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Data mining digs up dirt on cheats

There's a creepy ad on British telly which proclaims "It's all in the database".

There's a creepy ad on British telly which proclaims "It's all in the database".

The ad tries to terrorise the population into buying a TV licence, reminding them that records exist of previous licence purchases as well as purchases of televisions.

I thought of this ad when I heard of some super snooping by Work and Income New Zealand (WINZ).

This government agency handles a vast array of benefits and is using "data mining" techniques to combat fraud.

This week the NZ Herald reported that some NZ$16 million of benefit fraud was uncovered last year, with 10 social welfare staff getting the sack for ripping off the system.

The data-matching techniques include matching client data with other government agencies like the Inland Revenue, Customs and the Department of Internal Affairs, which handles records associated with dead people.

WINZ has uncovered some really novel abuses. Last month, we heard of fraudsters claiming the pensions of dead family members, with some payments lasting 15 years. Fortunately, that avenue is now blocked with data-matching, introduced in 2004. Abuses earlier than that date were not able to be discovered.

Now they are under investigation thanks to data mining.

The technology and skills to "data mine" the records did not exist until 2007 when the ministry created an intelligence unit.

The head of the ministry's fraud team, Hilary Reynolds, said the unit last year identified a fraud risk with pensioners who died before 2004. Investigators "data-mined" 250,000 beneficiary deaths and decided 33 needed further investigation.

Criminal charges were eventually laid against 16 people.

Typically, such offenders, posing as pensioners, were other family members like widows. And it appears the intelligence unit is doing a good job.

The probe into 250,000 deaths came after a 2008 auditor-general's report, which said the ministry should improve the way it prevented, detected and investigated benefit fraud.

"We considered that the ministry could make better use of its intelligence and data-matching functions to identify areas of emerging risk and potential instances of fraud," the report said.

The government watchdog said the ministry should "regularly and formally" evaluate the effectiveness of data-matching for detecting benefit fraud. It also recommended that the ministry use risk assessments of emerging benefit fraud to better use the data-matching technology — which is how the pension scam was detected.

Now, data mining is often used for marketing and business intelligence, but it is great to see it used to tackle crime like this. We might have concerns about what governments might do with our data, but if we are accepting a benefit, it is only right and proper it makes checks to see that we and other beneficiaries are being honest.

This obviously applies to tax matters too. In Ireland, the tax revenue department is using similar data-mining tools called Social Network Analysis to match the data of clients with that of other agencies.

The US also uses data mining to crack down on tax evasion, most notably concerning those with overseas bank accounts.

New Zealand's own Internal Revenue is also stepping up its efforts (PDF) with data matching and similar tools, as is the Australian Taxation Office.

Data mining is certainly making life increasingly tough for cheats, be you a beneficiary or holder of a Swiss bank account!