A new report details how the federal government is ignoring billions of dollars in identity theft-related fraud every year as outdated systems leave government agencies and Americans both vulnerable to scammers.
The report from Socure, a firm which sells identity verification services, found that fraudsters are using stolen identities to scam government agencies out of billions and bilk Americans from receiving benefits they are entitled to in the process. The problem is so vast, according to the report, that false or fraudulent claims originating from crime rings primarily based abroad make up between 2 percent to 12 percent of all applications for US government services.
Government estimates project that federal agencies annually lose about $500bn to fraudulent claims. Socure’s report indicates the number could be nearly twice that high.
For comparison, that’s more than 10 times the annual budget of USAID, the hub of US foreign aid and soft power now eviscerated by Elon Musk’s DOGE campaign and due for rehousing at the State Department.
First reported by NBC News, the report went on to find that a lack of identity verification systems at the federal level was having a cascading effect, as scammers often target private entities with information improperly obtained through government agencies.
“There is a real need for fraud prevention solutions which leverage simple consortium data that spans commercial and government programs,” it reads.
The report cited basic issues with federal identity verification efforts: callers who connected with agencies were often able to access information by providing information which by itself could have been illicitly obtained, like Social Security numbers and answers to security questions. Red flags, like Social Security numbers that do not match an applicant’s date of birth, applications filed from international IP addresses, or phone numbers with area codes that don’t match a person’s place of residence, are often ignored.
“Today, in many agencies, if someone calls into a call center and says that I’m locked out of my account, many of them will allow them to get access to their account by saying, 'Hey, we’ll let you change your name and your password on here,’” Socure vice president Jordan Burris told NBC News. “They’ll probably ask them something to the effect of, ‘Hey, can you tell me your name? Can you tell me Social Security Number? Can you perhaps answer this question about a car that you probably had once upon a time?’”
One international fraud ring described as “sophisticated” by Socure’s analysis used stolen identities to launch 60 fraudulent claims across “multiple” agencies during a one-month span last fall.
It’s a bipartisan problem, too: according to Socure’s findings, fraud targeting government agencies jumped during the Covid pandemic as the federal government distributed assistance checks millions of Americans and insituted loan programs for businesses to support workers during lockdowns. The figures never recovered when those programs ended.
But it’s not part of the “waste, fraud, and abuse” which either Elon Musk’s DOGE effort or the Republican Congress are addressing through federal means and the effort to craft a budget bill that could pass the House and Senate. Republicans in Congress are hoping to find nearly $900bn in savings to fund a renewal of the 2017 Trump tax cuts, but are doing so by instituting work requirements for Medicaid which Democrats say just amounts to a layer of red tape aimed at kicking people off the program. The Republican plan also calls for cuts to food stamps and other changes to Medicaid aimed at lowering the burden for the federal government.
The Government Accountability Office (GAO) estimates that Medicaid and Medicare together make more than $100bn in improper payments every year. The GOP budget plan includes changes to eligibility requirements that make checks more frequent, but there’s no organized push for stronger electronic verification practices.
DOGE, meanwhile, is largely sputtering out after taking an axe to USAID and, by most accounts, urging large-scale cuts to federal staff rosters rather than changes to programs to improve efficiency, or even efforts to identify fraud. A website last updated on Sunday operated by the Musk-led effort indicates that his team is taking credit for $170bn in supposed savings, though that number is highly disputed.
Elon Musk is expected to take a public step back from his role in the coming days, while his team seems to largely view government programs as fraudulent and wasteful by design, rather than undermined by criminal groups.
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