The SSA Office of the Inspector General (OIG) is committed to addressing those challenges through independent oversight of SSA’s programs and operations. SSA OIG performs audits, evaluations, and investigations to prevent and detect fraud, waste, abuse, and mismanagement in SSA’s programs and operations and to provide recommendations for improvements.
SSA OIG works to ensure SSA administers its programs and operates economically, efficiently, and effectively. It is important for the Subcommittees to understand how President Donald J. Trump’s Budget for FY 2026 will provide the necessary resources for SSA OIG to execute its statutory role.
]]>The public expects SSA to be accurate in their benefit payments. While perfection is nearly impossible to achieve, improper payments can have a devasting effect on beneficiaries, particularly when the improper payment is the result of an agency error.
Simply put, an overpayment occurs when SSA states an individual received more social security or SSI benefits than they were supposed to receive. In some instances, individuals are sent bills stating they owe thousands of dollars they cannot afford. Many overpayments can accumulate over several years until SSA realizes payments to the beneficiary have been inaccurate. To reclaim overpayments, SSA typically reduces an individual’s monthly benefit to the correct amount and then reduces it even further, making it even more difficult for some individuals to survive, especially when they are on a fixed income. One individual recently stated in the media: “It’s not right that myself and a significant amount of other citizens are now being demanded to pay back what the SSA admits they made in error.”
The other side of this improper payments coin can be just as harmful to beneficiaries. When an agency error results in underpayments, beneficiaries are not receiving their full monthly benefits, sometimes for months or even years. In these cases, when SSA discovers the underpayment, SSA should ultimately make the individual whole and adjust the benefits accordingly. However, during the period they are being underpaid, the beneficiary is deprived of their full payment, which in many cases, can cause economic hardship to those on a limited income. Because of their devastating impact, it is critical for SSA to improve its processes, procedures, and controls to reduce the amount of improper payments.
Improper payments can occur for many reasons, including when SSA does not obtain necessary information from beneficiaries or fails to act on that information once received. Improper payments also occur when SSA makes mistakes in computing payments due to the complexity of calculations and reliance on manual processes.
SSA administers the Old-Age, Survivors and Disability Insurance (OASDI) and Supplemental Security income (SSI) program. SSA issues over $1 trillion in OASDI benefits and SSI payments to more than 70 million people annually. Therefore, even the slightest error in the overall payment process can result in billions of dollars in improper payments. According to SSA’s most recent reports, it estimates it made approximately $13.6 billion in improper payments in FY 2022: $11.1 billion in overpayments and $2.5 billion in underpayments.
Since Fiscal Year 2002, SSA’s Office of the Inspector General (OIG) has identified improper payments as a major management challenge. SSA’s OIG is committed to identifying ways for SSA to prevent improper payments to the millions of beneficiaries who rely on the Agency to send them their correct monthly benefit amount.
One of the most common reasons for improper payments is related to SSA’s reliance on beneficiaries to report any change in circumstances that may affect their benefits. Wages and income, resources, and living arrangements are a few of the factors that affect OASDI and/or SSI eligibility and payment amounts.
SSA explicitly informs individuals of their reporting requirements during the application process, in their award letters, and in periodic correspondence. However, beneficiaries do not always comply with or understand their responsibility to report this information. In a January 2017 audit of beneficiaries with multiple earnings-related overpayments, the OIG found over half were repeatedly overpaid because of their failure to comply with SSA’s requirement to report earnings.
Improper payments also occur when SSA does not act timely once it receives information from the individual. In a May 2018 audit, OIG estimated SSA incorrectly paid over $40 million because it did not timely process work reviews for beneficiaries who had reported their earnings. Delays like this occurred because SSA’s process for monitoring this workload did not provide automated alerts to management or employees. Rather, managers had to track pending cases manually by generating reports daily, weekly, and monthly to ensure they monitored the workload and sent cases to employees for action and follow-up.
SSA agreed with the OIG recommendation to determine the feasibility of developing automated alerts to ensure timely case assignments and follow-up on aged cases; but, this recommendation remains unimplemented.
