Netherlands childcare benefits fraud assessments automation
The Netherlands' childcare benefits scandal (kinderopvangtoeslagaffaire, or toeslagenaffaire) was a controversial scheme that automated the assessment and payment of childcare benefits by creating risk profiles of citizens and predicting the likelihood of their committing fraud.
Termed (pdf) an 'unheard-of injustice' by a parliamentary inquiry, the system led to false accusations of fraud by the country's Tax and Customs Administration levelled at approximately 26,000 families. The accusations resulted in deep mental stress for many of those involved, financial ruination, and suicide, with over a thousand children having to be taken into foster care.
Racial profiling, discrimination
The scheme's shortcomings and failures had been exposed many times before the parliamentary inquiry. Examples of fraud against the system had emerged soon after its launch in 2013, closely followed by cases involving suspected fraud, a number of which proved unfounded.
Substantive allegations of racial and ethnic profiling were levied by broadcaster RTL Nieuws and the Trouw newspaper in September 2018. Dual nationality and low income seen as major risk indicators, as was having a 'non-western appearance'.
In 2020, it was revealed that the tax authorities had kept secret blacklists of potential fraudsters for two decades. Being on the blacklist resulted in a higher risk score in the childcare benefits system.
These allegations led to a damning Dutch Data Protection Authority report which found the system 'unlawful, discriminatory and improper', and a parliamentary inquiry.
The government promised to reimburse each family EUR 30,000, only for the tax authority to demand much of it back in taxes. Eventually, the government cancelled the debts of those families impacted.
Welfare seekers were not informed about the system, and had little scope to complain or appeal decisions. External parties such as researchers, journalists or investigators were not permitted to inspect it.
Operator: Tax and Customs Administration; Ministry of Social Affairs & Employment
Developer: Tax and Customs Administration; Ministry of Social Affairs & Employment
Sector: Govt - tax; Govt - welfare
Purpose: Detect compliance errors; Detect fraud; Assess & classify risk
Technology: Risk assessment/classification algorithm
Issue: Accuracy/reliability; Bias/discrimination - race, nationality; Privacy
Transparency: Governance; Complaints/appeals; Black box
Published: January 2021
Last updated: September 2023