States Have a Great New Weapon Against Fraud: Big Data

By Jeffrey Stinson,

Stateline

November 20, 2014

Indiana began a big crackdown on identity crooks this year and the results are startling: The state has saved Hoosier taxpayers $85 million so far by not paying out bogus tax refunds. The savings come from using research firm LexisNexis’ giant database to verify the identities on state income tax returns. By spotting false or stolen identities, the state can determine which returns are concocted and block the fake refunds.

The Indiana Department of Revenue’s identity-matching effort is indicative of the types of data-driven programs most states have undertaken to combat an exploding number of sham tax refund filings, false Medicaid and unemployment claims and public assistance fraud that can cost taxpayers billions of dollars.

Related: How Big Data Can Stop Traffic Jams and More

Indiana’s results are proof that using data has a payoff. And they provide a tantalizing glimpse of the cost-savings states could get from applying a government-wide “big data” approach to combatting the fraudulent claims states face in an Internet age when identity theft is rampant. Indiana spotted 74,782 returns filed with stolen or manufactured identities as of the end of last month with its new identity-matching effort. Without it, the Department of Revenue caught just 1,500 cases of identity theft out of more than 3 million returns filed in all of 2013.

– See more at: http://www.thefiscaltimes.com/2014/11/20/States-Have-Great-New-Weapon-Against-Fraud-Big-Data#sthash.NEKYiF4g.dpuf

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