SSA employees also must take manual actions to make calculations or establish records when systems cannot fully process them. Some of the calculations that must be completed manually are based on complex provisions written into Federal statutes. Employees have tools to assist with the calculations, and there are alerts to prompt manual actions for some workloads, but OIG audits have found the controls around these manual processes are not always effective.
In a May 2022 audit of overpayments caused by incorrect benefit computations, the OIG found SSA could have avoided half of the overpayments—or about 73,000 overpayments totaling more than $368 million—if it had effective controls over benefit- computation accuracy. In this audit, employees entered the incorrect information into SSA’s systems or incorrectly calculated benefits.
For example, an employee may have transposed two numbers, which changed the benefit due. Benefits were also incorrectly computed when employees or SSA systems calculated benefits based on inaccurate information, for instance, an incorrect birth date. SSA had, as of the date of OIG’s report, two projects to modernize information technology and increase automation that it said would minimize manual processing; but, SSA did not have planned implementation dates.
Some overpayments are unavoidable. SSA considers some overpayments unavoidable and not improper payments because statutes, regulations, or court orders require the Agency to make these payments. For example, if an individual appeals a cessation determination following a medical review, the individual can elect statutory benefit continuation This provision allows beneficiaries to continue receiving benefits and Medicare coverage at the reconsideration or administrative law judge hearing level. If SSA upholds its cessation decision on appeal, any benefit payments made during the appeals process are considered overpayments.
Once SSA makes overpayments, it must provide due process to the overpaid individuals to notify them of information such as the amount of the overpayment, how and when the overpayment occurred, and options to request reconsideration or waiver.
However, in a March 2019 audit, the OIG found SSA did not always appropriately apply due process provisions and projected SSA incorrectly recovered approximately $345 million for about 190,000 overpayments established over a two year period. This occurred because SSA either did not send notices or sent notices with incomplete or inaccurate information, due to both employee and system errors. In some instances, employees did not put the adequate code into the system to generate the appropriate notice or complete an accurate notice manually. In other cases, the OIG found the automated system did not generate complete notices.
After SSA notifies the overpaid individuals, it has numerous options for recovering overpayments. The preferred method is to withhold benefits if the overpaid individual is receiving a monthly payment. Otherwise, SSA can directly bill the overpaid individual, negotiate a repayment plan, withhold other Federal payments, garnish wages, or refer the overpaid individual to credit bureaus in an effort to encourage repayment.
While the overpaid individual is primarily responsible, when SSA cannot collect from the overpaid individual, in some instances, SSA policy requires it to attempt collection from other individuals liable for repaying the overpayment. Such individuals could include spouses or children receiving benefits on the same OASDI earnings record or as members of an eligible couple for SSI. Despite these efforts, SSA continues to face challenges in recovering overpayments. The OIG has audits in process and planned that will address the challenges SSA faces.
SSA can waive recovery of an overpayment if the person is without fault, and recovery would either defeat the purpose of the Social Security Act or “be against equity and good conscience.” However, there may be inconsistencies in how SSA employees apply these policies. In a July 2015 audit, the OIG found some field offices approved 96 percent or more of the OASDI overpayment waiver requests they received, while another group of offices waived 30 percent or less. We found similar trends for SSI overpayment waivers.
Further, when an overpayment occurs, SSA must expend additional resources to attempt recovery. For Fiscal Year 2022, SSA reported an administrative cost of $.06 for every dollar collected.
SSA OIG’s work demonstrates a commitment to assisting SSA in addressing its improper payments challenge. In the last five years, the OIG issued 101 reports with 299 recommendations related to improper payments that identified over $7 billion in questioned costs. Of these, 76 recommendations aimed at addressing $1.8 billion in questioned costs remain unimplemented.
In Fiscal Year 2022, according to SSA, it recovered over $4 billion in overpayments. Still, at the end of the Fiscal Year, SSA had approximately $21 billion in gross accounts receivable, which consists primarily of overpayments owed to SSA by beneficiaries to whom it paid excess benefits. Approximately $13 billion in gross accounts receivable is from the SSI program, while almost $9 billion is from the OASDI program.
