Identity theft? Next step, government fraud


Sometimes, it is good to start with a confession.  I filed my taxes at the last minute. It was past time to get some money back from the IRS before they could waste $60,000 on another Star Trek spoof video.  Normally I'm one of those people that files in February, as soon as I have everything in hand.  Filing late gave me some concern, as it allowed a lot more time for someone else to "file" for me.  As in, steal my identity, file a bogus return for a huge refund, and mess up my life royally.

Why was I concerned this could happen?  Because according to a recent Javelin report, 12.6 million consumers had their identities stolen last year.  A shocking 1 in 4 notified of a data breach ended up being victims of identity theft.  Guess what, I was notified of a data breach by one of my credit cards late last year.  They had immediately canceled the card and issued one with another number, but that doesn't solve the cascade of effects.

A great ABC News article that ran last month highlighted a recent report from the Federal Trade Commission about the rapidly growing tide of complaints of identity theft.  In that FTC report, identity theft complaints made up 18% of all complaints, nearly double that of the next category, debt collection complaints.  Of the identity theft complaints, 43% of consumers reported that their identity was used for, guess what, TAX theft!  Either using the identity to gain a false tax refund, or working under your identity to stick you with the tax bill at the end of the year for wages you never earned.  Within Florida, the leading state for the identity theft crisis, 75% of the stolen identities were used to file false tax refunds or for government benefits, like welfare or unemployment.  Maybe I'm lucky I live in Washington State, about as far away from Florida as possible while still staying in the U.S.

What can be done about all of this?  Well, for consumers, start protecting your data and your identity as soon as possible.  If you have a breach, watch closely for months afterwards, as well as the next tax filing cycle.  For government agencies, it is past time to start doing something about this.  First step, break down data silos and start sharing data between agencies.  Match up birth and death records, other public records, SSN matches and filings between programs.  See if people really are who and where they say they are.  Then, add analytics.  Proper predictive models, anomaly detection and looking for networks of individuals will quickly show the rings of identity theft and false filings.  That will protect not only the government agencies and funds, but also protect the consumers and constituents living in your states.  We've already seen states like Kentucky, Michigan and Louisiana and others start down this path, utilizing tools like the SAS Fraud Framework with an enterprise view to protect themselves and their citizens.  While some of those are nascent projects, it is the right step.  What about the rest of the states and the Federal government, not to mention large cities and counties?  It's not too late to catch up.  Don't be last, or you may end up knocking Florida from its dubious perch.



About Author

Carl Hammersburg

Manager, Government and Healthcare Risk and Fraud

Carl Hammersburg manages the SAS Government and Healthcare Risk and Fraud team, and has been with SAS since 2012. Prior to that, he spent 20 years in anti-fraud activities for Washington State’s exclusive workers’ comp insurer, the Department of Labor and Industries. In 2004, Carl formed that agency’s comprehensive fraud program, covering tax and premium audit, claim investigation, provider fraud and collections. Data sharing and investigative partnerships with other State and Federal agencies, as well as driving public availability of information and awareness served as cornerstones to the anti-fraud activities of the program. During his stewardship, audit and investigative activities doubled and outcomes tripled, based on a focus on data mining and predictive analytics that improved efficiency and case selection. Program success under Carl’s leadership resulted in awards from two successive Governors of Washington State.

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