The Data Privacy Loophole Federal Agencies Are Still Missing

Why knowledge-based authentication is leaving federal contact centers vulnerable to an increasingly sophisticated hacker community.

Scott Straub, Public Sector Lead of Federal Risk Markets, Neustar, Inc

July 21, 2020

4 Min Read

The eyes of the general public are firmly trained on data privacy issues. From fears over the security of the social media giants right through to daily call center interactions, data privacy — or lack thereof — is the defining vulnerability that hangs over many federal agencies as they look for ways to secure customers' data. While customers have grown accustomed to seeing headlines about the latest social media or corporate data breach, sensitive and personal information contained within federal government agency databases may be the most vulnerable.

Privacy regulations, largely on the state level, have been focused on preventing future data breaches, limiting how customer data is collected and used, and, more recently, inviting customers to request their personal data be returned to them — with the California Consumer Privacy Act (CCPA) leading the charge. On the federal level, the IRS has led in addressing identity-based tax refund fraud while the Department of Veterans Affairs has begun prioritizing the "veteran experience" by more efficiently managing its trove of personal data.

These good intentions miss half the battle. With a deep trove of breached personal information already exposed and available to bad actors, the genie can't be put back into the bottle, as revealed last fall by a Pew study of public concerns about the widespread availability of this information.

The solution is to deweaponize personal information — make all breached personally identifiable information (PII) useless for gaining account access anywhere. Why then, are so many government agencies, as noted in this 2019 US Senate report, still authenticating customers for account access with the very information that's already compromised?

Ever since the global phone network connected to the Internet in 2003, criminals have been spoofing phone numbers and impersonating customers. In response, call centers started to challenge callers with knowledge-based authentication (KBA), relying on personalized questions to protected customer data and allowing them to be identified in a relatively straightforward and efficient manner. However, years of data hacks and customers readily divulging private details has made this information public and no longer sufficient for authenticating an identity.

Increased Government KBA means Frustrated Callers
One of the most immediate risks to customer data privacy on the federal level lies in an over-reliance on knowledge-based authentication across a number of government agencies. [Editor's note: The author's company provides inbound authentication solutions that address the challenges/risks associated with KBA, as do other vendors.] Fraudsters are increasingly targeting federal agencies, looking for customer PII that can later help them gain fraudulent access to victims' financial, healthcare, or government accounts. While confidence in KBA is waning every day in the private sector, the response some major government agencies are taking is to simply increase the number of questions, along with their complexity and intrusiveness. The result is frustrated callers. When it comes to authentication, it's time for an upgrade in the federal technology space.

Authentication should be performed using multiple factors without overreliance on the asking of questions. That means using factors such as ownership and possession of a unique device (such as a trusted phone) or identification cards combined with a biometric factor such as a voiceprint or fingerprint. New technologies — including ones that use customers' smartphones as physical ownership-based authentication tokens — can achieve significantly more accurate authentication and improve the effectiveness of fraud-fighting efforts. Modern authentication approaches offer agencies improved customer satisfaction, faster call resolution, increased interactive voice response (IVR) containment, and reduced fraud risk.

To achieve a call experience on par with the private sector — seamless caller authentication, even before the call is answered and with no identity interrogation — an organization must reduce fraud attempts targeting the contact center and allow resource reprioritization where the customer spends more time within the interactive voice-response software, allowing the agency to shift resources from low-value to high-value work. As a result, operational efficiencies and cost savings are enhanced because the call can be better routed to the best customer service and overall handle times will decrease. The benefits are apparent. The challenge lies in the tendencies of customer-service federal agencies to stagnate and lag when it comes to tech adoption.

Regardless of which road a federal agency takes in 2020 when it comes to data privacy, it's become clear in the fed tech community that KBA is a relic, one that leaves contact centers vulnerable to an increasingly sophisticated hacker community. Let's leave behind our loophole-riddled systems of the past and equip the federal government with the best methods available to protect the data of federal customers. Criminals are constantly evolving their tactics; the institutions protecting customer accounts should too.

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About the Author(s)

Scott Straub

Public Sector Lead of Federal Risk Markets, Neustar, Inc

Scott is responsible for developing data-driven solutions for governments in their fraud, waste and abuse prevention programs. Prior to joining Neustar, Scott was the Director of Federal Market Strategy at LexisNexis Risk Solutions where he invented several identity-based products and holds patents in products that have stopped over $500 million in government identity fraud.  Scott was also employed at the Bureau of Fiscal Service (BFS), a bureau of the US Treasury where he drafted strategic plans for multiple business units, implemented industry best practices in the collection processes of delinquent debt owed to the federal government by creating an Analytics Division.

Scott holds a masters in finance and a graduate certificate in investments from the Carey Business School at Johns Hopkins University.

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