SSA does not expect to collect over $12 billion of that balance based on either the age of the debt or the likelihood of collectability based on a 5-year average. In addition, a system limitation prevented SSA from tracking debt scheduled for collection beyond Calendar Year 2049. OIG audit work identified almost 101,000 overpayments that, at the end of Fiscal Year 2019, were not being fully tracked. The original balance of these overpayments was approximately $4.2 billion, of which the system was not tracking over $1.2 billion (30 percent) because SSA will not recover that amount by 2049.
The OIG acknowledges SSA has taken some steps to improve prevention, detection, and recovery of overpayments. In Fiscal Year 2019, SSA established an Improper Payment Prevention Team, implemented options to allow individuals to repay overpayments online, and is conducting more data matches with external entities to obtain income and resource information.
However, there is much more SSA can do. Specifically, SSA needs to identify and prevent improper payments through automation and data analytics, expand efforts to collect data from reliable third-party sources and address the root causes of improper payments to prevent their occurrence.
In a July 2023 report, the OIG noted SSA’s automation enhancements reduced the need for manual processing for some workloads from Fiscal Years 2019 to 2021. SSA began using robotic process automation, which involves the use of software to automate high-volume, labor-intensive, or repeatable tasks. This allows employees to focus their efforts on more complex actions. These “bots” can lead to cost and time savings by preventing human error and reducing the time employees require to make manual inputs and correct mistakes.
However, there was no requirement for SSA employees to use the bots. Therefore, the OIG recommended SSA instruct employees to use bots whenever possible and determine whether bots could assist with additional workloads.
Also, in the July 2023 report, the OIG identified 19 audits issued between Fiscal Years 2016 and 2020 that identified significant improper payments. SSA planned to address the OIG’s recommendations in these audits with information technology modernization projects. SSA had fully implemented the recommendations from only two of these audits, with actions to address the remaining recommendations still in progress.
Seven of the 17 unimplemented recommendations related to the establishment of a new Debt Management Product (DMP) that SSA expects will enable it to record, track, collect, and report overpayments more efficiently. However, SSA has been working on the DMP since at least July 2016, and SSA is currently targeting implementation in FY 2025. The OIG has an audit planned to review the Agency’s development of DMP.
SSA should continue to expand efforts to collect data from reliable third-party sources that would aid SSA in mitigating discrepancies that can occur when beneficiaries self- report information. For example, SSA could better utilize the Access to Financial Institutions (AFI) program. AFI verifies alleged bank account balances with financial institutions and searches for undisclosed accounts at geographically relevant locations based on the individual’s address. SSA uses AFI when it processes initial SSI applications and periodic eligibility redeterminations.
As noted in a May 2023 audit on SSA’s compliance with the Payment Integrity Information Act of 2019, financial accounts—such as checking, savings, and credit union accounts—are a leading cause of overpayments in the SSI program. To address overpayments related to financial accounts, SSA implemented the AFI program in June 2011. Between Fiscal Years 2011 and 2021, overpayments related to financial accounts ranged from $870 million to approximately $1.9 billion annually. However, several of the OIG audits determined SSA could have realized additional savings had it used AFI more often. For example, in FY 2021, the OIG estimated SSA could have prevented approximately $1.4 billion in overpayments due to financial accounts had it performed AFI searches between the initial application and redetermination. In May 2023, the OIG recommended SSA conduct a study to expand AFI searches between the initial application and subsequent eligibility redeterminations.
The Bipartisan Budget Act of 2015 provided SSA new legal authority to enter into data exchange agreements with payroll providers to access real-time payroll data. This information could allow SSA to adjust earnings and payment records more expeditiously to minimize and prevent improper payments. In Fiscal Year 2019, SSA awarded a contract to build an information exchange to obtain monthly earnings data from third- party payroll data providers. In Fiscal Year 2023, SSA planned to continue working toward implementing the payroll exchange. SSA is at least several years from determining whether the commercial payroll exchange effectively reduces improper payments that are caused by earnings reporting discrepancies. Further, these agreements can only be used to obtain earnings information for disabled beneficiaries, not retirement or survivor beneficiaries under full retirement age who work and are subject to earnings limits.
