Connecting state and local government leaders
COMMENTARY | The right fraud prevention practices apply a “friction-right” approach, making it easier for true users to apply for access while impeding bad actors.
Tax season is in full swing, and the IRS is in communications mode, issuing bulletins to inform Americans of the increased potential for fraud during the frenetic filing period. For state and local revenue offices with fewer resources, the public service announcements take an important item off their to-do list. Work that remains, however, presents more difficult challenges: how to serve all constituents in a timely and secure manner, maintain data privacy and secure public funds.
Although their federal counterparts may follow a more rigid security framework and allocate more resources to maintain it, state and local governments have an advantage in their relative size and potential flexibility. As a result, they may be able to integrate certain strategic fraud prevention and authentication strategies—without the friction associated with overprotective or invasive measures—with greater ease.
The right fraud prevention practices apply a “friction-right” approach, making it easier for true users to apply for access while impeding bad actors. State and local government leaders should consider the following best practices in tandem with working towards their strategic goals.
1. Tighten access to Employer Identification Numbers
First, states that require a separate business EIN should start by eliminating easy access to those numbers and related information. Access to this information shouldn’t be simple, and providing easy access opens up a greater potential for risk.
2. Stiffen identity verification practices
A thorough authentication process should be in place for any individual applying for access to benefits or data. Before allowing an applicant to establish a username and password, governments should verify that the applicant is who they claim to be. Tax records, unemployment benefits, licenses and registrations are all valuable information, and users should authenticated for accessing such sensitive data.
State and local entities should evaluate fraud prevention solutions that provide this critical, initial level of vetting, such as through linking an applicant with proprietary data, personal data, device identifiers or online behaviors. With an accurate view of who is applying and comparing that to the information provided on their application, public entities can better authenticate applicants.
3. Implement multifactor authentication
To ensure broad resident access to government services, authentication measures can’t be limited to the online channel. Effective authentication should take place whether an applicant logs in, calls, or shows up in person. A critical factor will be implementing inclusive, multilayered strategies so that agencies can better confirm an applicant’s identity over every channel. Security protocols may differ, but inbound authentication tools and technologies should help prevent vulnerabilities for fraudsters to exploit, while ensuring that every constituent, no matter how they may engage, has access.
4. Enable effective data sharing
Just as authentication tools gather information from various sources, verifying information can and should be gathered from across the public sector. A primary limiting factor is whether state and local governments are proactive enough to establish secure data-sharing agreements. Such agreements may allow confirming Social Security numbers with the Department of Labor, verifying identities with the IRS by leveraging the bureau’s wealth of information on businesses and individuals and keeping track of known fraudsters by checking records with the police and FBI. The more state and local governments know and handle on their end, the better they can determine whether a business exists or a person is who they claim to be—without creating more friction for the applicant.
Authentication and verification are not new concepts to those in government. Public sector institutions across the country likely already have systems in place that can be used as part of a fraud prevention strategy. Engaging in discussion with peers can surface alternative approaches to handling applications, enrollment, data security and the like. The odds of someone already doing what’s needed are high, and a conversation might be the start of a fine-tuned security system that helps prevent fraud from happening in the first place.
These steps will not only help protect institutions and constituents from bad actors, but they will better allow state and local governments to mitigate risk while more securely serving the people and entities that rely on them.
Jeffrey Huth is the Senior Vice President of Strategy for TransUnion’s Public Sector business unit.