Fraud feeds on weak digital identity verification

Government agencies that are unable to verify that online users are who they say they are leave themselves open to risk and cybercrime.

As citizens shifted from brick-and-mortar to online services in the wake of the pandemic, state and local governments agencies weren’t prepared for the increase in digital identities and new digital accounts – or the related fraud, an expert said.

“The first quarter of 2020 was sizing up to be typical fraud landscape,” said Andrew McClenahan, solutions architect with the LexisNexis Risk Solutions’ Federal Government Solutions team. Online transaction levels fell 17% in February and March as government workers shifted to online, but as stimulus checks went out in the spring, fraudulent transaction volumes increased by 35%, he said, citing data from the LexisNexis Digital Identity Network.

The same network serves as the source of the company’s biannual “Cybercrime Report.” Published Sept. 15, the report studied online transaction volumes from January through June 2020 and found that transaction volume for government services grew, especially as more people created digital identities to carry out needed business online.

The network “saw a growth in transactions from new devices, as well as new digital identities, with many new-to-digital consumers moving online to procure goods and services that were no longer available in person, or harder to access via a physical store,” according to the report.

“A lot of the state and local governments saw antiquated systems that were slammed with an unprecedented level of transactions and customers,” said McClenahan, former director of the Florida Department of Children and Families’ Office of Public Benefits Integrity. “The combination of a need to get benefits out quickly in a frictionless customer experience combined with a lack of digital identity verification and fraud risk analysis really created a ripe environment for fraudsters.”

What’s more, state and local governments are not used to such broad fraud exposure. Many of their systems lack fraud, waste and abuse risk analysis capabilities, and officials were so focused on meeting missions that in some cases, security took a back seat.

“I think a lot of agencies were having to stand up mobile apps and some digital services because their call centers just couldn’t handle the move from the physical presence to telephonic,” McClenahan said. “The cybersecurity was not generally part of the rollout.”

Additionally, although the report found that human-initiated fraud is decreasing -- by 33% year-over-year -- bot attacks rose, by 32% in e-commerce and 38% in financial services. These bot attacks are also new to the public sector, and agencies were unable to keep up, McClenahan said. “Government agencies are … the slowest and weakest member of the herd for fraudsters to attack,” he said.

In fact, digital identify verification – or the ability to ensure that someone is who they say they are when they try to access digital services – is the biggest area of risk and cybercrime that the company sees, he said, adding that “there has been a clear void or blind spot, both at the state and federal levels when it comes to digital identity.”

What’s more, many agency IT managers are unclear about the difference between a digital identity and a device assessment. Many agencies use cookies, for example, to determine that a device can be trusted, McClenahan said. The problem is that devices change and one user uses many devices, creating “challenges for saying this is a digital device vs. a digital identity,” he said.

Managers should think of digital identity verification as a doorbell.

Digital identity verification allows you to see “who’s coming to your door before they ring the doorbell, and that’s the difference between having a physical identity verification and a digital identity verification,” McClenahan said. Agencies need to have information to verify both that “this person exists and that this person is the one that’s coming to ring the doorbell.”

Federal leaders are addressing the need for digital identity verification. On Sept. 11, bipartisan members of the House introduced the “Improving Digital Identity Act of 2020.” It takes a three-part approach to modernizing “lagging digital identity infrastructure” by establishing a task force to bring key federal, state and local agencies together to develop secure methods; directing the National Institute of Standards and Technology to create a framework of standards on digital identity verification services; and establishing a grant program at the Department of Homeland Security to help states upgrade the systems they use for credentials, such as drivers’ licenses.

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.