In a September 2023 audit the OIG recommended SSA determine whether to seek legislation to permit the Internal Revenue Service (IRS) to share data to assist SSA in reducing improper payments related to Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP) of the Social Security Act.
The IRS is authorized to share information with SSA to support its administration of the SSI program; however, the IRS indicated the Internal Revenue Code does not permit it to disclose non-covered pension information to SSA for purposes of administering the OASDI program. The OIG concluded SSA generally made accurate GPO and WEP determinations when it had the non-covered pension information it needed. However, the SSA continued relying significantly on beneficiaries to self-report their non-covered pensions. SSA disagreed with the OIG recommendation, stating the decision to propose legislation depends on multiple factors, many outside of the Agency’s control.
As another example, SSA has authority to collect workers’ compensation information to administer SSA’s programs; however, a state may determine it lacks authority to share information with SSA based on state law. While SSA had included legislative proposals in prior years President’s budgets related to obtaining workers’ compensation, the President’s budget for Fiscal Years 2022 and 2023 did not include a legislative proposal. Without this state data, SSA must rely on beneficiaries to report any workers’ compensation they have received. A September 2023 audit has demonstrated that not all beneficiaries report workers’ compensation received, which leads to SSA improperly paying them.
Administrative finality is another issue related to improper payments. Under SSA’s administrative finality rules, the Agency generally considers its determinations or decisions to be final and binding when it renders them, unless they are appealed or reopened. Once a determination or decision becomes final, SSA will only reopen and revise it for certain reasons and within specific time periods.
For instance, an SSA OIG August 2018 audit, showed SSA could not correct payment errors related to WEP and GPO because of administrative finality and would continue overpaying beneficiaries approximately $46 million annually. One beneficiary highlighted in the report disclosed that she would be receiving a monthly non-covered pension. SSA correctly applied GPO to her spousal benefits but erroneously paid the full monthly retirement benefit rather than a reduced amount. Consequently, SSA overpaid the beneficiary $10,765 but did not generate an alert to address the incorrect payments because it determined administrative finality applied.
In a May 2021 audit, SSA OIG noted a Law Library of Congress study, which stated that “A government agency may correct a mistake, and no principle of administrative law consigns an agency to repeating a mistake into perpetuity. Administrative agencies have the inherent authority to correct adjudications which appear to be erroneous.” SSA agreed with the OIG’s recommendation in the May 2021 audit to evaluate its administrative finality policies; however, the Agency has not made any changes to its policies.
Improper payments are a major challenge for SSA. Without better access to data, increased automation, systems modernization, and policy or legislative changes, it will continue to be an issue into the future.
Thank you for inviting the Office of Inspector General to discuss issues concerning improper payments at SSA. I would be pleased to address any questions.
]]>Good afternoon, Chairman Ferguson, Ranking Member Larson, and members of the Subcommittee on Social Security. I commend you for holding this important hearing today on the Social Security Administration’s (SSA) role in combatting identity fraud.
Social Security touches the lives of every American no matter where one is in their life’s journey. With very few exceptions, all United States citizens, permanent residents, and temporary or working residents have a Social Security number (SSN). Even non-working residents (citizens and non-citizens) are required to obtain an SSN due to its use by businesses and government entities. Today, about 175 million people work and pay Social Security taxes and nearly 67 million Americans receive a Social Security benefit each month. Most Americans are either receiving a benefit from or contributing to the Social Security system.
Notwithstanding its original narrowly drawn function for use in recording Social Security earnings, the SSN has become a de facto national identifier. The SSN has essentially become the cornerstone of the identity framework. Individuals are often required to use their SSN as identifiers to open bank accounts, apply for loans, apply for unemployment, and for many other routine matters requiring proof of identification.
