Coronavirus payment fraud screening is sadly lacking-PaymentsSource

by Gary M. Shiffman, PhD, on Jul 27, 2022 10:53:24 AM

The article was originally posted by PaymentsSource. Click here for the full article.

COVID FraudBarbol/

A recent Congressional investigation found that coronavirus-related fraud exceeded $1 billion. By the end of August, Americans filed over 184,000 fraud reports related to COVID-19 stimulus checks and reported losses of over $124 million.

This kind of fraud isn’t surprising, given the speed and scale of the government’s stimulus package. After Hurricanes Katrina and Rita, the government distributed $6.3 billion in relief to victims, but later found that 16% of that was spent improperly. This year’s CARES Act has authorized $3 trillion in relief and stimulus spending. The Paycheck Protection Program has given $521 billion in loans to nearly five million small businesses. But with over $130 million in untapped PPP funds still remaining, the government must act quickly to address the issue of proper screening in order to deter future fraud.

Most relief money has been distributed through electronic payments. But if agencies are relying on technology to distribute money, they need to rely on technology to screen for risk.

To get money into the hands of the countless businesses and individuals with legitimate needs, counter-fraud and -financial crime professionals must have high-speed, large-scale screening that can quickly flag any businesses or individuals that may pose a fraud threat. Fifteen years ago, screening of this magnitude was impossible. But today, artificial intelligence and machine learning (AI/ML) technology can get money to the right people, faster.

Current anti-fraud programs seek to deter fraud by threatening would-be criminals with the probability of investigation and conviction years after the crime. AI/ML technology enables proactive screening to detect suspicious actors before the money is distributed, or immediately after. This deters the crime from ever happening.

Screening tools work by empowering users to rapidly confirm the validity of good applications, so that investigators can more slowly process those with anomalies. By using publicly available information (PAI) compared to an applicant’s expressed needs, threats become visible.

In the coming months, governments will continue to disburse truly historic amounts of funds; and we can continue to expect historic levels of fraud. Leveraging technology can get money to those who deserve it while preventing criminals from exploiting this crisis.


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