Behavioral analytics is a growing specialty among fraud investigators. It is a discipline that can be used very effectively to identify patterns of fraudulent behavior that would otherwise go undetected.
Fremont, CA: More than $4 trillion was pumped into the economy through various government programs to keep the US economy thriving during the COVID-19 pandemic. The money had to be distributed as soon as possible, so pandemic stimulus checks were sent out in a matter of weeks, new emergency loan programs such as the Paycheck Protection Program (PPP) and others began processing loans by the thousands, and unemployment compensation applications skyrocketed.
Data Analytics
In order to detect suspicious patterns of behavior that may indicate fraud, most government agencies depend on whistleblowers, anonymous tips, and alert administrators. The main problem with that approach is that program administrators do not always know what to look for, do not have enough time to devote to fraud prevention, and aren't technologically equipped to detect anything other than the most obvious and egregious signs of fraud.
Behavioral analytics is a growing specialty among fraud investigators. It is a discipline that can be used very effectively to identify patterns of fraudulent behaviour that would otherwise go undetected. When sophisticated fraudsters target unemployment advantages, they do not just create one or two bogus applications; they flood the system with thousands of bogus applications in the hope that someone will make a mistake and send them money. However, if, for example, 7,000 applications use the same address or P.O. box, a system equipped with the necessary analytical tools can easily detect the anomaly and send an alert.
In practise, properly programmed data-mining software can detect a wide range of suspicious or anomalous patterns that an overburdened, under-equipped administrator might miss. Furthermore, the software can run in the background 24 hours a day, seven days a week or be integrated with a case-management system to identify trends as well as patterns affecting the programme, adding an extra layer of security. According to the report, nearly two-thirds of state and local government employees do not use any type of matter-management software or analytics to help them prevent fraud.
Cyber Attacks
Government administrators frequently get a bad rap, but to be fair, they were faced with an almost impossible task last year. When the shutdowns started in March 2020, and over 32.5 million people filed for unemployment benefits in the first two months of the pandemic, with administrators handling those claims dealing with 10 to 15 times their normal workload. Controls had to be relaxed to distribute unemployment funds as quickly as possible, which – predictably – created a golden opportunity for fraudsters.
Even in the best of circumstances, most government agencies are employing antiquated technology to combat a class of criminals that are becoming smarter and more technologically advanced by the day. According to a report, nearly two-thirds of government employees said their most pressing issues were budget constraints and a lack of resources. Only half of those polled felt confident in their ability to combat fraud, waste, and abuse, and 45 percent said their primary tool for screening new vendors and contractors was a simple Google® search.
