Preventing fraud against our nation’s Veterans

In 2024, the federal government spent about $326 billion—roughly 5% of its overall budget—on Veteran program support, with approximately $200 billion spent on Veterans’ benefits. As these costs continue to rise, the need to combat fraud within the U.S. Department of Veterans Affairs (VA) becomes even more critical. 

While AI is helping VA better protect Veteran data, it’s also making it easier for bad actors to evade detection and divert much-needed funds away from Veterans who’ve earned them. VA faces a heightened risk of fraud because of its broad portfolio of benefits, including income security, disability, education, pension, and housing. For VA and the Veterans it serves, fraud is more than just a financial loss—it can directly impact Veterans’ health, well-being, and quality of life.  

Like many benefits programs, the VA Veteran benefit lifecycle is long with many entry points, so maintaining its integrity can be a significant challenge. Fraudsters exploit disconnected decisions across identity proofing, eligibility, service access, payment, account changes, survivor transactions, and more. The most effective response isn’t a collection of isolated controls but rather an integrated approach that connects identity, entitlement, payment integrity, and operational response across the full Veteran journey. 

Key fraud prevention tactics at each stage 

The benefits lifecycle can be broken down into three phases: establishing identity and eligibility, receiving benefits, and end-of-life and survivor transitions. Because bad actors exploit gaps between disconnected decisions across the lifecycle, agencies must design for continuity by linking potential fraud signals across every stage. 

Phase 1: Eligibility and enrollment 

Service members can begin to engage with VA even before they leave the military. Some start disability claims or submit qualifications for housing or education benefits before discharge, while others first apply after separation from the military using discharge documentation like a Department of Defense-issued DD214. Some Veterans may be required to submit a disability benefits questionnaire (DBQ), which is used to gather specific medical evidence for claims. Bad actors use stolen identities, submit counterfeit forms, or fabricate evidence to gain illegitimate access to benefits. Because identity and benefit access are established through multiple entry points, early trust decisions must be accurate and consistent. 

How to prevent fraud 

Strengthen identity assurance at enrollment. Early-stage controls should verify that the applicant is the legitimate Veteran or authorized beneficiary through strong identity proofing, authentication, and device or behavioral risk checks where appropriate. Login.gov doesn’t verify a Veteran’s eligibility, but its rigorous identity verification processes and mandatory multi-factor authentication are a critical step in safeguarding Veterans against identity fraud. 

Validate eligibility using authoritative third-party and cross-agency data. Programs should confirm service history, benefit eligibility, and supporting attributes against trusted data sources rather than relying solely on submitted information. For example, third-party verification tools can crosscheck employment or income information to help identify conflicting data. 

Authenticate key documents and detect manipulated evidence. High-impact forms like the DD214, DBQs, and other supporting records should be checked for authenticity, consistency, and signs of alteration, including comparison against authoritative sources like the Department of Defense when available. AI can scan DBQs and flag medical evidence that may be exaggerated or invented—a capability that VA is expected to roll out in FY2026.

Apply consistent trust decisions across entry points. Because benefits may be accessed through multiple channels and programs, agencies should connect identity and risk signals so that conflicting information or suspicious patterns are visible across the lifecycle. 

Phase 2: Receiving benefits 

Once benefits are active, the risk shifts from initial eligibility to ongoing payment and account integrity. Recurring compensation, pension, housing, education, and medical-related benefits create a high-value target for bad actors seeking to hijack legitimate payments, manipulate account details, or exploit service channels through impersonation and social engineering. 

As the largest pool of funds paid out in benefits, compensation payments may be the most important to focus on for fraud. Payment redirect fraud poses a significant risk—when bad actors attempt to hijack benefit payments and redirect them to their own accounts. Veterans may qualify for additional services and payments, including education, housing disability, pension, and medical—all of which are susceptible to fraud.  

