Dive Brief:

• A group of federal agencies working under the Joint Financial Management Improvement Program (JFMIP) released a report this week aimed at reducing improper federal government payments to individuals who aren’t who they say they are or otherwise provide inaccurate information about their identities.
• The report explores identity verification strategies for cracking down on the fraud by individuals who seek government aid. The effort comes after the Government Accountability Office estimated in May that federal agencies sent $281 billion in improper payments in fiscal year 2021, excluding the extensive COVID-19-related fraud. That figure was more than double the $75 billion estimated in the prior year.
• The Government Accountability Office, the Office of Management and Budget (OMB), the Office of Personnel Management and the Treasury Department collaborated on the 84-page report that resulted from reviewing studies, interviewing experts and convening government and industry officials and professionals for a two-day conference last month.

Dive Insight:

The new report is part of a broader federal government campaign in recent years to root out improper payments. As a result of the new effort, billions of dollars in government payments affected by fraud have been tabulated in recent years, the report said. Looking back, the report noted that estimated improper payments from fiscal year 2003 through 2021 amounted to $2.2 trillion, or about $7,000 for every U.S. citizen over that period.

The JFMIP report is part of a broader, ongoing initiative begun in October 2020 and will eventually feed key considerations and empirical data to an expected executive order from President Joe Biden calibrated to curtail identity theft in federal government benefits programs. In March, the White House announced it would implement the order this year to combat fraud particularly in pandemic relief programs.

“Federal agencies and oversight bodies have recently taken steps to determine the significance of misrepresented identity as a cause of improper payments and have begun to focus on identity verification as a means to improve payment integrity,” the report said.

A large share of the improper payments are to individuals who must meet certain eligibility requirements, the report said. Some strategies for preventing the fraud explored in the report include examining applicants’ digital footprints, reviewing bank account information, checking physical or email addresses and using biometric identification.

In 2020, another federal agency group determined that the government wasn’t doing enough to track identity theft in those improper payments and, as a result, the OMB called on agencies to tally that particular payment fraud. In 2021, it found about $7.7 billion in the faulty payments were due to problems with identity verification.

“Some agencies are still in the beginning phases of determining whether misrepresented identity is a significant cause of improper payments and the total impact of misrepresented identity is still largely unknown,” the report said. 

The report repeatedly warns of pitfalls if the government resorts to identification methods that present undue burdens for “socioeconomically vulnerable” people. The broader initiative under Biden’s direction seeks to cut the improper payments while also “protecting privacy and civil liberties and preventing bias,” the report said.