Preventing Fraud in Hard-to-ID Populations


The recent Inspector General report to congress for the Department of Education highlights increases in student aid fraud rings of as high as 82% in the past three award years. These fraud rings often target online and distance learning programs. “Large, loosely affiliated groups of criminals who seek to exploit distance education programs in order to fraudulently obtain federal student aid because all aspects of distance education take place through the Internet…” said Education Inspector General Kathleen Tighe to the House Oversight and Government Reform Committee. “…students are not required to present themselves in person at any point and institutions are not required to verify prospective and enrolled students’ identities.”

Verifying identities and determining the potential that a particular applicant may commit fraud can be complicated — particularly for young populations like college students who don’t often have the detailed credit histories which are the usual data source for online identity verification tools.

Using alternate data like payment of utility or phone bills, corroborated with other identity data, we have been able to successfully verify hard-to-identify groups like college students, new U.S. residents, and the “under-banked”.  An in-depth analysis conducted last September, across three different client programs, found identity match rates of up to 98% with the use of alternate data. Once ID’d those applicants can then be checked for past fraud or markers for the propensity to commit fraud.

Fraud solutions often target strategies to recoup fraudulent payments after the fact which is an often lengthy and not always successful process. Experience has shown us that setting up the appropriate checks during the application process limits fraudulent student loan applications and inappropriate payments.  The end goal is always to identify individuals who have a high risk of committing fraud and stop them before they get into the program.