In almost every country, revenue and payments systems have been placed under extraordinary strain by the pandemic. From furlough schemes and child support, to tax credits and unemployment benefits, agencies are dealing with an unprecedented increase in claims.

And there’s every likelihood that these demands on public finances will continue for a long time yet. In the US, for example, while jobless claims have dropped from their peak in March 2020, economists predict that it’ll take years for the labor market to recover from the impacts of
COVID-19.

I want to look at why this is happening and then use subsequent blogs to highlight solutions that can address it – and the results they’re getting.

The “Three S’s”

It’s important to re-emphasize that not all non-compliance is fraud. But how has the landscape for intentional non-compliance changed in the past year? It comes down to the “Three S’s”: the sophistication and variety of schemes used to secure improper payments have skyrocketed; the speed with which new schemes are introduced and adapted is unprecedented; and so is the scale of both traditional User Identity (UI) fraud and organized criminal attacks. 

To put this into perspective, a recent report in the US pointed to more than $36 billion being lost to improper unemployment claims since the CARES Act was passed in Spring 2020. Over the same period, the FBI has been reporting a dramatic spike in stolen IDs used to file these claims. And it’s not just identity theft that’s causing problems.

Criminals are taking advantage of volume surges in call-centers to target weak links in authentication processes (a straw poll across agencies we work with points to a 5-15 percent increase in fraudulent callers)[1].

Eligible claimants, unused to new digital interactions, are more likely to click on suspicious links. And others, that don’t qualify for claims, are seeking to exploit the more relaxed rules for eligibility assessment that have been introduced in some areas to expedite support.

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The north star? Automated, connected, cloud-powered capabilities, with embedded AI/ and machine learning (ML) driving continuous process optimization, fraud detection and investigation, all with real-time learning.

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Preventing improper payments

New solutions can help prevent improper payments. But there’s no one size fits all. Particularly during this pandemic, it’s been a question of balancing speed with capability readiness and investment appetite. Some approaches focus on implementing new pandemic unemployment assistance (PUA) processes and reacting to the rise in non-compliance, intentional non-intentional, by increasing the use of agents and investigators.

We’re seeing an increase in combining state and Federal UI program data and applying batch analytics to reduce agent workloads, detect fraud and support investigations. Meanwhile, some agencies are moving toward real-time capabilities, using identity proofing, authentication, fraud detection and investigation, and adjudication. With connected analytics and risk scoring, along with more advanced technologies for identity access management (IAM), interactions with customers can be monitored as they happen.

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The north star? Automated, connected, cloud-powered capabilities, with embedded AI/ and machine learning (ML) driving continuous process optimization, fraud detection and investigation, all with real-time learning.

What does good look like? And how to get there

This graphic highlights the six capabilities we believe will be essential from now on to pick up intentional non-compliance. With suites of integrated new solutions, existing systems and processes will benefit from intelligent, end-to-end insight to support the great work agencies are already doing in this space.

From fraud vulnerability analyses, through authentication, real-time analytics, and risk scoring to case management, these have one thing in common: they help to prevent improper payments.

In my next blog, I’ll look at some of the ways we’re helping agencies put these capabilities into practice. If you’d like to discuss anything I’ve raised in this blog, please get in touch.

[1] Accenture analysis: Office of the Inspector General report; $100 Million to US States to fight fraud

Glenn Gutwillig

Managing Director – Consulting, Applied Intelligence, Public Sector Lead

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