6 December 2004

Fraud threatens E-Gov Strategy

By Richard Veryard, Alco Group

This article has been extracted from Richard Veryard's paper 'Fraud and anti-Fraud', the full version of which can be found here

eGovernment services face a number of potential threats to their success, such as lack of take-up by the intended service users, the possibility of misuse, or plain old fashioned technical glitches which undermine public trust and confidence in e-services.

This article looks at the misuse of online services where there is a transaction involved. Some degree of fraud from a service user must be regarded as a possible scenario within every case of service use. Since most transactional activities will involve the authentication of identity on and increasingly the use of smartcards, this is an area where public bodies, in particular local authorities, need to focus their attention.

Public schemes of this nature cannot keep coming back for new infusions of capital, so anti-fraud mechanisms have to be future-proofed - in other words, designed and implemented in such a way that subsequent rework costs can be avoided, even when new technology is introduced or there is a change in users' requirements. All maintenance must be funded from the operating budget, and controlled by a sustainable governance process. Accommodating these requirements has important implications not only for the design of a smartcard scheme, but also for its continuing governance.

We have developed a collaborative approach to these challenges, which we believe has significant advantages over the traditional approach to systems engineering. This approach can be adopted on its own, or in the context of the FAME management framework, produced under the auspices of the ODPM.

For local authorities, fraud prevention is a key business driver.

For local authorities, fraud prevention is a key business driver. This includes reducing incidence of abuse of council services such as housing and taxi schemes, as well as revenue protection. Some types of fraud such as impersonation can compromise the safety of citizens and council employees. However while various fraud prevention measures may be in place, but it is not known how effective they are. Some frauds and attempted frauds are detected - sometimes only after the fraud has worked for a while - but the number of undetected frauds is guesswork.

Accurate and efficient detection of fraud should also benefit citizens with legitimate entitlement:

	·	Reduced likelihood of inaccurate suspicion or accusation (so-called "False Positives")
	·	Reduced inconvenience and delay while fraud possibilities are investigated
	·	Most citizens find security measures intrusive and unpleasant, so reducing the need for checks and investigations is a distinct benefit in itself
	·	More accurate and cost-effective identification of fraud means more resources available to those with legitimate entitlement. It also means greater public acceptance of the entitlement. (When there is a public perception of widespread abuse of a given entitlement, this may lead to hostility towards those legitimately claiming the entitlement, and to political campaigns for the entitlement to be completely withdrawn. Example: "bogus" asylum-seekers.)

Therefore, many public schemes, including local smartcard schemes, need to build in some resistance-to-fraud. But a one-size-fits-all solution simply doesn't work, for at least three reasons:

	·	It is inflexible, and cannot easily accommodate new legislative requirements or technological change.
	·	It is open to systematic abuse. If fraud prevention follows predictable -bureaucratic procedures, then intelligent fraud can always be designed to evade detection. Simplistic fraud prevention will merely detect minor breaches, and create inconvenience for legitimate users, while failing to trap the clever criminal.
	·	It is insensitive to community and culture. For example, different modes of identification may be appropriate or acceptable for members of different communities.

In contrast, a collaborative approach to designing anti-fraud measures is open to local knowledge and know-how, and can deploy a broad range of intelligent counter-measures against the possibility of systematic abuse.

Furthermore, if we adopt a collaborative approach to the overall design of the scheme, this gives some meaning to local design and governance. The differences between two local schemes are now not merely cosmetic variations on a standard national template, but genuinely driven by local demand factors.

The collaborative design approach is particularly suited to large programmes with many stakeholders (including those within the scope of the FAME framework) and helps to manage the dynamic interaction between a complex set of service providers and a diverse set of users and scenarios. It aims to achieve acceptable economies of scale without losing sight of the need to be responsive to the evolving needs of citizens and local communities.

The Alco Group is:
W: www.alco.eu.com
E: info@alco.eu.com
T: 0207 351 7866

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