A beneficiary advocacy group says a crackdown on welfare fraud could put some beneficiaries unnecessarily in the firing line.
The Government has announced it is removing the obligation for the Ministry of Social Development to immediately inform a beneficiary that they are being investigated for fraud.
In measures announced on Wednesday, the Government also created a new offence for the partners of beneficiaries convicted of fraud.
The Beneficiary Advocacy Federation says allowing the ministry to talk to third parties such as employers or banks without informing the beneficiary under investigation treats them as though they are guilty without the presumption of innocence.
The federation says it could have serious implications for beneficiaries' employment, housing and treatment by members of their community.
It says that of the more than 16,000 allegations of fraud reported to the Ministry of Social Development in 2010 only 16% were proven.
But the Government says the move will speed up investigations and bring beneficiaries into line with other members of the public who may be under investigation for other crimes.
The Labour Party is accusing the Government of double standards, by cracking down on benefit fraud but not doing the same with tax crimes.
Labour's social development spokesperson Jacinda Ardern told Radio New Zealand's Morning Report programme spouses can already be pursued if they are complicit in relationship fraud and she wants to know why the why the same thing isn't applied to tax evaders and fraudsters.
An associate professor of social work at Auckland University, Mike O'Brien, says beneficiary advocates often find people aren't getting their full entitlements but there's no official measure of that.
He says tax evasion and corporate fraud costs the country much more than benefit fraud yet there's no move to prosecute the spouses of white collar criminals.
Government defends move
Making the announcement on Wednesday, Associate Social Development Minister Chester Borrows said relationship fraud cost the welfare system $20 million dollars last year - and that of the 61 convictions for benefit fraud worth more than $100,000, 41 were relationship fraud cases.
Mr Borrows said at present, it is difficult to prosecute people who know of or gain from fraud committed by their partners.
The minister told Radio New Zealand's Nine to Noon programme on Thursday it is unfair that someone commiting benefit fraud is prosecuted while their partner can avoid charges altogether.
Mr Borrows said the new law will share the liability between spouses.