Finance Globe

U.S. financial and economic topics from several finance writers.
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FTC Survey: 25.6 Million Victims of Fraud

The Federal Trade Commission has released the results of its latest survey on fraud. Conducted in late 2011 and early 2012, the survey reveals there were 25.6 million victims of fraud. Here are the top 10 fraud categories:

Weight-loss products, 5.1 million victims
Fraudulent prize promotions, 2.4 million victims
Unauthorized billing for buyers’ club membership or internet services, 1.9 victims
Work-at-home programs, 1.8 million victims
Credit repair scam, 1.6 million victims
Debt relief, 1.5 million victims
Credit card insurance, 1.3 million victims
Business opportunities, 1.1 million victims
Mortgage relief scams, 800,000 victims

Many of these fraud categories match the FTC’s 2012 complaint list which lists the categories for which the agency receives the most complaints. For example, prizes and sweepstakes were 5th on the FTC’s complaint list and credit card related complaints was 10th on the list.

Other types of fraud in the FTC’s survey include advance fee loans, pyramid schemes, government job offers, counterfeit checks, and grants.

How Did Consumers Become Victims

Internet was the most common way of learning about offers that later turned out to be fraud, accounting for about 33% of fraudulent incidents. Most of these scams were found on general web pages. Email was another common way scammers used the internet to reach consumers.

Print media was the second-most common way that consumers learned for fraudulent offers, accounting almost 20% on incidents. Finally, telemarketing accounted for 10% of fraudulent incidents. Since the last survey in 2005, internet has drastically increased as a way of defrauding consumers while print media has decreased.

Most fraudulent orders were placed over the internet (40%) using credit cards (56%). Only 15% of fraudulent orders were made directly from a checking account with consumers giving their checking account information to the scammer.

Who’s Most Likely to Become a Fraud Victim?

People who reported themselves as risk takers were twice as likely to become fraud victims. In addition, people who’d recently (within the past two years) experienced a negative life event were more likely to experience fraud, particularly debt-related fraud and prize promotion fraud.

Respondents who believed they were patient people experienced less fraud than those with low patience. The results show that those who were more impatient were more likely to be a victim of weight loss product fraud and debt-related fraud. People with low numeric skills were more likely to be fraud victims, especially of prize promotion fraud.

People who said they had more debt than they handled were more likely to become victims of debt-related fraud than people who felt they could handle their debt and more likely, in general, to become a victim of fraud

According to the survey, African Americans and Hispanics were almost two times as likely to be a victim of fraud as whites, especially debt-related fraud and income-related fraud.

Consumers between ages 45 and 54 were more frequently scammed. Those between ages 18 to 24 more often were victims of income-related scams. Most victims of prize promotion scams were between ages 65 and 74.

How Much Was Stolen?

Half of those defrauded on business opportunities, credit repair, and pyramid schemes paid at least $200. And 25% said they paid at least $500 on these schemes. The median amount paid in fraud was $100.

Protect Yourself From Fraud

Be on the lookout for fraudulent offers, especially those that sound too good to be true. Since frausters are more commonly using the internet to reach consumers, it’s important to approach every offer with some skepticism. Some industries are more fraudulent than others. For example, weight loss products, credit repair, and debt relief industries have a reputation for over-promising and under-delivering.

Before taking advantage of an offer, whether you learned about it over the internet, in print, or on the radio, do some research. Ask around, do a web search to get some background information on the offer before spending your money on it.

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Thursday, 25 April 2024

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