White House Wants $1.6B to Attack Identity Theft and Fraud

The US administration released a three-part proposal on 2 March asking Congress for $1.6 billion to help provide federal agencies and local governments with more funding to handle pandemic-related fraud claims, modernise identity verification systems, and support victims of identity theft.

The spending proposal reconfirms President Biden’s commitment to boost the federal government’s efforts to combat fraud in government relief programmes during the COVID-19 pandemic – which have run as high as $60 billion in state unemployment insurance programs, and $5 billion in relief programmes administered by the Small Business Administration.

According to the White House, previous pandemic relief spending programmes attracted fraudsters, and the administration is now calling on Congress to give the federal government additional funding to recover stolen money and to take steps to cut down on further instances of identity fraud.

Investing in fraud prevention systems

The pandemic exposed significant vulnerabilities in government benefits systems, especially in preventing systemic identity theft. President Biden’s proposal builds upon the lessons learned during the pandemic and will ensure robust fraud prevention and identity theft prevention investments totalling at least $600 million.

Specifically, President Biden proposes to:

  • Prevent future fraudulent claims by expanding the pandemic response accountability committee’s (PRAC) Pandemic Analytics Center of Excellence – a cutting-edge analytic platform that provides analytic, audit, and investigative support.

  • Provide at least $300 million to prevent identity theft in public benefits; this includes supporting the modernisation of agency identity verification systems and supporting enhancements to lessen the impact on victims of identity theft.

  • Formalise ‘Gold Standard’ meetings – a more cooperative and early prevention model for fraud.

  • In addition, $1.6 billion in American Rescue Plan funds are to be available to states to modernise IT systems, improve access, and prevent fraud and identity theft.

Supporting victims of identity theft

The continuous evolution of identity theft schemes causes significant tax and credit harm to the victims and equally serious challenges in resolving those harms – such as ruined credit scores, disqualification for home mortgages, and denied access to public benefits.

To better support victims of identity theft, President Biden is proposing $400 million in new funding to:

  • Pilot an identity theft Early Warning System: Funding will be provided to the General Services Administration to evaluate, create government-wide recommendations, and pilot an Early Warning System which would notify individuals and entities when their identity information is being verified to access public benefits and allow them to stop potentially fraudulent transactions before they occur and report it to law enforcement.

  • Provide one-stop remediation experience for victims: Funding will be allocated to support the Federal Trade Commission’s enhancement of IdentityTheft.gov, to provide individuals with a single portal to both report identity crimes and receive personalised identity theft recovery assistance.

IRS plan for ID verification

Perhaps in a connected development to the request for additional funding for ID fraud prevention, the Inland Revenue Service (IRS) is preparing to implement a government-operated identity verification system: Login.gov. Taxpayers will be able to use the single sign-on tool to access tax documents and make payments through IRS.gov – hopefully in time for this year’s tax filing season.

The news comes one year after the IRS faced outcry over requirements for taxpayers to verify their identities using facial recognition technology from vendor ID.me to access online IRS accounts and one week after an internal audit showed Login officials had paused efforts to implement similar technologies—and misled agencies about those plans.

As last year’s tax season wound down, the IRS pledged to work with the General Services Administration (GSA), which operates Login.gov, to add the service as an option for users. The tax agency cited the need for higher security standards and scale for Login.gov.

The initial prototype for Login.gov was built by the US Digital Service—the White House’s tech unit—and 18F—the digital consultancy housed within GSA—with the goal of providing a single sign-on service that would someday be used across government.

The service launched in 2017 and has been built up over time, adding vendor support for various services, including data broker LexisNexis, which provides fraud detection and identity verification for the service.

In 2021, Login.gov received a $186 million investment from GSA’s revolving tech fund, the Technology Modernization Fund, to help it scale to more agencies. But the service has struggled to meet identity proofing standards set by the National Institute of Standards and Technology (NIST), leaving some agencies hesitant to use the service, including the IRS.