Fighting fraud is an interesting challenge. When an organization shuts down a fraud scheme, bad actors don’t suddenly become good citizens. Rather, they evolve. They evolve by designing and testing new methods that, when they succeed, are exploited until they too are detected and shut down. In fact, many of the more enterprising fraudsters proactively try out new methods to avoid any “breaks in revenue”. This constant game of “whack-a-mole” is well known to program integrity staffs.
This ever-changing nature of fraud schemes demands an ever-changing detection system. If an organization’s fraud detection methods look more or less the same as they did the year before, I can almost guarantee you that their fraud rates have returned to the levels prior to the introduction of the detection systems. Bad actors will simply find another way to conduct their business.
For these reasons, it is important to be nimble in fighting fraud. Complex technologies and massive data warehouses will lose effectiveness over time. If it takes a year to negotiate a change order, to deploy new technologies, or to integrate new data sources, literally billions of dollars in improper payments can be lost. The trick is to stay even with or just a “step” behind the bad actors, not miles behind.
While all state agencies want to choose the right partner to help them with their fraud detection efforts, I would challenge them to ask themselves the following questions: How easy is the company to work with? How willing will they be to incorporate new technologies (even if not their own)? How important is fighting government fraud to their company versus everything else they do? How passionate are they about the problem? Honest answers to these questions will reveal a lot about the future success of your efforts.