Urgent review ordered after Privacy Commissioner finds MSD misused powers while investigating benefit fraud

The Minister of Social Development has ordered an urgent review of the legal provision which allows the Ministry of Social Development (MSD) to collect information from clients and third parties, after the Privacy Commissioner found it had been systemically misusing its powers while pursuing people it suspected of benefit fraud.

Carmel Sepuloni. Source: 1 NEWS

"I've ordered an urgent review of section 11 and the practise of getting information from telcos has stopped immediately pending a review of the Code of Conduct," Carmel Sepuloni said. 

Privacy Commissioner John Edwards told TVNZ1's Breakfast that MSD requested telecommunication companies give out detailed information about MSD clients, giving an example of "text messaging information which has even included intimate photographs that a beneficiary might have sent to a sexual partner".

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Ms Sepuloni said while it was operational and immediate action had been taken by MSD, the activity "is not acceptable to our Government".

The urgent review will look at section 11, which is now known as schedule six of the Social Security Act. It allows MSD to collect information from clients and third parties, which is also included as part of fraud investigations.

Section 11 is supported by a code of conduct, which maintains information must be sought from the client first, except when it would prejudice legal proceedings. 

According to the Privacy Commissioner, MSD also failed to ask a client for information before seeking it from a third party and it was also found to have requested unnecessary and sensitive information.

MSD accepted the recommendations of the Privacy Commissioner and said changes have been made in its approach to high risk fraud investigations.

"The small number of cases we investigate using this measure are at the high end of the spectrum where there are serious, often multiple, allegations of fraud over a significant period of time, usually involving large sums of money," Viv Rickard of MSD said.

Mr Rickard said MSD's current practice was introduced publicly in 2012 in response to the Government at the time "taking a harder line on benefit fraud and speeding up investigations".

"Ninety-five percent of the time people didn’t provide the necessary information when we asked them directly, meaning we had to go to third parties anyway, delaying investigations."

"We take a prevention-first approach, using conversations with clients and data matching agreements to detect and stop anomalies early. We don’t investigate lightly,” Mr Rickard said.