The federal government has already found myriad uses for big data, including balancing the budget and improving social programs. But according to Banktech, another purpose for analytics has been put under Washington's microscope - by examining more data and looking for trends, the government can prevent identity theft and fraud.
The news source explained that credit card theft is one of the biggest financial problems facing Americans today. It affects a number of entities besides cardholders themselves, including retail banks, credit card lenders and investment firms. All of them have an interest in preventing fraud. Citing data from the Consumer Sentinel Network and the U.S. Department of Justice, Banktech pointed out that credit card fraud makes up 40 percent of total instances of fraud in the United States.
If the government had more data, it could sniff out instances of fraud right away. By examining individuals' budgetary tendencies, agencies can paint a clear picture of each person's habits with spending - when, how often, how much. If any fishy expenditure comes up, the government can act quickly to crack down on perpetrators of fraud.
This initiative could be tremendously successful, but a couple of things have to happen first. First, government organizations have to be aware of the regulatory environments around them. Data collection has tremendous power, but laws govern how much information the government can gather, and how invasive their methods are for gathering it.
The other prerequisite is data quality. If the government has accurate information about individuals' spending habits, it can act quickly to eliminate fraud cases. But if there's even the slightest imperfection in people's financial records, it could lead to mistaken accusations and messy legal action.
Data has the potential to make Americans safer financially, but that data must be as pure as possible.