Ministry of Social Development (MSD) employees spied on beneficiaries suspected of being in an undeclared relationship, an investigation by the Privacy Commissioner has revealed.
It revealed overly broad, disproportionate or inappropriate requests were being made of individuals under investigation.
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Privacy Commissioner John Edwards told Newshub third parties were also involved.
"We found that they were asking for very personal information from telecommunications companies and the like, getting actual text messages and even intimate photographs, which we were quite disturbed by."
In one case, an intimate picture sent to a partner was produced at an interview - and the beneficiary was asked to explain.
"I don't want to see somebody brought in for an interview and shown an intimate photograph that they themselves have sent by text to a partner and that the ministry has obtained," Edwards said.
Other cases saw MSD investigators go to the police and ask for information about whether clients had been investigated for domestic violence, or any notes police had on them.
"Now you shouldn't be taking into account an incident of reported domestic violence as evidence of a relationship in the nature of marriage. These things are entirely incompatible," he told The AM Show.
Edwards told Newshub the practice was intrusive and excessive and called for change.
"In a criminal investigation there's no way you could get information at that level of sensitivity and privacy without some sort of judicial oversight."
MSD deputy chief executive for service delivery Viv Rickard said in a statement the ministry accepted the Privacy Commissioner's recommendations.
"These high risk investigations are about 17 percent of the 13,250 allegations we get every year. The small number of cases we investigate using this measure are at the high end of the spectrum where there are serious, often multiple, allegations of fraud over a significant period of time, usually involving large sums of money.
"The allegations often relate to people who on the face of it have set out to deliberately mislead in order to receive benefits they’re not entitled to. "
"We recognise we have to balance clients’ privacy rights alongside our responsibility to taxpayers to investigate serious fraud in a timely way, and to establish the facts."
Rickard said 71 percent of the investigations resulted in people needing to pay money back, while 96 percent of the investigations were successful.
The MSD will review the code of conduct that applies to the investigations, and will commission an independent assessment of fraud practices and policies.
Rickard said policies have also been amended to ensure staff make a case-by-case decisions on whether to go to a client or third party about collecting the right amount of information.
All requests for information from telecommunications companies or the police have been suspended.
Edwards told The AM Show he was "really pleased" with the way the MSD had responded to the inquiry.
"They've said 'these are good points, we need to think about this, it's not the same legal and social environment that it was in 2012'
"We've agreed to work with them, we'll try and help them get their practices up to an acceptable contemporary standard."
Auckland Action Against Poverty spokesperson Ricardo Menendez March also called for change, as well as an apology from Minister of Social Development Carmel Sepuloni and Rickard.
"The report should also be a wake-up call for the Government to amend the Social Security Act and stop punishing people in the welfare system for being in a relationship," Menendez March said.
"Currently the married benefit rate is lower than two individual benefit rates, and people on the benefit in a relationship with someone who earns above a certain threshold are expected to forgo all financial independence as they lose their benefit entitlements."