The cost of living crisis and general volatility in the world are creating the perfect conditions for fraud to flourish. Soaring inflation, with rising costs across the board, and an increase in digitalisation of services and remote working are creating new motives and justification for some to carry out fraud. In fact, the current turmoil has fed into the three elements of the fraud triangle: motivation, opportunity and rationalisation.
While concrete figures are hard to come by, it’s generally accepted that fraud and error in local government is estimated to cost the taxpayer many billions of pounds every year, with fraud and error across the wider public sector reaching over £50bn a year – a figure that’s set to grow. These losses come at a time when local authority budgets are already under huge pressure due to the large sum the Government has borrowed to support the country during the pandemic. In fact, the country’s debt during the cost of living crisis is set to increase as the purse strings are loosened again, while taxes are cut.
With the cost of living crisis expected to cause a surge in fraud, it’s more important than ever that local authorities ensure they are dealing with the person they think they are online.
Clean data aids ID verification
A good place to start to help prevent fraud is to have processes in place that deliver data hygiene on an ongoing basis.
For example, when it comes to the data cleansing process one of the most useful tools for the public sector is an address autocomplete or lookup service which gathers accurate address data in real-time at the onboarding stage. These tools also provide address validation - supporting ID verification.
Because ID checks will pick up rudimentary things, such as an incorrectly formatted address, it’s much better value and best practice to ensure you have accurate user contact data in the first place.
Also, a data hygiene first approach is not only important for identity verification. Accurate data on users enables the public sector to obtain valuable insight, such as a single citizen view (SCV). This insight can be used to improve services and targeting, including personalisation with communications, which improves the user experience.
Today, as technology evolves, it’s even more straightforward for local authorities to deliver data quality. It’s easy to pay for a license to access a data cleaning platform that requires no code, integration or training - simply plug in and benefit, straightaway.
Electronic ID verification
Unfortunately, data hygiene practices on their own aren’t enough to prevent fraud. Forward thinking councils are already using identity verification services, such as electronic ID verification (eIDV). These tools deliver cross-checks against an individual's contact data – name, address, phone and email address - in real-time, as they complete an online application process, whilst ensuring the user experience isn’t compromised. To work effectively the eIDV service must have access to a dataset of billions of consumer records, including reputable third party, sanctions, and politically exposed person (PEP) data, from reputable global streams, including government agency, credit agency, and utility records. Ideally, the service should at the same time enrich the data of those held on databases, highlighting and correcting any existing inaccuracies. Such an approach ensures good governance by aiding compliance with know your citizen (KYC) and anti-money laundering (AML) regulations.
With the move to digital, local councils must embrace automated eIDV in lieu of the manual ID checks that many still undertake, despite the fact they are more expensive, time consuming and subject to human error.
Biometrics
As part of a strategic eIDV process to further prevent fraud, it’s important to use biometrics. A biometric technology that delivers facial and document verification using optical character recognition (OCR) works well. This technology checks the validity of ID documentation in real-time and successfully examines the image in the master ID documents with the selfie provided by the applicant or user to see if they match. Once an applicant passes the necessary checks and is verified using this technology it simplifies the process of accessing their account or services. There’s no need for time-consuming security questions and passwords, they just provide a selfie. However, it’s important that the OCR technology sourced is able to offer liveness checks, and requests a ‘challenge response’, such as blinking. Only then is it possible to establish if the person is real.
As the cost of living crisis starts to bite, it’s time for local councils to ensure they protect their precious budgets from fraudsters. Having processes in place that deliver data hygiene is a good first step, but to be as secure as possible requires eIDV and biometric tools in place.
Barley Laing is the UK managing director at Melissa.
