According to the Pandemic-Related Identity Fraud Crime Victim Impacts Report, the past two years have brought about an unprecedented surge of government benefits-related identity fraud. The Identity Theft Resource Center (ITRC), a nationally recognized nonprofit organization established to support victims of identity crime, and LexisNexis Risk Solutions, a leading provider of data, analytics, and technology to help organizations manage risk, have teamed up to release the report, which details the massive extent to which individuals and government agencies have been impacted by government benefits identity fraud since 2020, especially in the areas of unemployment benefits and small business loans.
A group comprised of more than 1,800 consumers, self-identified identity crime victims, and government officials were surveyed for this study, and the findings were alarming, to say the least. Nearly half (42%) of pandemic benefits applicants reported being a victim of identity fraud. These unfortunate victims were denied benefits or had benefits disbursed in their names, even though they had not applied for any pandemic-related benefits. More than half of those cases took between six months and one year to resolve.
Twenty-three (23) percent of victims reported they were unable to pay for food or utilities as a result of the fraud, 17 percent were unable to pay their routine monthly bills, and 8 percent reported that they were evicted from their homes for failing to pay rent or mortgage. Haywood Talcove, Chief Executive Officer, LexisNexis Special Services and LexisNexis Risk Solutions Government, illustrated the weight of those numbers best when he was quoted, “…every statistic represents a real person and potentially a family negatively impacted by identity theft.”
While the ITRC has found that 40 percent of pandemic-related scams had no financial impact on their victims in 2021, which is thankfully an improvement from 27 percent reported in 2020, the non-financial impacts of these crimes are ever present. Seventy percent of victims reported feelings of stress, violation, and even suicidal thoughts as a result of their experience. Forty-eight (48) percent of consumers expressed fear that their personal information could be exposed in a data breach, which could give way to potential employee misuse, profiling, and identity confusion.
Those feelings of unease that consumers are expressing are legitimized when one examines the course this year has taken from a cybersecurity standpoint. Traditionally, the first quarter of each year sees the lowest number of reported data breaches, however, 2022 began with the highest number of Q1 data compromises reported within the last three years. It is evident that this is going to be a taxing year for cybersecurity, and that benefit identify fraud is going to be a permanent fixture on the government risk landscape. In fact, reports of unemployment benefits identity fraud made to the ITRC are up 778 percent from the pre-pandemic rate.
As of right now, there are no national or state infrastructures in place to provide free support to victims of serious identity fraud cases. In addition to that, only 26 percent of the victims who self-identified in this study said they reported the crime to a government agency. There is a noteworthy disconnect between the types of identity credentials consumers are required to provide to these agencies, and the level of comfort they have with doing so.
The good news is that the jump in fraud has motivated 59 percent of government executives to take steps to modernize technology. The report states that 31 percent added steps to their identity verification process, 13 percent added new tools, five percent moved to an automated ID verification system, and 3 percent added a new vendor. The bad news is that identity criminals will continue to apply for benefits long after enhanced benefits have ended. Benefit-related identity fraud is here to stay.
It is vitally important that government agencies continue to modernize their technology, to both increase consumer confidence and strengthen the fight against future identity fraud crimes. That is the bottom line when it comes to studies like the Pandemic-Related Identity Fraud Crime Victim Impacts Report – to help LexisNexis Risk Solutions and the ITRC continue to develop and improve the technologies that will allow government agencies to keep citizen identities safe.