South Korea uncovered more than 14.61 billion won ($10.5 million) in fraudulent claims last year by social service providers that kept users' voucher cards and billed the government at their own discretion. To stop such practices, the government will add location verification to the payment process. It will also toughen penalties, including revoking the license of providers caught filing false claims twice.
The Ministry of Health and Welfare announced the measures, titled a plan to strengthen management of social service e-voucher fraud, on the 16th. The e-voucher program subsidizes the cost of care and rehabilitation services such as personal assistance for people with disabilities and developmental rehabilitation. Users pay with an issued card, and provider organizations receive the money.
The government acted because the scale of fraud is growing quickly. Detected fraud totaled 47.88 billion won last year, 6.5 times the 7.34 billion won recorded in 2021. The number of cases over the same period rose 3.7-fold, to 941,905 from 252,490. That far outpaces the 73.3% increase in the program's budget, which grew to 5.2 trillion won from 3 trillion won.
The largest category by amount involved provider organizations that kept users' cards and made payments at their own discretion, reaching 14.61 billion won last year alone. Cases of billing without providing any service came to 6.32 billion won. By program, fraud in personal assistance for people with disabilities accounted for 34.64 billion won, or 72.4% of the total.
The government will now block abuse at the payment stage. By the end of 2027, it will develop a function in the e-voucher app that compares the locations of the user and the service worker. With consent from both sides, the system will check location data and withhold payment if the two are in different places. The feature will be phased in according to field conditions once the system is built. Payment methods requiring user approval, such as QR codes and fingerprint authentication, will also be expanded to all 13 programs.
Penalties imposed after the fact will become stricter. Under the revised standard, authorities will be able to revoke a provider's license after two cases of false billing, down from three violations previously. The window for counting repeat violations will be extended to five years from two, keeping past cases on the record longer. Fines will be raised to as much as five times the amount wrongfully claimed. The government plans to revise the relevant presidential decree and enforcement rules by the end of the year.
The detection system will also be overhauled. The accuracy of the current artificial intelligence-based fraud detection system, or FDS, stands at about 63.5%. The government will upgrade the technology by next year and begin sharing suspicious payment records with local governments on an ongoing basis from July. Staffing and budgets for on-site inspections will be increased. The ministry believes fraud spread because the nature of home-visit services makes it hard to confirm whether a service was actually used, and because investigative capacity has been insufficient.
Management of the recovery process after detection will also be tightened. The government plans to conduct periodic checks on the steps from a local government's clawback decision through final collection. It is also considering imposing surcharges on organizations that fail to pay fines and other penalties.
