Public Sector Fraud Trends 2021: Insights for Building Trusted Online Government Services

Never let a crisis go to waste is a common refrain for government agencies and fraudsters. While the latter seeks to use the chaos to their advantage, government agencies can harness a crisis to improve policy and crystalize needs to further their mission. In our new study — Public Sector Fraud Trends: Insights for Building Trusted Online Government Services — created in conjunction with the Ponemon Institute, we surveyed nearly 600 leaders across federal, state and local government agencies about their experiences with customer fraud and the technology used to combat it. 

The COVID-19 crisis exposed the risks agencies face in online fraud

Government agencies delivered unprecedented economic relief in response to the COVID-19 pandemic. The trillions of dollars given to support individuals and businesses (and lessen the blow of stay-at-home orders) resulted in a flood of demand just as agencies pivoted to a remote workforce.

Unfortunately, it also exposed many agencies’ shortcomings in safely serving constituents online. Their valiant efforts to help lighten the burdens of individuals and businesses often went unheralded — and instead, agencies attracted headlines for the amount of fraud they fell victim to.

Agency priorities need to match the fraud risk

The pandemic accelerated the digital transformation many agencies have been pursuing for decades. With millions of benefit claims and program applications, agencies were forced to invest more in processing power, process automation and workforce efficiencies. However, there’s still much work to be done — and agencies leaders know it.

There are three clear takeaways from the study:

1. Agencies need to do more to deliver secure and quality customer experiences. Only 54% of respondents said their customers are happy with the customer experience, and only 39% are happy with the security of their agency sites.
2. Agencies are not equipped to deliver convenience and security. Only 43% of government agencies have the security technologies necessary to provide customers with both secure and convenient online experiences when accessing their accounts.
3. Agencies know what technology will help. Two-thirds (65%) of respondents said artificial intelligence (AI) tools and interconnected devices will improve security and convenience when accessing customer accounts online.

Government online accounts at risk of account takeover (ATO)

A specific type of fraud is a cause of concern for agencies. ATO fraud has become more prevalent in the public sector as consumers’ use of the web, mobile phones and connected enterprise/civic software has significantly increased. More than half (53%) of respondents in the study said ATO fraud has increased in the last two years. Yet, only 41% of respondents said senior leadership makes it a priority to prevent ATO; while only 38% said their agency regularly assesses the ability of its IT systems to prevent and detect fraud.

Rising risk: Mobile phones are a significant ATO fraud vector

Not only are ATO threats on the rise, but 6 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, as reflected by:

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

AI will help protect constituents and deliver better experiences

Agency leaders agree 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.

Closing the gap in online constituent services

The sheer 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. Constituents expect positive online experiences from public sector agencies as government websites form a critical backbone for constituent service delivery.

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

Download the full study here.