Since the early days of Covid-19, South Africa has experienced a slew of fraud crimes from the most unexpected fraudsters.
As people have been struggling to make ends meet during the pandemic, many have turned to fraudulent activity as a means of making a quick buck. Now, not only should businesses be on the lookout for criminals using cyber gateways to access personal information, but they should also implement a stringent fraud prevention strategy to effectively monitor everyday consumers.
One sector that has been struck by rising consumer fraud trends is the medical aid industry. Service providers, such as dispensaries, hospitals and GP’s, in this industry are frequently exposed to misrepresented member information in recent times – an act of fraud that has caused a ripple effect of expenses that continue to affect members and providers alike.
Common medical aid fraud
Past trends in the medical industry showed internal employees of providers as leading perpetrators of fraud; however, in recent times, members have become an even bigger threat to the industry, and service providers are sorely unprepared.
Fraudulent activities in this sector range from falsified claims, stolen medical aid cards, and dual memberships, to what some view as ‘minor’ acts such as choosing not to disclose a medical condition, submitting false invoices, or performing membership substitutions – members give their medical aid cards to individuals who aren’t registered. However, when looking at the bigger picture, fraud can never be considered ‘minor’ as every omission or misrepresentation of crucial information allows members to wrongfully claim their benefits.
Large, well-known franchise dispensaries have amplified the vulnerabilities of medical aid providers to fraud like identity theft, by disregarding the need to verify identities when members present their club/store cards. This has opened the doors for individuals to use stolen or shared club/store cards to charge medication to the members’ medical savings account. Without the appropriate fraud risk management procedures in place, the effects of membership fraud can become detrimental to both members and providers.
The consequences of medical aid fraud
Medical aid members involved in fraudulent activities often do not understand the repercussions of their actions. They do not realise that every act that they commit compromises their medical aid benefits in the future due to the faster depletion of their medical savings accounts and yearly benefits, as well as its grander effect on their scheme, which has to increase premiums for all scheme members to cover the cost of fraud. Medical aid schemes are suffering major financial losses related to fraud including the costs of fraud investigations, legal fees, and a loss of income due to reputational damage. Unfortunately, some service providers in this industry are well aware of the damage this fraud is doing to others, but they still aren’t taking the necessary precautions to avoid these situations. If all providers could enforce an effective fraud prevention strategy with secure authentication solutions, they could streamline their processes and actively safeguard the industry against these losses.
How businesses can protect themselves
Businesses in every industry should be concerned with protecting themselves against rising fraud threats, and service providers in the medical industry are no exception. It is in their best interest to accurately verify customer information before every transaction to ensure safe and seamless client-business interactions.
Taking into consideration a few of the most common types of fraud that service providers are exposed to, the ideal first step against these acts is to put digital Know Your Customer (KYC) solutions into practice. Providers – including dispensaries and hospitals – can effectively counter the risks of stolen or borrowed cards by using fingerprint recognition biometrics and digital Identity Verification Services (IVS) to authenticate members on the spot. These real-time solutions allow service providers to gain access to member identity information in an instant without the need for their identity documents.