Unsurprisingly, the expanded use of SSNs as a national identifier has given rise to individuals using other people’s SSNs for illegal purposes. Stolen SSNs have been used to obtain benefits and services, establish credit, gain employment, and hide identities to commit other crimes. The SSN has become the lynchpin to identity theft.
Identity theft is one of the fastest-growing crimes in America, affecting millions each year. According to the Federal Trade Commission (FTC), in 2022, individuals reported identity theft more than any other type of complaint. Of those, the FTC received 441,882 reports from people who said their information was misused with an existing credit card or when applying for a new one.
SSN misuse and identity theft has a real impact on the American public. Victims of SSN misuse face significant harm when others obtain benefits in their names: victims may be unable to rightfully receive critical benefits or be left to deal with the ramifications of damaged credit and other issues. The states with the most reported identity theft cases per capita include the Chairman’s state of Georgia, along with Louisiana, Florida, Delaware, and Nevada.
The Office of the Inspector General (OIG) plays a vital role in combating SSN misuse and identity theft. Throughout SSA OIG’s history, SSN misuse and identity theft have been a priority in our oversight efforts. SSA OIG has specific authority to investigate SSN misuse violations under Title 42 U.S.C. §408. Additionally, based on shared jurisdiction, we also assist in addressing identity fraud by conducting investigations related to violations under Title 18 U.S.C. § 1028.
Our SSN misuse investigations encompass a range of fraud schemes. To facilitate these schemes, perpetrators rely heavily on their ability to acquire and misuse another individual’s SSN to commit crimes. Examples of those crimes and our work include:
Synthetic identity theft is one of the more troubling forms of identity theft and has been a focus of some of our recent investigations. It is a unique form of fraud that combines SSNs of real people with fraudulent information, such as false names and dates of birth to create new identities. Synthetic identity theft is one of the most difficult forms of fraud to catch because fraudsters build good credit over a period time using a fake profile before making fraudulent charges and abandoning the identity.
The combination of a fraudulently obtained identity document, such as a picture ID, and an SSN enhances an individual’s ability to commit certain crimes while concealing their true identity. This type of fraud has a particularly damaging impact on vulnerable populations such as older individuals and children, who are less likely to use their SSNs for work and therefore less likely to discover the fraud.
One example of our synthetic identity fraud investigations involved individuals who participated in a scheme to defraud a bank in San Antonio, Texas. The individuals were charged with using approximately 700 synthetic identities, in addition to stolen identities, to create bank accounts and shell companies. The perpetrators used complex computer data storage and virtualization machines to manufacture synthetic identities, combining the personal information of real people (such as stolen SSNs) with fraudulent information, such as false names and dates of birth.
They used the identities to falsely and fraudulently open credit cards and bank accounts for those identities. They also registered shell companies with the State of Florida Division of Corporations, using the companies as part of the scheme. The companies appeared to be associated with service industries, such as yachting, technology, and landscaping, but conducted no legitimate business and had no legitimate employees. Fraudulent payments were made from accounts registered to these synthetic identities to accounts registered to the perpetrators.
After the passage of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act their scheme evolved to utilize the already-established synthetic identities and associated shell companies and accounts to fraudulently apply for assistance under the CARES Act’s Paycheck Protection Program (PPP), which was intended to help small businesses financially survive the pandemic. Between $20 and $25 million in PPP relief was paid to companies registered to the perpetrators, and to companies registered to synthetic identities they controlled. This multifaceted scheme not only harmed and misused the benefits of the PPP and the CARES Act, but it also harmed the integrity of the SSN as an identifier. One of these individuals recently pled guilty for his role in stealing millions in COVID relief money through a synthetic fraud scheme.
SSA OIG has established a multidisciplinary team of professionals that develop and implement innovative approaches to combat identity theft and scams through audits, criminal investigations and prosecution, civil enforcement, public outreach, and education. I want to outline some of those efforts.
The SSA OIG Office of Audit (OA) is a key player in identifying vulnerabilities in SSA programs and operations that may result in identity theft. We report these vulnerabilities to SSA for their attention and refer the data from our audits to the SSA OIG Office of Investigations (OI) to investigate identity fraud and disrupt organized groups from manipulating this system.
