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Gov Benefit Fraud Trends Q1 2022

Gov Benefit Fraud Trends Q1 2022

Throughout the COVID-19 pandemic, there were significant increases in government benefit fraud. Unemployment insurance fraud jumped dramatically early in the pandemic as government assistance was rushed to address the crisis. As the pandemic enters its third year, TransUnion’s Consumer Pulse Q1 2022 report indicates that public sector benefit programs continue to see significant levels of fraud impacting Americans. 

Gov benefit fraud impacts nearly a third of Americans

Nearly a third (29%) respondents were affected by public benefits fraud schemes. Americans reported experiencing some level of fraud across all major benefit programs including Medicare/Medicaid, Social Security and Unemployment Insurance. The IRS and state revenue tax agencies also appear to be targeted by fraudsters. Respondents reported experiencing the following level of fraud by program: 

  • 45% reported health insurance fraud
  • 34% reported tax return fraud
  • 33% reported retirement-related fraud
  • 28% reported unemployment fraud

Unemployment fraud was most frequently reported by Gen Z, by a significant margin (37% vs 25% for other generations). In addition, low-income households (annual income less than $50,000) were more likely to report experience with benefit fraud schemes (36%), compared to just 23% for high-income households (annual income greater than $100,000).

Members of the military appear to experience benefit fraud at higher rates than the general population. Of military service members (active, reserve and retired) 54% reported being affected by public benefits fraud schemes compared to just 24% of those with no service record. 

Digital fraud schemes impact more than a third of Americans

Overall, digital fraud impacted 38% of Americans in Q1 2022, which is the same as mid-2021. While phishing was the most reported fraud scheme people experienced (29%) followed by stolen credit card (26%) and money/gift card scams (25%), unemployment scams impacted 10% of respondents.

The proportion of respondents who reported falling victim to any kind of digital fraud scheme rose one percentage point (10% -> 11%) this quarter. All age cohorts except Gen Z reported higher levels of falling victim to fraud schemes compared to Q4 2021.

  • Gen Z: 11% (Q4 2021) -> 10% (Q1 2022)
  • Millennials: 13% -> 14%
  • Gen X: 9% -> 12%
  • Baby Boomers: 6% -> 8%

More generally, about half (49%) of military service members surveyed reported being targeted by a digital fraud scheme of any kind in the past 3 months, compared to 36% of those with no service record.

Data breaches Impact more than a quarter of Americans

Data breaches continue to be an ongoing source of identity theft that can impact public sector benefit programs. Overall, 26% of respondents had been notified that details about their identity/online account had been stolen in a data breach in Q1 2022. Respondents reported being targeted less frequently across all digital fraud schemes except “Identity Fraud”, which stayed the same quarter over quarter (24%) – indicating this is a persistent problem, exacerbated by continued data breaches.

While 72% of respondents indicate that identity theft is their number one concern with regards to sharing personal information online, it’s surprising that less than half act to protect themselves after being notified that their account has been impacted by a data breach.

The most common (top 3) remediation actions reported by repondents include:

  • Changing the password on affected account (38%)
  • Checking affected account for unauthorized activity (38%)
  • Checking credit report for fraudulent trades (32%)

While the least common (bottom 3) remediation actions include:

  • None of the available options (7%)
  • Filed a police report (12%)
  • Signed up for credit/identity monitoring service (18%)

On average, younger consumers took fewest actions after being notified of a data breach affecting their identity/online accounts. Gen Z respondents took 2.1 actions after breach notification, whereas Millennials (2.29), Gen X (2.67) and Baby Boomers (2.92) all took more.

Low-income respondents were most likely to choose “None of the above” in response to how they responded (14%, compared to 2% for High and 6% for Medium income respondents). In fact, “None of the above” was more common than filing a police report (11%) for these respondents.

Government agencies step-up to combat fraud and protect constituents

With roughly a third of Americans experiencing some level of fraud, it’s not surprising that 54% of government agency leaders reported an increase in ATO fraud in the last two years. At the same time, more than two-thirds of agency leaders believe investments in AI decision making tools, interconnected devices and identity authentication enhancements will not only improve account security but will also deliver a better user experience. In one such investment, the Department of Labor is sending $260 million in grants to help states improve outreach and service, and $140 million for fraud prevention — part of the $1.9 trillion funds authorized by ARPA.


Learn more about TransUnion Public Sector Fraud Solutions.

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