Case Study: Identity Management Creating Huge Cost Savings in Florida

As stewards of taxpayer dollars, many health and human services programs are looking for ways to combat fraud and ensure that funds are going to those in need.

The state of Florida’s Department of Children and Families (DCF) provides food assistance—among other types of programs—to low-income families, providing them with Electronic Benefit Transfer (EBT) cards (similar to ATM cards) that have predetermined dollar amounts loaded on them that can only be used in authorized food stores to buy eligible items, promoting nutrition for the less fortunate. With recent advancements in online applications, Florida DCF understands the importance of strengthening front-end identity authentication processes not only to prevent the fraudsters from stealing benefits, but just as importantly, to make sure those who rightfully deserve them are able to receive benefits in the most efficient means possible, all the while having a positive user experience.

Within any program where money is sent to beneficiaries, there are always people who are trying to get that money. People steal identities, apply for benefits and receive EBT cards pre-loaded with funds. While some people perpetrating this kind of fraud are trying to receive more food, whether to consume or sell, the most common fraud is trafficking. They sell their loaded EBT card to a store for 50 cents on the dollar—one fraud; and the store runs the card through its state-approved account—a second fraud.

With nearly 93 percent of all Florida public assistance benefit applications received electronically, there is a risk for abuse by identity fraudsters. In 2013, to combat this threat, the state of Florida selected LexisNexis Risk Solutions to support its Customer Authentication Program, which verifies food assistance applicants’ identities. Authenticating benefit customers using a risk-based identity authentication approach is critical. However, the goal of the program is not only to prevent and deter fraud, but also to provide more efficiency and ultimately a very positive user experience to the population served.

In March 2014, after just five months after going live with the Customer Authentication Program, the state announced it had saved more than $5 million by preventing fraud and improving efficiencies, and received the Governor’s Savings Award. Since then, the total cost avoidance associated with the implementation of this program is nearly $670 million in taxpayer benefits not issued due to suspected fraud. That amounts to a 233 to 1 return on investment in the program.

To understand how an identity management solution can be effective, it is important to understand that an identity is more than just a few data points such as name, address, Social Security number, etc. An identity is a person with a network of historical data points, meaning their connections and their habits. By drawing on aggregated identity data, Florida has an advantage: when a person goes online to Florida’s integrated eligibility system to apply for benefits, the state is able to quickly authenticate the applicant’s identity by first assessing the riskiness of the identity and then having them answer a series of questions that only the owner of the identity would be able to answer. Most of this risk assessment and decision-making is done behind the scenes to interfere with or deter the user as little as possible.  

Florida inherently is a challenging environment for fraud prevention. The state has the largest percentage of elderly residents, who frequently are attractive targets for fraud schemes. It also has a very transient population, many whom may not have conventional bank accounts, which renders many other identity management tactics useless.

Even with such a diverse population, the Customer Authentication Program has a very high success rate for the Florida DCF. While traditional identity management approaches would have difficulty being successful in this environment, the solution selected by Florida draws on so many public databases that 98 percent of the identities that come through the food assistance program are located and processed through Customer Authentication. Additionally, a very high percentage of those that are automatically authenticated need no further review.

Roughly four million applicants are screened annually; beneficiaries have to renew their applications twice a year, so if a family moves out of state or a recipient dies, for instance, a fraudulent renewal will be flagged.

DCF has strict protocol in place to ensure that the right benefits get to the right people, so it is important to understand that even when an application is flagged as possibly fraudulent, the state follows already-established protocols for determining whether it’s legitimate, which may involve letters, telephone calls or in-person checks. The purpose of the identity screening is not to deny benefits to individuals who need them.

Those in fraud prevention know that when one avenue is shut down, criminals look for new ways to run their scams. Florida DCF is determined to thwart these efforts by continuing to innovate its fraud prevention program, to get in front of fraud cases and improve operations of the department.