Our audits found fraudsters may steal identities to work or to claim earnings-related benefits. For example, in one audit, we found fraudsters improperly used the SSNs of 37 older adults to acquire $4.6 million during a five-year period.2 During the same timeframe, OA found fraudsters misused 817 SSNs of deceased individuals to earn approximately $29 million in wages.
In another audit, we reported SSA removed from its Master Earnings File $742 million in self-employment earnings originally reported on approximately 50,000 numberholders’ Federal income tax returns during a four-year period.3 In approximately 59 percent of those cases, SSA removed the earnings because the numberholders alleged other individuals stole their identities and used their SSNs to file fraudulent tax returns.
At our request, the U.S. Department of the Treasury Inspector General for Tax Administration (TIGTA) determined tax filers had used the self-employment earnings to claim the earned income tax credit.
Another audit found in one three-year period, about 37,700 employers reported approximately $1 billion in wages using the names and SSNs assigned to 36,546 children ages 13 and younger.4 This group included 365 deceased children. Although the earnings for the living children were legitimate in all but eight percent of the cases, nearly all (362) of the deceased children’s cases involved SSN misuse. These children had about $9 million in wages reported by employers that did not typically employ children.
Another focus of our audit work examines the Internet services the SSA offers. SSN numberholders can create my Social Security accounts to transact business with SSA, including reviewing their earnings records or changing their direct deposit information.
In January 2013, SSA began allowing individuals to change their direct deposit bank information using the my Social Security Internet application. Shortly thereafter, SSA and the OIG began receiving allegations of fraud related to unauthorized changes.
Our audits found from January 2013 through May 2018 fraudsters redirected $33.5 million in benefits intended for 20,878 beneficiaries by making unauthorized direct deposit changes through my Social Security.5 Fortunately, an additional $23.9 million to 19,662 beneficiaries was prevented from misdirection because SSA corrected the unauthorized direct deposit changes before a payment was released.
During the COVID-19 pandemic, SSA closed its field offices to the public, resulting in a dramatic increase in the utilization of SSA’s online services. As the use of eServices increased, so did the opportunity for fraudsters to manipulate SSA’s online platforms.
Scammers use stolen personable identifiable information (PII) to file fraudulent online applications, establish or take over online accounts, or redirect benefit payments to alternate bank accounts. Since the start of Fiscal Year 2021, OIG has received more than 41,000 eServices-related allegations, including fraud schemes that misuse or are facilitated by SSA’s online platforms, such as my Social Security. It is critical SSA employ effective controls to obtain sufficient assurance users of its online services are who they claim to be.
Additionally, bad actors exploited some of SSA’s public-facing systems to validate SSNs and potentially use that information to commit identity fraud. These incidents underscore the need for SSA to thoroughly evaluate applications for potential vulnerabilities—including the risk the applications could be misused for purposes for which they were not designed. As more Americans utilize online platforms, fraud schemes will increase.
Our OI is currently developing an OIG-wide strategy to address identity theft related to eServices, including the analysis of real-time agency data to proactively identify the potential fraud. In addition to investigating identity theft related to eServices for prosecution purposes, OI also identifies vulnerabilities in systems and processes and reports them timely to SSA.
As you can imagine, beyond eServices, our OI also receives and evaluates allegations of fraud, waste, abuse, and mismanagement in SSA’s programs and operations, and takes appropriate action in coordination with federal, state, and local prosecutors on matters of SSN fraud. Like the synthetic identity fraud case highlighted earlier in my testimony, many of our investigations involve SSN misuse. This work has led to many successful convictions.
For example, to highlight a few, in a recent joint investigation with the U.S. Department of State Diplomatic Security Service (DSS) and other federal and state law enforcement agencies, a man was found to have stolen the identity of another individual. Following the joint investigation, the man pleaded guilty to passport fraud, aggravated identity theft, and possession of a firearm by a convicted felon. In February 2022, a U.S. District Court judge sentenced him to 22 years of imprisonment.
