Thirty percent of Arizona's unemployment insurance payments were stolen by criminals over the past 18 months. When the pandemic began and unemployment numbers soared, Arizona had almost no identity-verification and fraud-prevention system in place. Criminals came out of the woodwork and simply filed claims in other people’s names and got paid. There was nothing sophisticated about it.
When Arizona caught on to the scale of the losses, they turned to a third-party identity-verification firm to solve the issue. Things appeared to be working. But, over the past four months, fraudsters have evolved their tactics.
Arizona now relies on a facial recognition system to verify people’s identities. Initially, scammers responded by using victims’ photos or literally creating masks to trick the system.
But now, they've taken it to a whole new level. Criminals are actually creating fake job posts online. When somebody goes to apply for the job, they are reeled in - and as part of the hiring process, they must verify their identity. The victim then verifies their own identity with a third party.
Now, not only can criminals use their verified identity like a government credit card to bilk a myriad of entitlement programs, but there are almost no mechanisms in place for the victim to un-verify their identity.
"The way most banks in the U.S. approach identity verification is with a combination of publicly accessible information and real-time device assessment," said Haywood Talcove, CEO of LexisNexis Risk Solutions, Government Group. "Facial recognition systems may seem like modern technology, but in actuality it's an antiquated model. Think about it. In the 1980s, if you went to the DMV, they would look at you, look at your driver's license, and confirm that your picture matches. Facial recognition has simply digitized this very rudimentary model, and it doesn't leverage the cutting-edge identity verification frameworks that are employed by every major bank in the U.S."
LexisNexis Risk Solutions is a multi-billion-dollar provider of identity-verification and fraud-prevention systems to a dozen-plus state unemployment programs, and they’ve been one step ahead of these criminal groups since this pandemic began.
