Government insiders say digital IDs could make massive fraud events rare
When looked at through the lens of identity fraud in the United States, the pandemic has showed how poorly government systems performed in safeguarding an unprecedented emergency relief program.
According to reporting by The (San Jose) Mercury News, $80 billion to $100 billion was fraudulently claimed from the $400 billion Covid Economic Injury Disaster Loan program. How much was taken with fraudulent identification schemes is to be determined, but the percentage is likely to be high.
Also disconcerting was a panel discussion June 17, sponsored by Socure, a predictive-analytics platform for digital ID verification, about how identity fraud is evolving. There were four speakers and a moderator all of whom are or have been federal or state officials.
Only journalists were invited, an atypical arrangement.
Even if there had been no gigantic economic bailout, all the millions of people suddenly interacting online with the world outside their homes would have presented rich opportunities for criminals. And that online glut of activity largely remains.
“There is more money moving through the system,” said Suzette Kent, a former federal CIO and current CEO of Kent Advisory Systems. The number of Americans online is extraordinary, and the opportunity for crime “is pervasive across all industries.”
The dangers are only going to get more sophisticated, said Linda Miller, former deputy executive director of the federal Pandemic Response Accountability Committee, part of the Council of the Inspectors General.
Now a principal at Grant Thornton, Miller said street gangs are crawling the dark web to learn how to get involved.
The panel agreed that it was not the speed at which relief money was sent to individuals and companies. It was the fact that anti-fraud measures were insufficient.
In the past, building friction into transactions has helped in some circumstances, said Jordan Burris, a former federal CIO chief of staff and now cybersecurity strategist at Socure. Those days are done.
The federal government has to “prioritize a mind-set shift,” said Burris. It is possible to use AI to spot red flags and suspicious patterns even as the speed of services increases.
Of course, there is always trust. Trust in government capabilities and competence, certainly, but also giving individuals the power to set their own varying, flexible levels of identity verification.
Kent said a person should be able to set verification parameters – friction – based on the transaction. A citizen likely (hopefully, should) choose more friction when trying to transact a tax issue, but paying entrance fees for a national park could be slick.
There is nothing remotely impossible in what the panel agreed must be done technologically to fight identity fraud. And the world saw that the federal government is capable of racing at business speed to aid the economy.
No less than the Treasury Department has sent officials out to talk about making 2022 a year of action on digital ID.
But left unsaid is that conservatives have spent a generation saying the federal government is incompetent, corrupt and too big. If recent political events are any indication, that sentiment has cemented for a large number of Americans.
Can a pilloried government win more control over personal information, even if the program is a collaboration with states and businesses? It would be asking for a lot of trust.