The next frontier – using data to find and stop fraud

Data is everywhere. One of the revolutions of the early 21st century has been the exponential growth of data, and the use of this data to help us manage our day-to-day lives in the modern world. We have seen this again and again, from how we shop to how our countries have responded to the COVID-19 pandemic. In the United Kingdom (UK), the National Health Service's Test and Trace App that I have on my phone collects data to help us collectively live safer lives during the pandemic and slow the transmission of the virus. This is just one example of how data is helping us live richer, safer and more efficient lives.

Data is a key tool in fighting fraud. If you use a credit card or debit card, you may know that the company or bank who manages it collects data on every transaction that you undertake – from what you bought to where you bought it, when you bought it, how you bought it. All of this data enables them to build a profile of you and your habits – and to use this profile to keep your money more safe by highlighting transactions that do not look like you and asking for extra information to make sure it is you.

In the public sector, generally, we are behind the curve when it comes to using data to find and stop fraud. We know we cannot investigate our way out of the fraud problem – we simply do not have the capacity in the system. The best way to deal with fraud is to leverage data to prevent it, or find it earlier.

We have a wealth of data but, strangely, the public scrutiny and heightened public interest in how we use data makes us less able to use it in the way that private sector enterprises can. Whilst we hold huge amounts of data, we are often hampered by the quality of the data and other barriers that stop us from bringing data together for the benefit of the citizens we serve.

However, we get nowhere by standing and looking at a problem. Those who work to find and fight fraud are not observers or commentators – they are 'doers'. They are Roosevelt's 'person in the arena', covered by sweat but trying to make a difference. There are superb examples, in all of the administrations that I have had the privilege of working with, of people bringing data together to find and stop fraud, breaking new ground.

Using data to counter fraud in the UK

If I look to the UK, COVID-19 has been a terrible national crisis, but the public sector has reacted to this crisis by innovating and working in ways, and at a pace, previously seen as unachievable. A small example of this is how my team, the Counter Fraud Centre of Expertise at the UK Cabinet Office, has worked with public bodies and the private sector to use data to find instances of potential fraud in the stimulus schemes that supported our communities.

What has been a particular highlight for me has been how much of this activity has been in public bodies who haven't traditionally been at the leading edge of using data to find fraud. For example, in our Bounce Back Loans scheme, which has been run from our Department for Business, public bodies have come together bringing data from a number of other government departments to help identify where people have provided incorrect information when applying for the loans – or set up businesses specifically to do so. This has helped stop some fraud and is finding more in the system.

In the UK we are steadily building a structure to help public bodies to find it easier to work with data in the counter fraud agenda. The pieces we have put in place include:

• Introducing legislation, which greatly simplifies the process for sharing data between public bodies (part of our 'Digital Economy Act').
• Creating a team at the centre of government to help departments make the case and navigate the legal routes to share data.
• Creating best practice guides and training for those who want to push this agenda and be the 'doers' who try more data initiatives, so they can build off the experiences of those who did before.
• Developing professional standards and competencies for those working in using data to find fraud to create recognised qualifications and career paths to supplement those they already hold.

This has enabled us to increase the number of pilots across government, and to increase how successful they are. Just this year, the centrally driven pilots have identified and prevented tens of millions of pounds of likely fraud against the taxpayer, and many of these pilots have gone on to be operational processes. There is still further to go, but this work is helping the government to increase the pace and impact of its use of data.

Progress is being made in Australian Government entities

When I had the privilege of coming to Australia in summer 2019, I saw first-hand some of the terrific work that some Australian Government entities were doing to use data to find and prevent fraud. I also heard from other public bodies who wanted to do more, but were unsure where to start. The terrific work of the Commonwealth Fraud Prevention Centre is helping Australian Government entities to take the step towards better use of data to find and stop fraud.

In 2020, the Centre worked with multiple partners to design and deliver pilot projects to explore opportunities to share and use data to counter fraud. Building on their experience with these pilots, coupled with lessons learned by my team in the UK over the past three years, the Centre has developed a new Data Sharing Pilots Leading Practice Guide. This guide highlights key principles to follow and common mistakes to avoid when designing and delivering data pilots. It also gives those who want to be the next 'doers' a superb resource with practical step by step advice.

In the UK government, data pilots are now an intrinsic part of how we deal with the unseen and unchecked problem of fraud. We have felt their value keenly during the response to COVID-19 and the investments in capability and structures that we made before the pandemic have helped us to achieve things we would not have otherwise been able to do – certainly not at the pace we have.

The tools that the Commonwealth Fraud Prevention Centre is now bringing to bear for Australian Government entities will open up similar opportunities for public officials, and their colleagues in other sectors who support them. I believe this will help the 'doers' who want to step up and move the data agenda in the critical area of fraud control to make more progress more quickly. This will ultimately reduce fraud losses experienced by Australian Government entities, both protecting taxpayers' money and reducing the human cost of fraud on the citizens we all serve.

Author: Mark Cheeseman