Fraud Threats on Government Agencies Growing in Numbers and Severity

Rhea-AI Summary

TransUnion has released a study indicating a significant rise in Account Takeover (ATO) fraud within government services, as citizens increasingly interact online. The Public Sector Fraud Study, in collaboration with the Ponemon Institute, surveyed nearly 600 officials, revealing that 53% noted ATO incidents increased over the past two years. Despite this threat, only 41% prioritize prevention measures. Mobile devices are identified as primary fraud vectors, with 57% of government website visits coming from mobile users. The report advocates for greater investment in AI and identity verification to enhance security.

Positive

• Over two-thirds of agency leaders recognize the need for more investment in AI and identity authentication.
• The report highlights the potential of AI to improve the security of online accounts.

Negative

• Only 41% of respondents prioritize ATO fraud prevention.
• Only 39% of agency respondents believe customers are satisfied with their security measures.
• A significant $7 billion reported in improper payment fraud by federal agencies.

New TransUnion Public Sector Fraud study highlights how threats such as Account Takeover (ATO) erode trust in government’s online and mobile services

CHICAGO, June 15, 2021 (GLOBE NEWSWIRE) -- As more U.S. citizens have interacted with government agencies online during the COVID-19 pandemic, account takeover fraud threats (ATO) are becoming more prevalent. The findings were revealed today in TransUnion’s (NYSE: TRU) Public Sector Fraud Study, created in conjunction with the Ponemon Institute.

The study surveyed nearly 600 leaders across federal, state, and local government agencies about their experiences with customer fraud and the technology used to combat it. A clear finding is that ATO fraud has become more prevalent in the public sector as consumers’ use of the web, mobile phones and connected enterprise/civic software have significantly increased.

More than half (53%) of respondents in the study said that ATO fraud has increased in the last two years. Yet, only 41% of respondents said senior leadership makes it a priority to prevent ATO, and only 38% said their agency regularly assesses the ability of its IT systems to prevent and detect fraud.

“The breadth of services delivered on government websites creates complexity, and agencies face dynamic constituent and regulatory requirements to protect customers, verify identities, authenticate eligibility and secure payment transactions,” said Jonathan McDonald, executive vice president and head of TransUnion’s public sector business. “Each agency, be it federal, state or local, has unique regulatory and fraud challenges depending on the types of e-commerce services offered. Constituents expect positive online experiences from public sector agencies as government websites form a critical backbone for constituent service delivery.”

Rising risk: mobile phones are a significant ATO fraud vector
Not only are ATO threats on the rise, but six in 10 government agency workers said the severity of these attacks are as well.

Because mobile phones are ubiquitous, they represent the largest threat to customer accounts.

• 57% of visits to U.S. government websites are mobile
• 62% of respondents said mobile phones are the most vulnerable to ATO

The report also found that government agencies are not making adequate investments in security technologies to protect customer data and make online access to accounts secure and convenient. Only 39% of government agency respondents said customers are happy with the security they offer.

AI perceived as a growing force
Agency leaders agree artificial intelligence (AI) and improving identity authentication will help them deliver a better customer experience while ensuring greater security. More than two-thirds of respondents felt more investment in these two areas is necessary to achieve this goal.

“Combatting fraud in each vector, from mobile to online portals, is an imperative and essential task that government agencies must address in 2021. Focusing on emerging tools, such as AI, device risk assessment and identity verification, in addition to policies and best practices for a seamless user experience, will go a long way towards protecting and gaining the confidence of consumers,” added McDonald.

According to the study, 65% said artificial intelligence decision-making tools/technologies and interconnected devices will improve the ability to track customers’ status to improve the security and convenience when accessing online accounts. In addition, 61% said improvements in identity authentication will improve the state of access governance and, therefore, improve user experiences.

Improving benefit enrollment security with identity verification
Government agencies provide trillions of dollars in benefits to constituents annually. The programs that provide cash payment benefits like unemployment, Medicare, SNAP and Social Security are particularly tempting targets for criminals. In 2020, federal agencies reported more than $7 billion of confirmed improper payment fraud.¹

“Government agencies can address these challenges and be in a position to improve their service levels with a friction-right approach that seamlessly verifies and authenticates constituents throughout their customer journey. Using integrated identity proofing, risk-based authentication and fraud analytics, agencies can scale protections while delivering the streamlined experience their constituents demand,” concluded McDonald.

TransUnion’s Public Sector Division provides fraud, benefit eligibility verification, continuous evaluation services, identity authentication, data breach response, investigation services, and other key solutions to federal, state and local government agencies in the U.S. TransUnion’s solutions help both private and public sector organizations manage risk and reduce costs.

Government agency officials may register for a July 29 webinar to learn more about the findings. The full study can be downloaded here.

About TransUnion (NYSE:TRU)
TransUnion is a global information and insights company that makes trust possible in the modern economy. We do this by providing a comprehensive picture of each person so they can be reliably and safely represented in the marketplace. As a result, businesses and consumers can transact with confidence and achieve great things. We call this Information for Good.®

A leading presence in more than 30 countries across five continents, TransUnion provides solutions that help create economic opportunity, great experiences and personal empowerment for hundreds of millions of people.

http://www.transunion.com/publicsector

Contact	Dave Blumberg
	TransUnion
E-mail	david.blumberg@transunion.com
Telephone	312-972-6646

¹ US Government, PaymentAccuracy.gov, Annual Improper Payment Datasets, Payment Accuracy Dataset 2020

FAQ

What does the TransUnion Public Sector Fraud Study reveal about Account Takeover fraud?

The study indicates a substantial increase in Account Takeover fraud, with 53% of surveyed officials reporting a rise over the past two years.

How do mobile devices relate to ATO threats according to TransUnion's study?

The report states that mobile phones represent the largest threat in ATO fraud, with 57% of government website visits originating from mobile users.

What percentage of government agencies prioritize preventing Account Takeover fraud?

Only 41% of respondents reported that their senior leadership prioritizes the prevention of ATO fraud.

What are the financial implications of improper payment fraud reported by federal agencies?

Federal agencies reported over $7 billion in confirmed improper payment fraud in 2020.

How do agency leaders view the role of AI in combating fraud?

More than two-thirds of agency leaders believe that investment in AI will improve customer experience and security.