Centrelink is under fire for letters using the AFP's logo and language that critics say is intended to intimidate clients into updating their personal details.
The agency has sent out the letters within months of prolonged controversy over the wording of notices it sent to welfare recipients about possible "robo-debts", and after Department of Human Services officials were forced to defend them.
Letters sent to welfare recipients in late July have an AFP logo beneath Centrelink's and tell them to keep their personal details up to date, before listing a series of penalties if they commit welfare fraud, including a prison sentence and a criminal record.
"The majority of our customers do the right thing and tell us about any changes to their information. We also know that sometimes people make honest mistakes, however customers who deliberately withhold or provide false or misleading information could be committing fraud," it said.
The DHS tells clients it has established a taskforce with the AFP to detect people committing welfare fraud.
"We are sending this letter to remind you of your ongoing responsibility to keep your information up to date," it says.
A DHS spokeswoman said the taskforce had identified $28.9 million of debt owed to the government and referred 57 matters to the Commonwealth Department of Public Prosecutions.
"Taskforce Integrity isn't about prosecuting people who make genuine mistakes, it's about enforcing the law and deterring those who set out to commit welfare fraud," she said.
"A small number of people deliberately defraud the Commonwealth by claiming benefits they're not entitled to or by not informing the department when their circumstances change, which is why our fraud and compliance work is so important."
It is understood the department since 2015 has sent more than 85,000 letters with the AFP logo to welfare recipients in nine locations around the country.
Australian Council of Social Service chief executive Cassandra Goldie said Centrelink clients should not be made to feel like they were doing the wrong thing by claiming a social security payment.
"It is completely inappropriate for the government to send letters to income support recipients with the Australian Federal Police logo asking if their details are up to date," she said.
"These letters are threatening and completely disregard any mental health issue the person may have."
Opposition Human Services spokeswoman Linda Burney said the government's approach to ensuring the income security of vulnerable people was to "defer and deny".
"Whether it's the robo-debt debacle, or inserting the AFP's logo onto Centrelink letterheads, this government is only interested in victimising and harassing vulnerable Australians," she said.
The DHS started Taskforce Integrity to detect welfare fraud with the AFP in 2015 and has targeted areas it says have a higher risk of non-compliance. In July, it focused on Mirrabooka, Western Australia, Liverpool, NSW, Dandenong, Victoria and Burnie, Tasmania.
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