Colorado has had a difficult time managing unemployment insurance fraud against the government and its residents. First, the state was overrun by fraud during the COVID-19 pandemic a state audit showed that more than $100 million in overpayments were made./1/ Then, the state overcorrected and in so doing, it wrongfully withheld the benefits that were legitimately owed to 5,000 out-of-work Coloradoans. /2/. Over the course of the pandemic, the GAO said, “[a]gencies across the federal government acted quickly to stand up new programs and greatly scale up existing programs.” Yet, in moving fast, these agencies did not strategically manage fraud risks and were not adequately prepared to prevent fraud” during the COVID emergency. /3/
Fraud against the government is really fraud against people. For example, SNAP benefit fraud is literally taking food out of the mouths of hungry parents and children. In 2022, LexisNexis Risk Solutions, a consumer reporting agency, took a deep dive into fraud committed against SNAP benefits agencies, and the fraud rates they found were staggering.
So, are governments caught between the proverbial rock of moving fast and the hard place of creating too much friction in providing benefits to rightful beneficiaries? No. “Fast versus friction is a false choice,” wrote Jennifer Kerber in an OpEd in the Colorado Sun. Kerber added that with the correct technology in place, government “agencies are able to get benefits to the right people while keeping public funds safe from fraud.” /4/
Among the recommendations of the GAO was to stop relying on self-attestation. Verification of identities, documents, and circumstances could have deflected a great deal of pandemic fraud against those in need. But that is not the only vector for fraud. Enhanced data analytics is also a tool supported by the GAO to prevent fraud. /5/ Government agencies should also partner with the private sector to prevent fraud. American ingenuity available from the private sector can offer multi-layered solutions and integrated fraud solutions. These tools can put benefits where they belong – in the hands and on the tables of those who are legitimately entitled to those benefits and to keep the fraudsters at bay.
/1/ Colo. Office of the State Auditor, Dep’t. of Labor & Employment, Unemployment Insurance Benefits, Public Report, Nov. 2021.
/2/ Cole Sullivan, Colorado tried to weed out unemployment fraud and caught thousands of real claims in the process, 9 News, Aug. 18. 2023.
/3/ COVID-19: Key Elements of Fraud Schemes and Actions to Better Prevent Fraud, GAO-24-107122, Oct. 19, 2023, at 1 and 12.
/4/ Jennifer Kerber, Opinion: Colorado’s recent problems verifying unemployment benefits show need for better ID checks, Colo. Sun, Nov. 1, 2023.
/5/ COVID-19: Key Elements of Fraud Schemes and Actions to Better Prevent Fraud, GAO-24-107122, Oct 19, 2023.
Eric J. Ellman is Senior Vice President for Public Policy and Legal Affairs at the Consumer Data Industry Association (CDIA) in Washington, DC. He also served for eight months as Interim President and CEO of the Association. More