government access cards: a key to fraud and identity theft reduction?

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  • 2008 RMAA Conference

    Government Access Cards Paper Summary

    GOVERNMENT ACCESS CARDS

    A KEY TO FRAUD AND IDENTITY THEFT REDUCTION?

    Paper Outline

    Purpose:

    1. To evaluate the potential for cost savings associated with the introduction of access cards across social services in Australia;

    2. To evaluate the potential for cost savings associated with the introduction of access cards across all governmental services in Australia;

    3. Potential for reduction (or elimination) of identity fraud and theft against governmental services; and

    4. Compare and contrast the proposed Australian system with comparable systems overseas (particularly the United Kingdom and United States of America).

    Methodology:

    A review of literature on subject from governmental, non-governmental, private, academic, and other sources.

    Abstract

    During 2006, the Australian Commonwealth government introduced

    legislation to establish a social services access card, requiring that possession

    of the card to access certain government benefits and concessions. The

    claimed benefits ranged from fraud reduction to improved access to benefits

    and refunds associated with certain medical expenditure. Despite claims of

    substantive savings over a long timeframe, no independent verification of the

    savings claims have been produced.

    The purpose of this paper is to compare and contrast Australias Access Card

    system against the United States REAL-ID system and the United

    Kingdoms identity card system and asks the question Are identity card

    systems worthwhile?

  • 2008 RMAA Conference

    Government Access Cards Table of Contents

    TABLE OF CONTENTS

    Introduction.............................................................................................................1 Australian System Overview ...................................................................................4 United Kingdom System Overview .........................................................................9 United States System Overview.............................................................................11 Interplay Of Identity Theft And Fraud Overview ...................................................15 Interplay Of Identity Theft And Access Card Regimes ..........................................19 Conclusion Is It Worthwhile? .............................................................................25 Biblographry .........................................................................................................28 Acronym List ........................................................................................................36 Appendix One Timeline......................................................................................37

  • 2008 RMAA National Conference Adopting and Adapting

    Government Access Cards - A Key To Fraud And Identity Theft Reduction? Introduction

    Page 1

    INTRODUCTION

    The underlying definition of identity theft is the appropriation of an

    individuals personal information with the aim of impersonating that

    individual in a legal context (Vacca 2003, p. 4). The motivation to

    perpetrate identity theft varies by individual case it ranges from

    vindictiveness to financial troubles. Possible sources of identity thieves

    come from the most unlikely of sources including family, friends and, work

    colleagues to more traditional category of total strangers.

    A 2005 study by Javelin Research (Johnson 2006, p. 52) identified 11 areas

    where information breaches occur that form the basis for identity theft:

    Information Breach Source

    Breach Percentage

    Lost/Stolen wallet 30.0 Corrupt employee 15.0 Paper mail 8.0 Misuse of data 7.0 Other way 7.0 Finance company 6.0 Computer infiltration General 5.0 Computer infiltration Phishing 3.0 Garbage (Dumpster Diving) 1.0 Computer infiltration Online transactions 0.3 Table 1-1 Information source types for identity theft (Johnson 2006: 52)

    The growth and spread of technology over recent decades (particularly since

    the 1980s) have the potential to negatively influence the victims reputation

    more quickly than before (Vacca 2003: 5). The speed of technology change

    has facilitated the transformation of access to information by governmental

    agencies, corporations and individuals often at the expense of security and

    verification.

  • 2008 RMAA National Conference Adopting and Adapting

    Government Access Cards - A Key To Fraud And Identity Theft Reduction? Introduction

    Page 2

    With personal information becoming increasingly accessible online through

    registers and databases (connected directly to the internet or through private

    networks) and personal disclosure all stakeholders and the government

    require a clear understanding of the new paradigm operating ensuring

    critical information is accurately and securely retained and only accessible to

    verifiable, authorised recipients is paramount.

    The costs associated with identity theft are startlingly. A Federal Trade

    Commission (FTC) study (Aratia Jnr 2006) highlighted some of the costs

    relating to identity theft affecting America from 1999 to 2004:

    27.3 million Americans were victims of identity theft in the preceding five years;

    The direct cost to American financial institutions was US$33 billion and US$5 billion to consumers;

    Average consumer cost was approximately $500; Identity theft was the fastest growing crime; 50% of victims were unaware that personal information was stolen; The fraudster was known to victims in 25% of reported cases; and The fraudster was a direct family relative in 35% of reported cases.

    A 2005 study conducted by Javelin Research (Johnson 2006) contended that

    identity theft in America was stable, even declining in certain respects. The

    study did highlight the following:

    8.9 million people (4 percent of the adult population) suffered identity theft in 2006 a 11.9 percent decline from their2003 survey;

    Losses amounted to $6,383 per person a 21.6 percent increase from 2003; and

    Total amount defrauded through identity theft was $56.6 billion a 6.4 percent increase from 2003.

  • 2008 RMAA National Conference Adopting and Adapting

    Government Access Cards - A Key To Fraud And Identity Theft Reduction? Introduction

    Page 3

    David Shenk outlined 13 laws of Data Smog (1997, p. 11) that can easily

    underpin the implementation of the access card regimes:

    1. Information, once rare and cherished like caviar, is now plentiful and taken for granted like potatoes;

    2. Silicon chips evolve much more quickly than human genes; 3. Computers are neither human or humane; 4. Putting a computer in every classroom is like putting a power

    plant in every home; 5. What they sell as information technology but information

    anxiety; 6. Too many experts spoil the clarity; 7. All high-stim roads lead to Times Square; 8. Birds of a feather flock virtually together; 9. The electronic Town Hall allows for speedy communication and

    bad decision-making; 10. Equifax is watching; 11. Beware stories that dissolve all complexity; 12. On the information superhighway, most roads bypass journalists;

    and 13. Cyberspace breeds libertarianism.

    For the three governmental card access systems subject of this paper, all of

    these laws apply in various guises some in how information is gathered,

    digested and processed for stakeholders; others by effectively excluding

    people from society by denying them elements that society has deemed

    essential.

    The purpose of this paper is to examine and contrast three governmental

    identity management systems United States Real-ID framework; United

    Kingdoms National Identity Card; and Australias Welfare Access Card1 -

    with their stated role in minimising fraud against the public purse and

    identity theft. The core question after this analysis is is it worthwhile? in

    preventing such theft and fraud.

    1 For the purposes of this paper, the Australian system refers to the Welfare Access Card proposed by the Howard Liberal/National coalition government on April 26 2006. The coalition was defeated at a general election on November 24 2007.

  • 2008 RMAA National Conference Adopting and Adapting

    Government Access Cards A Key To Fraud And Identity Theft Reduction? Australian Welfare Access Card

    Page 4

    AUSTRALIAN SYSTEM OVERVIEW2

    The Australian system has had a chequered and laboured journey. The

    genesis started in 1985 with the Hawke Labor government proposed The

    Australia Card system that bears remarkable similarities to the 2006 Welfare

    Access Card system proposal of the Howard coalition government.

    The Australia Card proposal was abandoned after the 1987 double

    dissolution election that saw the Hawke government returned with a reduced

    majority, but enough to pass the proposal under a double sitting of

    parliament if it chose.

    A consequence of the failure of the Australia Card proposal, the introduction

    of an alternative system called the Tax File Number (TFN). This system

    initially was restricted to taxation-related payments but has since gradually

    expanded to include Centrelink payments, interest earned on bank accounts,

    investment transactions, and the higher education loans scheme (previously

    HECS).