Types of Fraud

Today’s fraud schemes are largely being perpetrated by widespread identity theft.  This should come as no surprise, since many government programs only require four key data-points of self-reported information to confirm identities and distribute funds or benefits:

  • Name
  • Address
  • Date of Birth (DOB)
  • Social Security Number (SSN)

This hasn’t always been the case.  Twenty years ago, if you wanted to apply for unemployment benefits you had to go to a government office and sign up in person.  Individuals had to show multiple forms of identification.  This presented a barrier to fraudsters who wanted to steal identities, since they would have to furnish hard-copies of fake documents – and would have to show up in person for each instance of fraud.  Back then, criminals risked capture each time they perpetrated fraud.  As a result, instances of fraud in these programs was low and the fraud that did occur was largely due – not to identity theft – but to legitimate beneficiaries who continued collecting after gaining employment.

With the Internet, government agencies recognized that it made good sense to allow people to register online.  This was more convenient and required less man-power from the government agency.

Unfortunately, without person-to-person contact, people used stolen identities, the identities of those who were ineligible (e.g., prisoners, deceased persons, etc.) or synthetic identities to gain access to these payments.  Because many government programs and services evolved before Internet fraud became pervasive, these organizations now find themselves ill-equipped to mitigate today’s unprecedented levels of fraud.

Learn more about the different types of fraud: