A lawyer who has taken cases against the Ministry of Social Development says the ministry needs to completely overhaul its fraud investigation unit.
A scathing report by the Privacy Commissioner found some of the ministry's investigations into suspected benefit fraud were excessive and even illegal.
The report blasted the ministry's practice of collecting large amounts of personal information from banks and telcos, without the peoples' knowledge.
Lawyer Frances Joychild QC said the findings in the Privacy Commissioner's report were just another example of the ministry's "flagrant disregard and contempt for the law".
"It's breathtaking that in a Westminster democracy as ours is, with a major government department that impacts on the lives of around a quarter of its citizens, that they can keep getting away with what they're doing."
Ms Joychild doubted the ministry's promises of change and said the entire unit should be closed down.
"Start again with a new office, with none of those older people in it," she said.
"Staff the office with someone who has a sound knowledge and appreciation and understanding of privacy law, human rights law, Bill of Rights law and the need to maintain the integrity of the Social Security Act."
The actions of the fraud investigation unit have a real impact on people's lives - especially solo parents, Ms Joychild said.
"I have seen so many people's lives damaged and crushed, children crushed by the burden their parents are under by the behaviour of the MSD benefit fraud unit."
Ms Joychild said if an audit was carried out of the debts to the ministry, they would be found to have been wrongly and unlawfully established.
"There is no adequate accountability, so we have the poorest people in our community, burdened with huge debts to MSD, paying them back at maybe $5 a week, $10 a week - that is a huge amount of money to people who are trying to live on a couple of hundred a week and support their children.
"Probably, those debts aren't even justified, we just have a benefit fraud investigator determining a debt."
Meanwhile, beneficiary advocate Kay Brereton said people suspected of welfare fraud weren't being given enough time to get detailed information to investigators.
She said people were being given five days to provide their financial, medical and other records, which wasn't enough time.
Amassing huge amounts of information before speaking to the people concerned could lead investigators to jump to conclusions.
"By the time the investigator sits down with someone to talk to them about the situation they're investigating, they've got a ream or so worth of what they consider to be evidence and really they've formed a decision - it would be very difficult not to form a decision when you've collected a whole lot of information and come to conclusions about it."
The ministry said one of the reasons why it had to go to third parties was because beneficiaries weren't handing over the information themselves.