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The House Oversight Committee says ID.me made baseless claims about the need for its software

Newly released findings from the Subcommittee on the Coronavirus Crisis and the Committee on Oversight and Reform say that the identity tech company was dishonest about its wait time estimates and the potential for fraud to make its services seem more valuable.
Update: This article has been updated to incorporate post-publication comments provided by Terry Neal, ID.me's chief communications officer, as well as language from a LinkedIn post by CEO Blake Hall. (11/17/22, 6:19 p.m.)
McLean, Virginia identity tech company ID.me is once again facing scrutiny from the federal government over its work on federal contracts.

Today, the House Subcommittee on the Coronavirus Crisis and the Committee on Oversight and Reform dropped new findings saying that the tech company “inaccurately overstated” its abilities in identity verification for the Internal Revenue Service (IRS). In other words, the company wasn’t exactly upfront about how long people filing claims for pandemic relief with state-level agencies using the software would have to wait. The statement also said that the company’s claims about the amount of federal funds lost to fraud were completely baseless, overstating ID.me’s importance and increasing demand for its product.

These rather damning findings are the result of an investigation the Oversight Committee called for in April after a deal between ID.me and the IRS prompted many concerns about the privacy of its tech. The IRS said it would stop using the company for new accounts in the following weeks.

Coronavirus Committee Chair Rep. James Clyburn said in a statement that in the early days of the pandemic, the government was hard at work trying to get unemployment benefits to Americans in need. ID.me’s false claims about its wait times, he said, may have hurt those seeking benefits.

“It is deeply disappointing that a company that received tens of millions in taxpayer dollars to help Americans obtain these benefits may have hurt their ability to access that critical relief,” Clyburn said. “ID.me’s practices risked putting desperately needed relief out of reach for Americans who lack ready access to computers, smartphones or the internet. Companies entrusted with implementing critical programs in a national crisis must be able to serve the needs of the people those programs are intended to benefit.”

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Here’s how it all apparently went down at the time: The company had contracted with at least 25 state agencies and received $45 million for its verification services. ID.me sent about 10 to 15% of users to verify their identity with its video chat service, which was those who couldn’t be identified with its facial recognition technology. All in all, given that 22 million people lost their jobs at the height of the pandemic — and that ID.me was serving about half the country — that means a few-hundred-thousand people were likely redirected to this video verification service.

In 14 of the 25 states, wait times for the video chat service were over four hours on average in April 2021 (this is according to ID.me’s own data). North Dakota’s was nearly 10 hours and Washington state was averaging about six. Meanwhile, in New Jersey, users only had to wait about six minutes, but the state was also working with another company that let users verify their identity in person.

However, according to meeting minutes from ID.me obtained by the committee, at an April 2021 meeting with ID.me leadership and IRS officials, the tech company said that wait times were only about two hours. Going off the inaccurate two-hour information, the IRS chose to contract again with ID.me for its verification service to help implement the Child Tax Credit.

Oversight Committee Chairwoman Rep. Carolyn Maloney said in a statement that in some cases, the company removed customer service accommodations, making it harder for people to receive the aid they needed.

“The Committees’ investigation uncovered appalling new information about how ID.me’s identity verification services delayed benefits for Americans when they needed them most…” Maloney said. “I am also deeply concerned about ID.me providing inaccurate information to federal agencies in order to be awarded millions of dollars in contracts. The Oversight Committee will continue to review the federal government’s use of identity verification services to ensure that Americans’ sensitive information is protected and that everyone can access the government services to which they are entitled.”

In June of 2021, ID.me CEO Blake Hall said that thanks to fraud in pandemic relief, the US had lost about $400 billion in false unemployment benefits, further asserting the need for its services. But the committee said that the company couldn’t provide any methodology for its arrival at that number. According to the committee’s statement, the Department of Labor’s Office of Inspector General had found about $45.7 billion in potential fraud — almost ten times less than what ID.me claimed. That number is also three times higher than the department’s overall estimate of all improper payments in unemployment.

ID.me told the committees that it got its number from “public statements by state and federal officials responsible for administering and overseeing UI programs, estimates put forward by third-party analysts assisting state governments in detecting potential fraud, and the company’s own observations.” It also cited an estimate from the Heritage Foundation for $357 billion — a number that actually referred back to ID.me’s own assessment from June.

ID.me’s Chief Communications Officer Terry Neal reiterated the Heritage Foundation estimate in a nearly-three-page statement, sent to Technical.ly by Rob Van Raaphorst of the public relations firm Rational360, that also cited a mix of state government publications and media reports to qualify ID.me’s $400 billion estimate.

Calling ID.me’s estimate too high or baseless is premature, and we welcome continued investigation into this important matter,” Neal said in the statement, in which he also blamed the long wait times on the “unprecedented” number of people trying to obtain unemployment benefits during the pandemic. 

More than 80 percent of users verify their identity using a self-serve pathway, typically in under 10 minutes,” he asserted. “Those that required a live agent faced long wait times because of this massive volume, the impact of COVID and the lack of modern technology in state governments. To prepare for any such emergencies in the future, ID.me has invested in personnel and technology to address volume surges.”

Van Raaphorst also pointed to Hall’s LinkedIn statement, in which the CEO said that the House Oversight committee “inaccurately accused me of using a claim about fraud to win unemployment identity verification contracts.”

“As a combat platoon leader and soldier in Iraq who risked my life serving the United States of America, I would never use a claim about a national crisis to advance the interests of my company,” Hall said. “My loyalty to my country supersedes my loyalty to my company. We welcome additional oversight on this important matter so Americans have a full accounting of what happened to pandemic benefit funds.”

Companies: ID.me, Congress
People: Blake Hall
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