Today marks the beginning of International Fraud Awareness Week. And, it can’t have come soon enough. 2017 has become the “Year of the Data Breach.” According to the Identity Theft Resource Center, so far there have been 1,120 data breaches in 2017 alone, compromising more than 171 million records. These records include names, birth dates, Social Security numbers (SSN), addresses, phone numbers and more – all the components needed to use a stolen identity to commit fraud.
These records – and the corresponding identities – are now on sale all over the dark web. According to the 2017 LexisNexis Fraud Mitigation Study, criminals who commit fraud in one industry are likely to commit fraud in other industries, as well. In other words, the stolen identities will be used over and over again to perpetrate fraud in multiple industries.
Right now, organized criminal groups are targeting government services and programs. The reasons are simple:
- Government is a high return, low risk target. Government benefits and/or services fraud won’t be found on a credit report. When an individual applies for and receives a benefit, such as unemployment insurance or Medicaid, or a service, such as a tax refund, it isn’t a credit transaction. Typically, when an organization’s data has been breached, they offer a year or two of free credit monitoring. That year is underway right now with multiple breaches that occurred in 2017. That means right now organized criminal groups aren’t targeting industries where fraud will be flagged on a credit report, they are targeting industries, such as government, where no credit transaction is created.
- Government unintentionally offers a criminal multiple bites at the apple. By targeting government benefits and/or services to commit fraud, organized criminal groups really have the opportunity to bilk taxpayers. For example, with tax refund fraud, criminals can use a stolen identity once at the federal level and then target the 42 states requiring individuals to file a state tax return. Other benefits, such as Medicaid and unemployment insurance, are available in all 50 states.
- Government agencies typically don’t share data. This may seem like a simple point, but it is perhaps the biggest hurdle government faces in fighting this type of fraud. And, a key to winning the battle against it. When agencies share data, they can find instances of duplicate participation in government programs, due to error or outright fraud and put a stop to it. Similarly, they can detect identities known for defrauding government services and programs, and flag those for additional investigation.
The fact is: organized criminal groups are coming for the government in 2018. They are already hard at work procuring stolen identities to get ready for the upcoming tax season, or to file at scale for unemployment insurance, or even to steal medical identities and perpetrate Medicaid fraud. Data sharing is the answer. By sharing data across government programs and jurisdictions, agencies will be better positioned to detect and prevent fraud. Keep your data siloed at your own risk.
