State Benefits Fraud

Florida deploys technology to weed out benefits scammers


Palm Beach Post

Florida has long been known as a haven for scammers intent on stealing benefits of every kind — from food stamps to Medicaid. But state officials are striking back with a new program that relies on demographic data to weed out criminals.

The program focuses on so-called out-of-wallet information. It’s stuff that a scammer can’t find by stealing someone’s wallet or mail. With the help of LexisNexis, a company that owns decades worth of address, telephone, license and other personally identifiable information, Florida hopes to save about $60 million a year in benefits it would otherwise have paid to fraudsters.

“This is changing the whole way we focus our antifraud efforts,” said Amanda Huston, director of public benefits integrity with the Florida Department of Children & Families. “We are stopping it before a dollar ever goes out the door that shouldn’t.”

Florida’s program is the first of its kind, Huston said. The Customer Authentication Project has begun in some communities and, by mid-August, it will be employed statewide in such programs as food stamps, Medicaid and cash assistance. The state spends $26 billion a year on those three programs.

Florida leads the nation in identify-theft complaints, 72 percent of which involve stolen government documents and benefits, according to the Federal Trade Commission. By contrast, states as a whole report about 46 percent of their fraud cases are related to the government documents or programs.

Criminals steal benefits because they have value on the street and getting caught is unusual. On the black market, food stamps, from the Supplemental Nutrition Assistance Program, are worth 50 cents on the dollar.

The department began cracking down using technology about 2 ½ years ago. It was manual, intensive work that largely involved trying to stop fraudulent payouts that had been approved.

“We were literally using spreadsheets,” Huston said.

“In an agency where you get 5 million annual applications or restarts, we knew we needed something smarter, better, faster.”

The state knew what kind of data sets were traditionally compromised. They include date of birth, mother’s name and her date of birth, things a smart criminal can find through court records or genealogical websites.

“It’s just not that hard to get that information, unfortunately,” Huston said.

Enter LexisNexis.

The company uses complex algorithms and “billions and billions of records across multiple decades” to perform what it calls identity analytics, said Clint Fuhrman, senior director for healthcare programs at LexisNexis Risk Solutions.

In a test conducted in Orlando and Ocala, the company found that it could trace the records associated with an identity in 99 percent of the applications submitted.

That sort of work involves differentiating one Jane R. Smith from all the Jane Smiths and making sure that the history of Jane Rachel Smith does not get confused with that of Jane Rochelle Smith.

One point of pride for the state has made it more vulnerable. Florida leads many states in moving state benefit applications online. Roughly 90 percent of applications are filed online. And while that’s a good thing for efficiency, it leaves the state open to higher rates of fraud.

Fraudsters don’t have to report in person and stand in line, risking detection.

“Now with it being online you don’t have that face-to-face interaction,” Fuhrman said. “You’re literally dealing with a phantom identify on the other end of the line.”

So LexisNexis had to erect barriers to claiming fraudulent benefits.

The company won’t reveal the precise recipe for its secret anti-fraud sauce. But Fuhrman said it turns its data against fraudsters.

Applicants must pass a multiple-choice test designed to weed out identity thieves. It might ask which color car haven’t you owned. Or it might list several street names and cities and ask where you have not previously lived.

“If you’re using info that’s stolen, you really only have two options: you can opt out of them or you can guess and you’re going to fail,” Huston said.

Applicants who opt out of the online test then must answer similar questions in a test by phone or they can’t be cleared for benefits, Huston said.

“If you’re a bad guy, and you think you’re going to skip questions [and get past us], think again,” she said.

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