Pandemic Fraud: A Cautionary Tale

Any time a new source of public funds emerges, fraudsters are soon to follow. Especially in cases where organizations try, with the best of intentions, to get money into the hands of people quickly. In this article, we will look at how tens of billions of dollars are estimated to have been paid to scammers during the recent COVID pandemic – and how using identity validation services could have prevented many of these losses.

Pandemic relief – A system ripe for fraud

The COVID pandemic was an unprecedented emergency for the US economy. Restrictions designed to protect the population from the spread of a deadly virus impacted the ability of many people to work, and of many businesses to function normally or maintain their payroll.

To support these people and protect the economy, Federal and state governments in the US quickly launched a number of financial relief programs, including unemployment and small business assistance, as part of an estimated outlay of over US $3.5 trillion in Federal spending alone. Unfortunately, these programs also ushered in a simultaneous rise in fraud, with an estimated 7.6% or more of these Federal funds (and US $20 to 36 billion just in California) going into the pockets of scammers.

This fraud was aided by systemic failures at several levels, including a sense of urgency to get funds into the hands of people, as well as short staffing for reviewing claims. Some of these false claims sprang from misuse of real personal data, ranging from identity theft to using black market Social Security numbers. Others involved clearly fraudulent identities, including made-up names including “Sen. Diane Feinstein” and even “Mr. Poopy Pants”. Yet other schemes included ineligible recipients such as individuals in prisons and cases like an internal EDD employee convicted of diverting over $4 million in benefits.

Fighting scammers with data hygiene

A great deal of this pandemic fraud likely springs from systems that are too antiquated to check for potential recipients being real people, with contact data that is accurate, genuine and up to date. Today, cloud-based data quality tools can help automate this process and stop much of this fraud before it even enters your database.

Here are just a few of the tools the Data On Time Solutions (DOTS) that help fight  identity fraud:

  • DOTS Name Validation software uses sophisticated analysis, together with a database of over 1.4 million first names and 2.75 million last names, to weed out things like bogus, junk or vulgar names.
  • DOTS Address Validation helps ensure contacts have real addresses with USPS deliverability, and can also flag high-risk addresses such as prisons.
  • DOTS Lead Validation verifies and cross-references contact data records against more than 130 data points, providing quantitative Certainty and Quality scores that let you flag suspicious contacts for further review.

Best of all, each of these tools can be implemented directly into the most popular business automation platforms using convenient API interfaces, with expert assistance from knowledgeable engineers. Want to learn more about automated solutions for fraud prevention for your organization? Contact our friendly data quality experts for a free no-pressure, no-obligation consultation.

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