Processes such as changing an address, updating bank account information, adding or removing dependents, or filing renewals and appeals can appear routine, but they’re often among the most sensitive moments in the lifecycle. When identity signals, account ownership, or behavioral patterns aren’t validated carefully, these touchpoints can become opportunities for payment redirect fraud or account takeover. 

With so much personal data available on the dark web, VA is at risk for handing over access to bad actors who supply seemingly accurate information through social engineering—leaving Veterans without their benefits. 

How to prevent fraud 

Validate account ownership before payments are established or redirected. VA currently requires that most benefit payments be made electronically through direct deposit to a bank account. Third-party and financial-institution data can help confirm that a bank account belongs to the authorized recipient and flag unusual ownership patterns before funds are disbursed.  

Use a people, process, and technology framework to apply stronger controls to maintenance events. Changes to addresses, bank accounts, dependents, and appeals shouldn’t be treated as routine administrative updates. Offer continuous training for call center staff on how to recognize fraud warning signs, create processes and controls that prevent fraudulent changes, and implement technology that can recognize fraudulent changes and suspicious patterns such as multiple deposits for unrelated Veterans into the same account. 

Strengthen identity verification in service channels. As the VA notes, one to two out of 1,000 electronic fund transfers are fraudulent changes requested by bad actors attempting to steal Veterans’ benefit payments. Digital and assisted channels should use robust authentication and anti-impersonation controls to reduce the effectiveness of social engineering attempts. The department recently began using an AI-powered payment redirect fraud model to identify potentially fraudulent changes and take action. 

Phase 3: End-of-life and survivor transition 

End-of-life claims and benefit transitions are among the most sensitive and consequential moments in the Veteran benefits lifecycle. They’re among the highest payments disbursed, most time-sensitive, and most difficult to recover once disbursed. When death information is delayed, incomplete, or not shared across systems quickly enough, agencies face a dual risk. Improper payments may continue, and surviving family members may encounter added friction when trying to access benefits that they’re entitled to receive. 

A death event doesn’t simply close the lifecycle, either. In many cases, it initiates a new one, with surviving spouses or family members needing to establish identity, confirm eligibility, and navigate a new claims or benefits process. That makes end-of-life and survivor transition not just a payment integrity issue but a continuity-of-trust issue across the broader benefits ecosystem. 

How to prevent fraud 

Accelerate death-data matching and cross-agency notification. Monitoring authoritative death data can reduce the lag between a death event and benefit-system action. Data solutions like Guidehouse’s VitalAudit® can quickly and thoroughly search through the Social Security Death Master File and other third-party sources to identify deaths more quickly. By crawling third-party sources, VitalAudit covers 98% of deaths compared to just 15% reflected in the Social Security Death Master File (DMF)—and typically identifies records within 10 days, versus up to 30 days for the DMF.

Treat end-of-life events as high-risk payment integrity moments. Once a death is identified or suspected, payments, account activity, and recent changes should be reviewed quickly to reduce the risk of improper disbursements. 

Coordinate survivor transitions across identity and eligibility workflows. Because a death event may trigger a new benefits journey for surviving family members, agencies should connect fraud controls with compassionate, low-friction processes for legitimate survivors. 

Use targeted analytics to detect post-death anomalies. Monitoring should focus on continued account access, payment redirection, suspicious account changes, or claims activity that occurs after death records emerge. 

Balance speed, accuracy, and dignity in operational response. Controls should help agencies act quickly on risk without creating unnecessary burdens for grieving families seeking rightful support. 

Closing gaps across the VA benefits lifecycle 

Fraud targeting Veteran benefits isn’t confined to a single claim, payment, or administrative action. It emerges across a connected lifecycle of identity, eligibility, access, account maintenance, and survivor transition—often in the gaps between systems, workflows, and trust decisions. 

An effective lifecycle approach helps reduce improper payments, detect risk earlier, and protect public resources without creating unnecessary barriers. For agencies like VA, the challenge isn’t simply to catch more fraud. It’s to embed trust, continuity, and resilience into every stage of the benefits lifecycle so that Veterans and their families receive the support they’ve earned.