Government: Silo your data at your own risk

26835495 - side view of hacker using multiple computers to steal data at table

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.

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Frank W. Abagnale is one of the world’s most respected authorities on identity theft, forgery, embezzlement and secure documents. For over 35 years he has worked with, advised and consulted with hundreds of financial institutions, corporations and government agencies around the world. Mr. Abagnale’s rare blend of knowledge and expertise began more than 40 years ago when he was known as one of the world’s most famous confidence men. This was depicted most graphically in his best-selling book, Catch Me If You Can, a film of which was also made, directed by Steven Spielberg with Leonardo DiCaprio and Tom Hanks. A Broadway musical of the same title was also created and in April 2011 opened on Broadway. It has since been nominated for four Tony Awards, including Best Musical. Between the ages of 16 and 21, he successfully posed as an airline pilot, an attorney, a college professor and a pediatrician, in addition to cashing $2.5 million in fraudulent checks in every state and 26 foreign countries. Apprehended by the French police when he was 21 years old, he served time in the French, Swedish and U. S. prison systems. After five years he was released on the condition that he would help the federal government, without remuneration, by teaching and assisting federal law enforcement agencies. Mr. Abagnale has now been associated with the FBI for over 35 years. More than 14,000 financial institutions, corporations and law enforcement agencies use his fraud prevention programs. In 1998 he was selected as a distinguished member of “Pinnacle 400″ by CNN Financial News – a select group of 400 people chosen on the basis of great accomplishment and success in their fields. In 2004 Mr. Abagnale was selected as the spokesperson for the National Association of Insurance Commissioners (NAIC) and the National Cyber Security Alliance (NCSA). He has also written numerous articles and books including The Art of the Steal, The Real U Guide to Identity Theft and Stealing Your Life.