(Bloomberg) — California should “pause and consider” whether to continue contracting with identity-verification software vendor ID.me, the state’s nonpartisan legislative adviser recommended Tuesday, noting concerns about the company’s use of facial recognition software.
The California Legislative Analyst’s Office, providing advice on Governor Gavin Newsom’s proposal of six new deals with vendors to prevent unemployment insurance fraud, recommended withholding action on the ID.me contract. The state began working with ID.me on an automated verification service during a pandemic boom in unemployment and increased fraud in temporary federal benefits.
“Now that this critical period has passed, we recommend the Legislature pause and consider the implications of using third-party facial recognition software that has come under scrutiny in recent days,” wrote the office in an emailed summary of recent actions.
If California doesn’t continue with ID.me it would represent the end of one of the software vendor’s earliest and most significant state deals. California represented a quarter of all unemployment funds paid out in pandemic and was one of ID.me’s first five contracts. And the company’s software did help weed out fraud during the pandemic — state officials have said California actually stopped $125 billion in fraudulent claims during the pandemic, or more than six times the $20 billion in fraud it succumbed to.
But a log of complaints for California’s Employment Development Department (EDD), which signed up with ID.me in September 2020, details issues ranging from a transgender person being blocked from accessing benefits because the gender on their driver’s license didn’t match their passport to an applicant who went through ID.me’s verification process only to find their claim still on hold six weeks later. And the contract had faced scrutiny from state legislators who complained they were inundated with complaints from constituents who were unfairly flagged for fraud or unable to verify their identities using ID.me.
Read More: How Did ID.me Get Between You and Your Identity?
ID.me has faced criticism for reports that legitimate unemployment insurance applicants were tied up by its software, delaying much needed payments for weeks and months. More recently, after being awarded a contract with the Internal Revenue Service, ID.me has had to correct previous statements about its use of facial recognition software and the IRS has said it will look for alternatives.
The company has previously deflected questions about its use of facial recognition technology by saying it only uses so-called one-to-one technology. That process compares a selfie taken by a user to their likeness on a driver’s license or passport. The company disclosed last month that it actually also used much more controversial one-to-many technology to compare selfies to a bigger database of images that it collected. Research has shown that AI-driven facial recognition software often makes mistakes with darker-skinned people. That identified bias in the technology has prompted activists to call for law enforcement agencies to abandon using it altogether. The U.S. Department of Veterans Affairs is also considering dropping ID.me.
The Legislative Analyst’s Office recommended against all but one of the governor’s proposed contracts, amounting to $29.8 million in spending. That’s because the fraud California saw largely targeted the special pandemic federal unemployment insurance programs, which the group said lacked fraud safeguards that California’s regular programs have. The targeted federal program ended in 2021, making this spending unnecessary, the group said, except for one contract with Akamai that deals with preventing attacks by automated bots.
“Going forward with these proposals would prioritize fraud elimination at the expense of prompt and straightforward payments,” the group wrote.
(Corrects first paragraph of story published Feb. 15 to clarify that California was advised to “pause and consider” whether to keep contracting with ID.me.)
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