Opportunities for fraud

The Guardian has reported that criminals are using Universal Credit claimants’ identities to claim the loans designed to tide people over the wait before Universal Credit payments begin.

Tens of millions of pounds have reportedly been stolen by fraudsters as a result of a universal credit scam that has left affected claimants up to £1,500 out of pocket.

The Department for Work and Pensions (DWP) is under to pressure to explain what it intends to do to counter a scam in which criminals obtain claimants’ personal details, often by posing as DWP staff, to make bogus online applications for universal credit.

Once the claim is established the scammers can apply for, and take a cut of, an advance loan of hundreds of pounds routinely offered to new claimants to get them through the minimum five-week wait for a first payment.

In other cases in which claimants’ details are obtained without consent, the first the claimant becomes aware of the scam is when they receive a letter from the DWP telling them their existing benefits have been cancelled, their universal credit claim has opened and they must repay the advance loan.

Paul Spicker has commented in an article, ‘Universal Credit and a pattern of fraud‘:

It should have been obvious from the outset that computer-based identification wouldn’t be sufficiently secure for the purposes of the DWP.  There was something close to an admission of this more than  three years ago, when Verify, the successor to the failed “Identity Assurance”, was cut adrift.  But the problem is not only down to poor tech.  The situation has been produced by a system that relied on online verification, rather than claims in person; that left claimants without resources for well over a month; and replaced a system capable of processing the vast majority of claims within 14 days with one that struggled to do it in six weeks, and sometimes could take as long as three months.   Universal Credit is error-prone by design.  Its vulnerability to deception is only a part of that.

An interesting question is the extent to which Citizen’s Basic Income would be open to such fraud. There would be no waiting periods, no short-term loans, and no variations in payments (apart from annual upratings, and age-related changes to the amounts paid). So all that would be required to prevent fraud would be to ensure that each person should receive only one Citizen’s Basic Income, and that their age should be accurately recorded. If receipt of Citizen’s Basic Income were to be triggered by Child Benefit ceasing, then fraud would only be possible if someone were to receive two identifies at birth.