The Ministry of Social Development is reviewing how it investigates the most serious allegations of benefit fraud.
In the most serious fraud cases the ministry would generally go to third parties to get information and documents before informing the person being investigated. Photo: RNZ/ Rebekah Parsons-King
The Privacy Commissioner and beneficiary advocates have raised concerns about the way investigators gather information, saying some of the tactics could breach people's privacy.
In the most serious fraud cases, the ministry said its investigators would generally go to third parties to get information and documents before telling someone they are being investigated.
The ministry has the power to do this under the Social Security Act.
Deputy chief executive Viv Rickard said the Privacy Commissioner was consulted about it when the practice began in 2012.
"The practice was made public at the time, and was introduced as part of a range of anti-fraud reforms that were a key focus of the government of the time.
"This change was introduced because approaching people directly for information first was delaying investigations, and only yielded the information requested in five percent of cases."
But Ricardo Menendez March from Auckland Action Against Poverty said they have been worried for some time about the practice.
Ricardo Menendez March of Auckland Action Against Poverty Photo: Supplied
"People only find out they're being investigated for fraud when and acquaintance or a family member notifies them that somebody from MSD popped by," he said.
Those friends and acquaintances were also being asked for very private information.
"It could be about their sex lives or other really sensitive issues," Mr Menendez March said.
"It can be really traumatising and life-destroying for the person being investigated to find out that a government agency has been prying into their sex lives without even letting them know or giving them fair process of natural justice."
The ministry said it would work with the Privacy Commissioner and beneficiary advocates on how to balance people's privacy with its responsibility to investigate benefit fraud allegations.
The Child Poverty Action Group has criticised the way MSD gathers information through its tip-off line.
"The watchdog approach that MSD encourages of the public fosters a culture of mistrust and discrimination against beneficiaries, especially sole parents who attempt to repartner," spokesperson Jeni Cartwright said.
"It is not helpful to any parent who is already experiencing the stress of being stigmatised for their circumstances, meanwhile trying to feed a family on a lower than adequate income, to have the added anxiety of wondering if their neighbour or ex might dob them in for spending time with another adult."
Ms Cartwright said some fraud investigations may lead to prosecutions that could have lifelong impacts for low-income people and their children, and crippling debt.
"Our systems have contributed towards a damaging culture of punishing those who most need help.
"Critical changes are needed so that we are pulling people up, not pushing them down."
Figures released by the ministry show that half the beneficiaries investigated for fraud have to answer questions about their relationship status.
In the 2016/17 year close to 6000 fraud investigations were completed.
About half the investigations closed in that same year involved questions about relationship status.
However, of the total number of investigations completed, overpayments were established in just 1800 cases.
There were only 431 successful prosecutions.