UI ID Theft in Texas UI Director s Conference. Paul Carmona Director, Regulatory Integrity Division

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1 UI ID Theft in Texas 2014 UI Director s Conference Paul Carmona Director, Regulatory Integrity Division

2 Overview Desired End State What We Know What We re Experiencing What We re Doing About It Near-Term Mid-Term Long-Term

3 Desired End State Accurately Pay Valid UI Claims to the Authentic Claimant

4 What We Know Court Ventures 200 Million people affected 130 Million people affected 76 Million people affected 152 Million people affected Target Corp. 110 Million people affected 56 Million people affected 76 Million people affected 145 Million people affected

5 What We Know - Data Breaches in the U.S.

6 What We Know - Data Breaches by Cause

7 What We Know

8 What We Know "In 2012, the total monetary loss due to identity theft was $24.7 billion nationally. The total monetary loss due to all other types of property theft combined that year was $14 billion Susan Combs, Texas Comptroller Javelin Strategy & Research has produced yearly studies, titled Identity Fraud Report, showing that the number of identity fraud victims increased from 10.2 million Americans in 2010 to 13.1 million in 2013.

9 Launched October 7, 2014 What We Know

10 What We Know - ID Theft Identity Theft: number one complaint category in the Consumer Sentinel Network for CY2013 with 14% of the overall complaints Debt Collection: 10% Banks and Lenders: 7% Impostor Scams: 6% Telephone and Mobile Services: 6% Prizes, Sweepstakes and Lotteries: 4% Auto-Related Complaints: 4% Shop-at-Home and Catalog Sales: 3% Television and Electronic Media: 3% Advance Payments for Credit Services: 2%

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12 What We Know - Consumer Sentinel Network Identity Theft Complaints How Victims Information is Misused Government documents\benefits fraud (34%) was the most common form of reported identity theft, followed by credit card fraud (17%), phone or utilities fraud (14%), and bank fraud (8%). Other significant categories of identity theft reported by victims were employment-related fraud (6%) and loan fraud (4%).

13 What We Know Based on preliminary analysis, the Internal Revenue Service (IRS) estimates it paid $5.2 billion in fraudulent identity theft (IDT) refunds in filing season 2013, while preventing $24.2 billion (based on what it could detect). The full extent is unknown because of the challenges inherent in detecting IDT refund fraud. GAO Report IDENTITY THEFT Additional Actions Could Help IRS Combat the Large, Evolving Threat of Refund Fraud, August 2014

14 What We Know City Ranking for ID Theft Complaints Florida is the state with the highest per capita rate of reported identity theft complaints, followed by Georgia and California.

15 2. Prepaid Cards figures include a significant number of complaints from data contributor Green Dot, and Wire Transfer figures include a significant number of complaints from data contributors MoneyGram International and Western Union Money Transfer. This may affect the distribution of the reported methods of payment.

16 What We Know TWC Experience with UI Fraud Schemes Using Stolen Identities : 27 Claims, Saved $ : 200 Claims, Saved $693, : 260 Claims, Saved $533, : 26 Claims, Saved $65, : 274 Claims, Saved $966, :??? Claims, Saved $???

17 What We Are Experiencing Organized ID Theft Attack on the Texas UI System Using Stolen Identities ID Theft List is Extensive To Date, TWC has stopped > 7,200 claims Fraudsters continue filing claims daily TWC prevented paying millions on bad claims Some bogus claims are more sophisticated than previous schemes The claims exhibit recognizable patterns / attributes

18 What We Are Experiencing 2014 ID Theft - Florida On or about the end of January 2014, Office of Investigations (OI) received an ID Theft allegation The week of April 13, 2014, claimants and/or employers called and said they or their employee was not filing a UI claim UI alerted OI Special Investigations identified UI claims exhibiting known fraud patterns

19 What We re Doing About It - Near-Term Due to the volume of calls and ties to a previous scheme, Special Investigations (SI) requested all web data for UI claims filed since 1 Nov 13 IT determined ~86,000 claims filed through the internet portal Enterprise Architect (IT) analyzed UBS UI claim data patterns and identified 6,600 claims with similar characteristics: SI identified trends and developed a rating process with Operations Insight Analysts

20 What We Are Doing About It - Near-Term Tele-Center Ops fielded calls and provided UI Support with Known ID Theft Claims to stop The Tele-centers or UI Support Services staff read the following script to the caller who did not file the claim or their employer. This occurs only for claimants that call and say they did not file the claim or the employer response states the person is still working and they did not file the claim. Thank you for reporting this issue and taking the time to answer my questions. I ve documented the information about the fraudulent claim and am sending it to TWC s Office of Investigations. TWC works with state and federal agencies and law enforcement officials to investigate fraudulent claims. You don t need to contact us unless you have new information. If you think of additional information you d like to give us, call our fraud hotline at If you are (your employee is) concerned about identity theft, go to the Federal Trade Commission s website, at select the link for Report Identity Theft, and follow the instructions. Or, call the FTC at for help. The next step: Tele-centers notify UI Central of the detected Identity Theft case.