In 2021, as a result of our investigation, an employee of a car dealership in the State of Connecticut was sentenced to 21 months in prison and five years of supervised release for a scheme involving fraudulent auto loan applications and identity theft. For a period of almost a year, the man falsified documentation for auto loans, including SSA benefit verification letters, and in some instances used others’ identities to apply for loans without their authorization.
In 2020, a former U.S. Postal Service letter carrier was sentenced to 27 months in prison. Our investigation found she had misrepresented her living arrangements and income in applying for government benefits in her own name and applied for and received additional benefits using the identities of multiple friends and family members, including minor children. She also stole and deposited checks from the mail she was assigned to deliver.
Our OI in collaboration with private sector partners, conducts imposter scam investigations, often jointly with law enforcement agencies. In some instances, these partnerships have allowed OI to identify victims quickly and recover funds before they were lost. For example, on November 18, 2021, SSA OIG and the FBI arrested five individuals pursuant to an indictment from the Northern District of Georgia. The indictment resulted from an investigation led by SSA OIG investigators that uncovered a telephone imposter scam originating from overseas call centers. The twelve-count indictment charged the five defendants with wire fraud, conspiracy to commit wire fraud, money laundering, and conspiracy to commit money laundering.
In addition to the arrests, agents executed one residential search warrant and five account seizure warrants. The operation took place in five states: Georgia, Florida, Massachusetts, New Jersey, and New York, with approximately 100 law enforcement officers and support staff involved. In addition to SSA OIG and the FBI, DHS Homeland Security Investigations, the TIGTA, and Wood-Ridge (New Jersey) Police Department provided substantial assistance to the investigation and operation. The investigation has identified and seized nearly $2 million in proceeds of the scam’s criminal activities.
The development of Artificial Intelligence (AI) provides a new tool to create official-looking deception scam messages intending to steal personal information. AI will utilize algorithms that can recognize, summarize, and generate fraudulent texts and contents based on massive datasets. AI can even generate scam messages and produce a transcript in which a scammer impersonates federal government employees. AI will prove valuable to criminals and challenging for investigators. Aware of this developing technology, SSA OIG is working towards countering AI-generated scams and educating Social Security recipients of AI-generated scams.
The emergence of the COVID-19 pandemic resulted in criminals finding ways to fraudulently take advantage of the infusion of trillions of dollars in federal funding. SSN misuse, including identity theft, is a common thread running through many investigations related to the misuse of pandemic relief funds.
Since the start of the pandemic, SSA OIG has participated in the National COVID-19 Fraud Enforcement Taskforce, led by the Deputy Attorney General of the United States, 25 COVID-19 fraud workgroups and in 159 investigations related to COVID-19 pandemic relief programs, funds, and scams.
Further, SSA OIG has issued nearly a dozen COVID-19-related audits. SSA OIG and collaborated in joint investigations working with federal, state, and local law enforcement entities to pursue SSN misuse and other crimes involving federal pandemic relief funds including Unemployment Insurance (UI) fraud and PPP fraud.
Since the outset of the COVID-19 pandemic, SSA OIG has received over 31,740 fraud allegations referencing Pandemic-related relief programs and funds. At present, we have over 70 active investigations involving COVID-19 pandemic fraud. Our investigative efforts to date, both solely and in joint investigations with our law enforcement partners, have resulted in 32 defendants convicted, over $34 million in identified fraud loss, court-ordered restitution of over $24 million, and over $6.5 million in funds recovered.
In FY 2023, SSA OIG anticipates expending approximately $2.3 million on Pandemic-related investigative workloads and audits. Though SSA OIG has a critical role in combatting COVID-19 pandemic fraud, SSA OIG has never received dedicated funding for pandemic oversight.
These COVID-19 challenges required additional resources not accounted for in our budget and took away from resources generally devoted to our bread-and-butter investigations, such as Social Security program fraud. Nonetheless, SSA OIG continues to make data-driven decisions to prioritize these workloads. Even in Fiscal Year 2022, SSA OIG identified $15 in returns to the government for every $1 it received through its appropriation.
