The Social Security Administration is changing its policy of holding benefit claims made over the phone for three days to check for fraud, a protocol that was causing processing slowdowns and a “degradation of public service,” according to an internal document, even as the agency found hardly any fraud.
The move follows reporting by Nextgov/FCW that the anti-fraud checks set up last month had slowed retirement claim processing by 25% and found only two claims filed over the phone — out of over 110,000 — that had a high probability of being fraudulent.
The three-day hold applied to retirement, survivors and auxiliary claims filed over the phone, in order to run the fraud detection tool.
Now, the agency is removing that three-day hold, effective Saturday, according to a Thursday afternoon email obtained by Nextgov/FCW. Lump-sum death payment and children benefits applications taken over the phone were also being held for three days, but no longer will be, according to that email. SSA did not respond to a request for comment on the email.
The agency is continuing to “refine the anti-fraud algorithm to flag only claims with the highest probability of fraud,” a spokesperson told Nextgov/FCW Thursday evening. Less than 1% of the over 110,000 calls that have come in since the policy was put in place were flagged as even potentially fraudulent.
“Continuous improvements will ensure timely processing of claims while protecting beneficiaries from fraud,” the spokesperson said.
As part of the policy — which SSA announced in April after Elon Musk, President Donald Trump and Vice President JD Vance repeated various false claims about the prevalence of Social Security fraud — SSA requires people deemed suspicious to go in-person to an office to prove their identity.
Initially, the anti-fraud algorithm was being run against all phone claims, but SSA later narrowed it to only retirement, survivors and auxiliary claims — not disability claims — after internal pushback, two employees previously told Nextgov/FCW.
The agency has also made various changes to people’s ability to modify direct deposit information over the phone since March.
The latest reversal of the three-day hold, however, is specific to claims made over the phone, not when people call to change their bank information. SSA still has some anti-fraud provisions in place that were introduced this spring for direct deposit changes made over the phone.
SSA has seen an “increase in allegations of Direct Deposit fraud” since 2023, and new fraud prevention tools have flagged over 20,000 Social Security numbers between March 29 and April 26 where a change was requested over the phone, but failed a security measure, the spokesperson said.
It’s not exactly clear if those flagged, however, were actual fraudsters or just real people that gave up.
The SSA spokesperson said the agency has saved an estimated $19.9 million from the direct deposit anti-fraud tools, which deter fraudsters from trying to game the system. Up to 72% of people whose transactions were flagged didn’t resubmit their requests, “a strong indicator that many attempts may not have been legitimate,” they added.
Direct deposit fraud and claims fraud are generally regarded as two different problems within SSA, according to two current employees, although the agency’s former acting commissioner, Leland Dudek, also pointed to the 20,000 attempts flagged by new tools across both direct deposit and first time claims made on the phone or over the internet in a statement provided to Nextgov/FCW on Thursday.
SSA’s watchdog did recommend that the agency improve its security controls for direct deposit changes in 2012, but big picture, direct deposit fraud represents a fraction of a percent of the total money SSA doles out to beneficiaries annually. SSA also had anti-fraud work ongoing prior to the Trump administration, one current employee noted.
And fraud overall only accounts for a sliver of the so-called “improper payments” the agency makes every year — which themselves are only 0.3% of old-age, survivor and disability insurance payments — a category that also includes when the government makes a mistake, not the claimant.
