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The Resource Center Identity Theft & Protection | post

New FTC Report Dissects Scams That Are Being Perpetrated in This Country

by Steve Schwartz on

The Federal Trade Commission has released the results of a survey that shows in one year an estimated 10.8 percent of U.S. adults — 25.6 million persons — were victims to some kind of fraud. The data for government statistics typically lags by a year or two, so this survey, which was done in late 2011 and early 2012, covers calendar year 2011.

While not directly relating to identity theft, I found some of the findings of the survey of interest. Moreover, while the FTC survey did not specifically ask about identity theft, some of the categories of scams have some aspect of identity theft involved in their commission.

It should be noted that this FTC survey closely matches the data on scams in 2012 that was previously released by the Better Business Bureau, and that we reported and commented on in this space.

The survey asked consumers about 15 specific, and two general, categories of fraud. The top 10 according to the respondents were:

1)      Weight-loss Products (5.1 million, est.)

2)      Prize Promotions (2.4 million, est.)

3)      Unauthorized Billing for Buyers' Club Memberships (1.9 million, est.)

4)      Unauthorized Billing for Internet Services (1.9 million, est.)

5)      Work-at-Home Programs (1.8 million, est.)

6)      Credit Repair Scams (1.7 million, est.)

7)      Debt Relief (1.5 million, est.)

8)      Credit Card Insurance (1.3 million, est.)

9)      Business Opportunities (1.1 million, est.)

10)   Mortgage Relief Scams (800,000, est.)

The reason the FTC conducts these annual surveys was explained by Charles Harwood, Acting Director of the FTC's Bureau of Consumer Protection. "The FTC fights fraud every day by taking scammers to court and telling consumers how to avoid being scammed. Studies like this one help us fine-tune both our enforcement and education efforts."

What's most interesting is that some of the data seems almost counterintuitive. For instance, we have a picture of scam victims usually being older. That might be correct for some specific types of scams — fraudulent prize promotions as an example — but generally the idea of seniors as the most common victims is not supported by the survey results.

The survey found that generally, consumers age 55 and older were less likely to have been victims than those between the ages of 45 and 54. The rate of victimization for any fraud included in the survey was 14.3 percent for those between 45 and 54. It was more than one-third lower (9.1 percent) for those between 55 and 64. The rate for those 65 to 75 (7.3 percent) was just over half the 45 to 54 rate.

Not surprising, the survey found a direct correlations between level of education and the livelihood of being a scam victim. Simply put, the more educated a person the less likely they will become a victim. The highest category of victim is those with less than a high school diploma.

Another nugget interested me. The survey found that those most likely to become victims are those who can be categorized as risk takers. The survey concluded "Looking at the more general measure, those who reported a high general willingness to take risks were more than twice as likely to have been victimized as were those who reported a low willingness."

How people are being victimized is also interesting because it clearly shows how criminals are evolving in this digital age.

  • The Internet was the most common way victims first learned about offers that turned out to be fraudulent. The Internet was the source of information in almost one-third of instances. The Internet has increased from being the source of information in just over 20 percent to just under 33 percent of incidents.
  • Print media — direct mail solicitations, newspaper or magazine advertisements, and posters or flyers — were the second-most frequent source of information about offers that turned out to be fraudulent, accounting for almost 20 percent of incidents. This was a decline of about 8 percentage points since 2005.
  • Telemarketing was the source of information in just under 10 percent of incidents, a figure that was essentially unchanged since the 2005 survey.

While fast-growing online commerce has benefited consumers with greater choice and convenience, the survey indicates that, as of 2011, the Internet was also the place where consumers most often learned about fraudulent offers. The Internet category, which included email, social media, auction sites and classified ads, was followed by print advertising, and TV and radio. Most consumers bought fraudulent items via the Internet; telephone purchases ranked second.