Catching bad guys: Preventing and combating fraud in government programs
Jon Coss, Risk & Fraud Solutions
Government subsidy programs have always, and always will be, targeted by fraudsters.
The size of the funding, more than $2 trillion per year distributed by over 2,000 different programs, combine with prompt payment laws and antiquated, siloed computer systems to make government a target-rich environment for criminals.
Never has this been more apparent than during the pandemic, when opportunistic and organized fraud rings stole more than $100 billion from programs like Unemployment Insurance and the Small Business Administration’s Paycheck Protection Program (PPP).
During the pandemic, both the velocity and depravity of these fraud methods greatly accelerated.
Equally devastating to the financial impact of fraud is the human tragedy that accompanies it. Even during “normal” times, abuses in these programs have included crimes such as doctors treating healthy patients for cancer just so they can bill Medicaid, or care centers increasing margins by illegally substituting inexpensive products like Ensure supplement drinks for doctor-prescribed nutritional formulas.
During the pandemic, both the velocity and depravity of these fraud methods greatly accelerated. We’ve witnessed fraudulent letters sent to vulnerable Medicaid populations threatening them with program expulsion if they refuse a visit for a fake COVID test where their IDs are then stolen for financial crimes. We’ve even seen “doctors” who have prescribed homeopathic vaccine substitutes to trusting patients, and then forged vaccination cards for them. In addition, multiple law enforcement officials have complained that Unemployment Insurance fraud has funded the purchase of illegal weapons that have directly contributed to increases in violent crime across the country.
Often lost in this reporting on this criminal activity is the devastating effect that fraud has on Americans who legitimately qualify for government benefits…
Often lost in this reporting on this criminal activity is the devastating effect that fraud has on Americans who legitimately qualify for government benefits and who desperately depend on them for access to healthcare, housing, and temporary financial assistance during difficult times. Caught up in the government’s efforts to prevent fraud during the pandemic, millions of honest Americans were denied or significantly delayed while securing business loans or unemployment insurance payments. The real-world effects of this included the inability to make rent or mortgage payments and businesses that struggled to pay their employees.
…in a five-day period, we were able to process one state’s 9.7 million Unemployment Insurance claimants caught in a payment backlog.
If anything, positive has come from the pandemic, it may be the increased funding made available for governments to modernize their computer systems and their fraud-detection technologies. The size and importance of the programs demand this. For example, in a five-day period, we were able to process one state’s 9.7 million Unemployment Insurance claimants caught in a payment backlog. This prevented $30 billion in fraud and, and more importantly, allowed the state to confidently pay millions of legitimate claimants.
In another state, we identified identity theft rings attempting to steal millions of dollars from the Supplemental Nutrition Assistance Program (SNAP) in fraudulent benefit cards and online grocery purchase. There is simply no way for states to do this on their own with old technologies or by throwing more people at the problem.
One thing we know for sure is that when fraud methods are discovered and shut down, criminals don’t suddenly become good citizens. Instead, they innovate to find new ways to defraud government systems. Machine learning, artificial intelligence, cloud computing, and constantly improving detection algorithms are the only way to keep pace with increasingly sophisticated criminal networks. We may never eliminate fraud, but we absolutely can dramatically reduce while improving service delivery.
I’ve made it a priority to remind them as often as possible that their work literally saves lives, protects our most vulnerable populations, and is helping our country recover from the pandemic.
Many of our employees at Thomson Reuters have worked nights and weekends since the start of the pandemic to help our government customers during these challenging times. I’ve made it a priority to remind them as often as possible that their work literally saves lives, protects our most vulnerable populations, and is helping our country recover from the pandemic.
Perhaps the most encouraging words I’ve heard in recent months came from one of our software developers in response to my question about what he was working on. Rather than an expected answer like “building an algorithm in Python” or “optimizing a database,” he answered that he was “catching bad guys.” That’s the kind of dedication that we need in this never-ending fight.