The “F” Word: Rapid Change in Government Fraud Prevention
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Linda Miller, Founder and CEO of Audient Group, LLC, began her session, “GenAI Political Polarization, and the Future of Government Fraud Prevention,” by stating that “Government fraud fighting is going through a period of rapid change.” This statement set the tone for the remainder of her session at the 36th Annual ACFE Global Fraud Conference by emphasizing the urgent need for adaptation in the face of rapid technological advancements and political shifts.
Miller, a seasoned expert in government fraud prevention, delved into the complex macro trends influencing the fight against fraud in the U.S. public sector. Those trends include rapid technological advancements, increasing data breaches, sophisticated AI-powered scams, political polarization and a growing reluctance to acknowledge the extent of fraud within government agencies. Her presentation focused on four key forces shaping the landscape of government fraud.
1. The Technology Mismatch
Miller discussed the difference between the technological capabilities of fraud actors and the government. Fraudsters are leveraging readily available data, sophisticated AI tools like large language models and chatbots, one-time password bots and deepfake technology to execute increasingly believable and complex scams. Fraudsters are also using AI to create counterfeit documents and bypass liveness detection tools. She cited the recent “mother of all data breaches,” compromising 16 billion login credentials, as a prime example of the vast resources available to criminals. “Data is the currency that fraud actors use today,” Miller explained. “This has created a real asymmetric landscape in the fraud prevention world.”
On the other hand, government agencies often rely on outdated legacy systems, some dating back to the 1960s and built on common business-oriented language (COBOL). Miller shared an anecdote about California’s unemployment insurance system during the pandemic, where hiring more staff paradoxically worsened the backlog due to the complexity of the antiquated IT infrastructure.
2. Fraud is a Dirty Word in Washington, D.C.
Miller declared that “fraud is a dirty word in Washington,” arguing that government agencies are often hesitant to acknowledge the extent of fraud, leading to a lack of investment in prevention and detection measures. “There isn’t a great incentive to look for fraud,” Miller stated, “And in fact, when an agency does go out and look for fraud, they’re penalized.”
She pointed to the alarming fraud during the pandemic, when trillions of dollars were stolen, yet few consequences were faced. This lack of accountability, combined with the fear of negative publicity, created a disincentive for agencies to actively seek out and address fraud. Miller contrasted this with the private sector, where such massive losses would likely result in job losses and significant repercussions.
3. The Broken Data System
Miller continued her session by identifying the government’s “broken data system” as a major impediment to effective fraud prevention. She outlined the three key data problems as being unreliability, data sharing limitations and the perception of data as a threat.
She then went on to share a story about Elon Musk’s outrage over alleged Social Security payments to dead people, stating, “maybe a lot of vampires were collecting Social Security.” This highlighted the unreliability of data on individuals born before 1920. Because the Social Security Administration (SSA) automatically cuts off benefits to anyone over 115, they did not prioritize updating death dates for those before 1920. This left millions of records without accurate death information, making those identities vulnerable to theft. She also revealed the fact that, “The [United States Treasury Department’s] ‘Do Not Pay’ list did not have access to the death master file until they got special access in a law that was passed in 2021.”
The lack of data sharing between agencies further exacerbates the problem, allowing fraudsters to exploit vulnerabilities across different programs. Miller mentioned that agencies repeatedly buy the same data from data brokers, using that as an example of the inefficiency of the current system.
The Way Forward
Miller stressed how “now is the time to get really, really serious” about stopping government fraud. After discussing the current challenges, Miller offered five points to “turn the tide” and improve government fraud prevention. She continues to state that she is “not naïve” and she “understands how challenging these [points] are,” but that, in her opinion, these points are a roadmap for what needs to be done if “we want to make a dent in where we are, and where we need to be.”
The Five-Point Roadmap to Improve Government Fraud Prevention:
Stop paying and chasing: Prevention is the way to stop fraud. Shift from reactive measures to proactive prevention strategies.
Make it acceptable to say the word “Fraud”: Create a culture where acknowledging fraud is acceptable and encourages investment in prevention.
Validate information from applicants: Implement robust verification processes to prevent identity theft and fraudulent claims. Miller emphasized this point by stating that, “We are in a trust and don’t verify world in the government today.”
Invest in technology: Embrace cutting-edge technologies, including AI and data analytics, to detect and prevent fraud.
Stop villainizing data: Recognize data as a valuable tool for fighting fraud and prioritize data sharing and security.