Further, as recommended by the Pandemic Response Accountability Committee in testimony provided to the Committee on Ways and Means and included in the recently passed H.R. 1163, Protecting Taxpayers and Victims of Unemployment Fraud Act, the extension of the statute of limitations for criminal charges or civil actions for prosecuting fraud from five to ten years means SSA OIG will continue focusing on fraudulent Unemployment Insurance payments further into the future.
SSA OIG also plays an important role in disrupting Social Security-related and other government imposter scams. For over a decade, the American public’s have been plagued by widespread robocalls and live callers impersonating government agencies to steal money or personal information, including SSN’s, from victims. At a basic level, the scams are all the same: a victim is contacted by a criminal pretending to be from a government agency, the criminal tells the victim about a problem or prize, the criminal uses specific payment methods that are difficult to track, and the criminal pressures the victim to act immediately.
These scam calls appear to originate from within the United States and, more maliciously, often “spoof” caller identification from a government or law enforcement agency. Callers may ask for personal information, demand payment, or make threats. These scams occur primarily via telephone but may also occur via misleading postal mailings, emails, internet websites, blogs, radio and television ads, and social media accounts.
These scams have caused untold anguish and financial harm, with criminals sometimes stealing hundreds of thousands of dollars from victims. In response, a team from across SSA OIG developed and implemented a multipronged approach to combat these scams, harnessing its workforce’s diverse skills and experience and collaborating with other public and private entities as a force-multiplier.
The SSA OIG’s Office of the Counsel (OC) is responsible for enforcing Section 1140 of the Social Security Act, which, in part, protects consumers from misleading SSA-related communications (including through Internet websites and scam telephone calls) may convey the false impression SSA approved, endorsed, or authorized the communication, and may lead people to provide money or PII.
Our OC educates U.S. telecommunications companies about Section 1140 and secures compliance and seeks penalties against U.S. telecommunications companies, acting as gateway carriers, who profit by accepting these scam calls into the U.S. telecommunications system and passing them to unsuspecting consumers.
OC has initiated 36 cases against gateway telecommunications companies and have imposed penalties against 16 gateway carriers. As a result, many of these companies have begun to take more proactive steps to prohibit scam calls from entering the United States or have decided to discontinue operations and/or the gateway carrier segment of their operations.
Our OC also proactively and continuously protects consumers by shutting down fraudulent SSA-related websites and social media accounts. For example, since the start of this Fiscal Year, the SSA OIG has successfully requested the removal of 20 fraudulent SSA-related social media accounts on platforms including Facebook and Pinterest. These fraudulent and imposter accounts frequently take the form of pages masquerading as official agency resources or and even agency officials. They can trick members of the public into revealing their PII to scammers. In sum, our education, investigative, and enforcement efforts have yielded meaningful results. Since fall of 2020, there has been an 87.4% decrease in SSA-related imposter allegations.
While safeguarding the public from financial fraud and scams is a daily goal, one of our major initiatives, in collaboration with SSA, is the National Slam the Scam Day. The campaign encourages the public to hang up or ignore suspicious calls or messages – in other words, to “Slam the Scam”.
On Slam the Scam Day we amplify our outreach efforts to protect the American public. This year on March 9, 2023, we marked our fourth annual National Slam the Scam Day, which brought together Federal, state, and local government agencies, nonprofit organizations, and private companies to encourage the public to hang up or ignore criminals impersonating government employees.
We appreciate the support of the United States Congress with a U.S. Senate Resolution marking National Slam the Scam Day and the Members of Congress who shared messages on social media and through press releases. This outreach expanded scam information and how your constituents can protect themselves from Social Security-related and other government imposter scams. This combined effort on Slam the Scam Day’s media coverage garnered an approximate audience of over 86 million people.
In conclusion, I want to thank the Subcommittee for inviting me today to highlight the SSA OIG’s oversight and outreach efforts in combatting and preventing the misuse of SSNs. This hearing is an important reminder to the American public we all need to remain vigilant to protect our SSNs and PII and be mindful to slam the scam.
Thank you, and I would be pleased to address any questions.
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