must be that the Inland Revenue Department had a New Zealand address for that taxpayer rather than an overseas one.
Willis said if it was the case there could be a much larger number than anticipated as she didn't believe many people would opt to change their address after leaving the country.