Fraud prevention demands a multi-layer response

Data sharing is a key element to combat multi-billion dollar losses.

Fraud is a constant challenge for government agencies, particularly during emergencies. Often, because of the complexity of the fraud, agencies require a multilayered plan to respond. For state-level CIOs, such a response is a priority, and would-be vendors to the SLED market should consider how they can position themselves in this growing area of concern.

Fraud is a multibillion-dollar problem

The financial implications of fraud have skyrocketed. The Federal Trade Commission data showed that consumers reported losing nearly $8.8 billion dollars to fraud during 2022. The FBI Internet Crime Report (IC3) reported that technical and customer support, and government impersonation,  most often occurring in the form of fraudulent call centers, are responsible for more than $1 billion in losses to victims

Fraud has become such a widespread problem that in March, the Biden Administration issued a proposal to address systemic fraud and identity theft. Shortly thereafter, the Government Accountability Office introduced an overview of fraud risk management outlining key areas for federal agency and congressional action.

At the state level, fraud detection and prevention is a hot-button topic. At its mid-year conference, the National Association of Chief Information Officers (NASCIO) hosted a panel discussion on the topic. NASCIO noted that, “fraud poses a significant risk to the integrity of state programs and erodes public trust in government.”

Components of a multilayered attack on fraud

A SLED-level, multilayered plan to combat fraud consists of three separate strategies:

  • information sharing and collaboration
  • new technologies
  • verifiable digital credentials

This three-tiered approach requires data sharing among state agencies, as well as education of local entities, leveraging emerging and advanced technology from industry, and implementing fraud detection and prevention legislation. Such legislation would require the allocation of funds to fraud prevention, thereby effectively mirror federal recommendations for fraud management.

To effectively combat fraud, it should be obvious that SLED organizations and government agencies must prioritize collaboration and information sharing. Leveraging technology, such as artificial intelligence, machine learning, and blockchain, can significantly enhance fraud prevention and detection capabilities. The Brookings Institution recently published information on the power of AI for fraud protection and defense. Additionally, verifiable digital credentials offer a secure and private way to reduce the risk of identity theft.

State agencies need collaboration tools, advanced technologies, and identity management solutions. To support them, vendors should begin aligning their technology offerings with the comprehensive and effective solutions that state government agencies are seeking, and aligning their solutions with federal agency recommendations in the continued fight against fraud.

Benjamin Harris is SLED Market intelligence analyst for immixGroup, the public sector business of Arrow Electronics. immixGroup delivers mission-driven results through innovative technology solutions for public sector IT. Find out more about immixGroup’s SLED contract vehicles here.