Once bitten, twice shy. Fundamental principles of human behavior are why reputable businesses striving to earn consumers’ trust should support the FTC’s ongoing efforts to combat fraud. According to the FTC’s 2017 Consumer Sentinel Data Book, Consumer Reports lost a total of $905 million to fraud last year. People will be unable to spend nearly a billion dollars on legitimate products and services from trusted companies.
Although the total number of reports received from consumers dropped from 2.98 million in 2016 to 2.68 million in 2017, this number increased by $63 million from last year.
Number one was debt collection, accounting for 23% of the total complaints. But there are two caveats: 1) This number is down from 2016; 2) The large number of debt collection reports is partly due to data providers collecting complaints through mobile apps.
Number two is identity theft at 14%. Consumer harm comes in two equally intolerable flavors. Credit card fraud is the most common manifestation. Tax fraud was next, but there was a silver lining as the total number of tax-related identity theft complaints fell by 46%.
The suspected Bronze Medalist was an imposter scam and consumers reported financial losses of up to $328 million.The impostor wears many masks: “I and [big-name tech company] Your computer is full of viruses. “Help, Grandpa! I’m under arrest and need bail” and “We’re from [government agency] If you don’t pay us today, we’re going to arrest you. ” Nearly one in five consumers who reported an imposter scam said they lost money as a result of the scam.
For the first time, the Consumer Sentinel Data Book breaks down fraud losses by reported age group, and the following results may surprise you: Consumers in their 20s report losing money to fraud more often than those over 70 loss. Among consumers in their 20s who reported fraud, 40% said they lost money. Compared to those over 70, only 18% reported financial losses. But this surprising fact also has a disturbing side. When seniors do report losing money to scammers, the losses can be much greater. For example, people 80 and older reported a median loss of $1,092, while those in their 20s reported a median loss of $400.
Wire transfers continue to be the payment method of choice for scammers, with 70% of the complaints we receive being contacted by scammers over the phone.
The states with the most reported fraud were Florida, Georgia and Nevada, while Michigan, Florida and California had the most reports of identity theft per capita. StatCats told us they found our state-by-state data dive helpful, so we created a new page to make it easier to evaluate the information.
Bottom line for business people:
- educate. Use your position in the community to spread the word about the latest forms of fraud to employees, industry colleagues and friends. One way to stay informed: Subscribe to the FTC’s Scam Alerts.
- cooperate. If someone you know suspects their identity has been compromised, please send them to Identitytheft.gov to develop a personal recovery plan. (Keep in mind that your company may have a legal obligation to provide identity theft-related transaction records to identity theft victims and law enforcement officials.)
- Report. When you see a scam, report it to the FTC.We’re talking about consumer fraud and Questionable promotions targeting small businesses. Your reports have helped the FTC and other law enforcement agencies prosecute fraudsters behind fake business listings, counterfeit office supplies and other forms of B2B fraud.
Consumer Sentinel is an online database available to civil and criminal law enforcement agencies across the country and around the world. Although non-governmental groups can provide data, only law enforcement agencies have access to the information.