21 What We Are Doing About It - Near-Term UI Support Locks a Known ID Theft Claim (where the claimant and/or employer confirms true identity owner was not filing): After receiving the from the Tele-Centers or if we become aware of the ID theft case, UI Support Locks the claim: Moves balance to disqualification Keys High Importance Notepad Keys decision on open case and NAs all other cases Responds to the Tele-Center that this has been reported Sends 1 list at the end of the day to Special Investigations and UI Support UI sends a list to Tele-Center Operations to put into Case Management System OI returns TWC Hotline Calls and Bat Phone Calls (Script) UI began calling Employers on claims using Yopmail in the User ID or e- mail address to proactively determine if the suspicious claim was bogus

22 What We Are Doing About It - Near-Term Current Data Collection and Scoring Process IT and UI uploads daily run of all internet filed claims UI aggregates the daily claims weekly and uploads into the Crossfunctional Data Exchange folder Operations Insight (Data Analytics Unit) combines and de-conflicts the data and scores it against predefined attributes Special Investigations (SI) reviews the scored claims and identifies claims indicating ID Theft. SI sends highly suspicious claims to the UI Tele-Center to verify if claim is bogus UI Tele-Center sends verified or highly suspicious claims to UI Operations to Lock the claim and adds claim to Locked list

23 What We Are Doing About It - Near-Term Rating Process (Identify and Score Patterns) Implemented a weighting and scoring process to quickly identify bogus claims ID thieves adapt to countermeasures quickly, requiring frequent changes to attributes, weighting and analytical techniques Currently on 5 th generation weighting and scoring process that checks against 13 predefined attributes Maximum score is presently = 54 Plan to add two new attributes soon

24 What We Are Doing About It - Short-Term UI Filter for Suspicious Claims Short-Term: UI detected suspicious claims as they are filed and required the claimant to contact a TWC Call Center to file Rqmt ID Business Topic 1 Web - New Claim Fraud Filter 1a 1b Description (This system will ) For a new internet claim, the system evaluates claimant information based on the following criteria: Does user name or user contain "yopmail"? Is the claimant address provided in the state of Florida? 1c Does the username contain the numeric "agent" pattern identified in the analysis? 2 Upon the user clicking submit, the system evaluates the conditions above. If 1 or more of the criteria are met, the system will: 2b Not submit the claim 2c Store the rejection code of "NNN" in the "YYY" table along with the claimant SSN 2c Present a page advising the user to contact the Call Center to submit the claim. This enables TWC to more thoroughly ID a suspicious claimant

25 What We Are Doing About It - ID Questions Confirm customer s identity. May I please have your social security number? Thank you. May I please have your name and current mailing address? Next, to further confirm your identity, please provide me your TX driver license # or your TX ID # and your date of birth. Enter Texas Driver s License or Texas ID #. Review the name, address and DOB. If DL # and DOB are confirmed in TDI, go to next identifier. IF DISCREPANCIES: Ask about any discrepancies, but do not reveal identifying information from this screen. If the discrepancy cannot be explained, continue with: Mr./Ms. I appreciate you providing me that information. In order to continue with your claim for unemployment benefits TWC will need verification of your Driver s License (or ID), Social Security Number (SSN) and proof of residency at the address you provided. We apologize for any inconvenience this may cause. You can present the documentation to a Workforce Solutions Office and ask staff at the center to contact us at the number they have for us to verify the information has been presented. If you can t go to a Workforce Solutions Office you may fax a copy of this information to us at [give your Tele- Center s fax number]. When we receive the information we will contact you to complete the claim. Please include the best telephone number to reach you on the fax you send. 75% or more of the total base period wages NOT AT LEAST 75% OF 2013 BASE PERIOD WAGES, ask caller to follow the additional verification procedure as outlined above. Referring to Workforce Solutions office or fax.

26 Filter and Enhanced Claimant ID Process Lesson Learned: Fraudsters adapted very quickly, rendering filter ineffective because the filter permitted multiple attempts per claim This educated the fraudster on how to circumvent the filter Long-Term: need capability on the front of UI claims system (Web and IVR) to identify suspicious claims requiring further action to authenticate the claimant s identity and validate eligibility

27 What We Are Doing About It - Mid-Term August 4, AWARE UI Benefits Fraud Detection System became fully operational Continue current detection/prevention efforts, including prosecuting thieves Applied for and received DOL Supplemental Budget Request (SBR) funds to create an ID Theft Task Force 3 BPC Investigators 1 Operational Insight Analyst (BPC expert) Submit proposal and process to stop direct deposits to pre-paid debit cards ID Theft Task Force Define requirements, procure, test and implement an enhanced detection/prevention capability (ID Theft FraudX) for existing AWARE system Define requirements for a layered Identity-Proofing system for real-time detection and predictive analysis to prevent high risk claims from entering the UI Benefits system

28 What We Are Doing About It - Long-Term Procure a layered Identity-Proofing system for real-time detection and predictive analysis to prevent high risk claims from entering the UI Benefits system

29 Summary Desired End State What We Know What We re Experiencing What We re Doing About It Near-Term Mid-Term Long-Term