FTC Databook Highlights Consumer Fraud


The FTC last week announced the release of the Consumer Sentinel Network Databook for January – December 2012. The “Consumer Sentinel Network” is the FTC’s platform for law enforcement collaboration on issues affecting consumers. The program collects data from a wide range of sources, providing a comprehensive, nationwide picture of consumer complaints. Given the possible existence of reporting biases and other factors, the FTC report should not be treated as a statistically valid survey of all consumer fraud. It is, nevertheless, an interesting and important part of the overall consumer-fraud picture.

This year’s Databook reports on over 2 million consumer complaints received, with identity theft as the top issue by a wide margin (369,132 complaints, 18% of complaints in all), followed by debt collection (199,721; 10%), banks and lenders (132,340; 6%), shop-at-home and catalog sales (115,184; 6%) and prizes, sweepstakes, and lotteries (98,479; 5%).

The total reported cost paid by consumers as a result of fraud was nearly $1.5 billion, or an average cost of $2,350 per affected consumer. However, this average is skewed by the existence of higher-dollar frauds affecting a minority of consumers. A close examination of the FTC-provided data reveals that most (54%) of consumers paid nothing as a result of fraud, with a median cost of $535 among victims who did pay. Thirteen percent of victims paid between $1,001 - $5,000, while only four percent paid more than $5,000,  rates which have remained fairly steady in each of the last three years.

It remains the case that most fraud originates in cyberspace, either via email (38%) or other web or internet exchanges (12%), although phone contact remains significant as well (34%).

Among reporting consumers, those aged 40 and above are at a higher risk of being victimized by fraud (66% v. 33% for those aged below 40). However, a complete look at the data undercuts any simple theory that susceptibility to fraud increases significantly with age. Considered as a whole, the under-40 group is helped by the fact that relatively few frauds target those 19 and under. And among reporting adults and broken down by decade, those aged over 70 are in fact the least likely of any group to be fraud victims.

In the category of identity theft fraud, most reported frauds are tax or wage related (43.4%), followed by credit card fraud (13.4%), and phone or utilities fraud (9.7%).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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