The Pandemic Response Accountability Committee (PRAC) issued a Fraud Prevention Alert this week that argues the Federal government could have saved an estimated $79 billion if it had implemented data analytics to prevent pandemic-related fraud.
Congress created the PRAC as a part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in 2020 to help combat COVID-19 benefits fraud.
In its latest June 4 alert, the committee said that the lack of effective pre-award vetting by the major pandemic relief programs resulted in about $79 billion of potential identity fraud involving the use of 1.4 million potentially stolen or invalid Social Security numbers (SSNs).
These programs include the Small Business Administration’s (SBA) COVID-19 Economic Injury Disaster Loan (EIDL) program, the SBA’s Paycheck Protection Program (PPP), and the Department of Labor’s pandemic unemployment insurance (UI) programs.
“Our oversight work during the past five years has detailed Federal agencies’ inability to use data to effectively prevent pandemic-related fraud,” PRAC Chair Michael E. Horowitz said in a June 4 statement. “By contrast, the PRAC’s sophisticated data analytics capabilities allow us to look across Federal agencies and programs to identify potential fraud before it occurs by comparing agency and other data with applicant-provided information, such as IP addresses, dates of birth, bank accounts, and home addresses.”
“As today’s report demonstrates, this data analytics capability can strengthen program integrity and prevent billions of dollars in fraud, ensuring taxpayer funds are paid to legitimate applicants,” Horowitz said.
To conduct its analysis, PRAC’s Pandemic Analytics Center of Excellence (PACE) randomly sampled 662,000 identity records from a population of 67.5 million funded applications across the COVID-19 EIDL, PPP, and pandemic UI programs.
PRAC then asked SSA to verify information such as if the SSN is valid, if the name associated with the SSN on the application matches SSA records, if the date of birth associated with the SSN matches SSA records, and if the SSN is associated with a deceased individual.
SSA’s verification process then flagged nearly 24,000 of the 662,000 sampled records as potentially fraudulent. This means that either the SSN was never issued or it didn’t match the applicant’s name or date of birth, “indicating that they were either stolen or being used without authorization.”
“This type of fraud is readily preventable using the authorities and analytics platform that Congress has provided to the PRAC,” the report says.
Notably, the PRAC’s data analytics center, known as the PACE, is scheduled to sunset on Sept. 30.
Horowitz has previously called on Congress to extend the PRAC’s data analytics function before it sunsets, saying, “The Federal government will no longer have an entity capable of proactively conducting cross-program, cross-agency analysis to help prevent improper payments in high-risk programs.”