Washington can’t afford to keep chasing digital ghosts

A student who doesn’t exist receives financial aid. An imposter bills Medicare using the identity of a patient who never received care. A fake landlord collects a deposit on an apartment they don’t own. An overseas operative uses a stolen identity to get hired by an American company.

These are different parts of the same booming business: turning stolen and fabricated identities into real money.

In this Ghost Economy, everyone pays a price. 

Victims lose money and spend months reclaiming their identities. Businesses and government agencies spend enormous resources investigating fraud. Consumers can face higher prices and fees. Burdensome security checks can delay or deny help to people who qualify. Over time, these failures weaken trust in the services people rely on.

Today, the investigations and crackdowns into these schemes are piecemeal, with different agencies and law enforcement bodies pursuing individual cases rather than mounting a coordinated response. 

The reality is that fraudsters exploit a common weakness: outdated digital identity verification systems that treat knowing someone’s personal information as proof of being that person. Washington has a choice: It can keep chasing ghosts after the money disappears, or close the gaps that let criminals cash in.

As AI makes impersonation easier and scalable, the Ghost Economy will continue to grow, infiltrating student aid, medical systems, housing, safety-net programs, financial systems, company payrolls, and more. We could even see ghost AI agents impersonating authorized assistants to access accounts, move money and obtain sensitive information without the knowledge or consent of the people they claim to represent.

Shutting down this ghost economy requires more than better fraud tools. The public and private sectors must work together, using all the levers at our disposal, to get in front and stop fraudsters and bad actors from making a profit off of unsuspecting agencies, organizations, institutions, and people.

For leaders in Washington, this means developing and executing a coordinated national digital identity strategy. This starts with three things:

First, make digital identity a national priority and fund it. A national strategy should establish common standards for verifying identities, protecting personal information and ensuring people can access the services they need. Congress must give agencies the funding and staff to meet those standards, including replacing outdated systems and training workers to recognize emerging threats. Agencies and their vendors should be judged on both the fraud they prevent and their ability to serve legitimate applicants.

Second, help institutions spot fraud before the money is gone. Agencies and businesses need to be able to connect the dots before money disappears. A criminal network can target several institutions at once, while each sees only a handful of suspicious accounts. Congress should make it easier to share confirmed fraud signals quickly. Protection also needs to continue after an account is opened. A verified account can be stolen, its payment details changed and its funds redirected. Agencies should apply additional checks before it’s too late. 

Third, extend identity checks beyond people to AI agents acting on our behalf. More and more, people are exploring how AI agents can act on their behalf. This will soon translate into government interactions, from applying for unemployment to disaster assistance to other forms of benefits. Government must prepare now for an influx of AI agents, and how they will be verified. 

That starts with Congress supporting NIST’s work with industry to establish how AI agents identify themselves and prove they have permission to act. Agencies should require those protections in the tools they buy. Companies should make it easy for people to control what agents can do, cancel that permission and see what was done on their behalf. If an agent acts without permission, people need a straightforward way to recover their losses.

Every dollar the Ghost Economy steals comes from someone: a family, a business or taxpayers. The longer policymakers in Washington wait, the more ghosts will appear and the more Americans will pay.

Jordan Burris is a digital identity expert, the head of public sector at Socure and a former chief of staff to the White House CIO.