Millions of fraud victims every year

Flourishing fraud

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Fraud and other white-collar crime
Big and getting bigger

For sociopaths, the ability to commit fraud is a job skill, a core competency. That doesn't mean sociopaths are responsible for all fraud, but they are exceptionally good at it.

No one knows exactly much fraud and white-collar crime is being committed, but the problem is huge. Consider:

Consumers filed more than 686,000 complaints with the Federal Trade Commission in 2005. Identity theft topped the list of complaints, accounting for 37% of them.

In 2005, the cost of identity theft in the United States was $56.6 billion, according to a survey released by the Council of Better Business Bureaus and Javelin Strategy and Research. Approximately 4% of United States adults were victimized.

Nearly 25 million adults in the United States—11.2% of the population—were victims of consumer fraud between 2002 and 2003, according to the Federal Trade Commission (FTC). The FTC conducted a survey which measured consumer experiences with particular types of fraud, including advance fee loan scams, buyers' club memberships, credit card insurance, credit repair and more. The survey did not estimate dollar losses.

Criminals are expected to steal $3 billion from online merchants in 2006, according to ePaynews.com. That's up from $2.3 billion in 2003.

The typical U.S. organization loses 5% of its annual revenue to occupational fraud, according to the Association of Certified Fraud Examiners (ACFE). Occupational fraud is deliberately misusing an employer's assets for personal gain, and the ACFE estimates that it costs companies, not-for-profit organizations and the government $652 billion a year.

Credit card fraud could total an estimated $30 billion for 2005, according to the NW3C. "Credit card fraud is so widespread that some organized crime rings and even drug dealers have shifted criminal career paths to engage in this simple, lucrative and relatively safe form of crime," the NW3C says.

Fraud doesn't count

Despite the explosive growth in fraud and white-collar crime, statistics reported by the Federal Bureau of Investigation (FBI) shows a declining crime rate. Why? Fraud doesn't count.

The Crime Index once presented a snapshot of crime reported to law enforcement agencies across the United States. It first appeared in 1960 and measured only selected offenses: murder, forcible rape, robbery, aggravated assault, burglary, larceny, motor vehicle theft and arson. Data was collected through the Uniform Crime Reporting (UCR) program. Many types of crime—including fraud—were not measured by the Crime Index at all. Recognizing that the Crime Index was misleading, the FBI no longer reports it.

Now, those Crime Index offenses are called Part I offenses in the Uniform Crime Reports and presented in three categories—violent crimes, property crimes and hate crimes. Fraud is classified as a Part II crime, which means that it is only measured when an arrest is made. As a result, the data appear to indicate that crime is going down, when in fact crimes like credit card fraud and identity theft are growing exponentially.

According to an FBI report, the UCR offers only a limited amount of information on white-collar crime. "It is well documented that the major limitation of the traditional Summary Reporting System is its failure to keep up with the changing face of crime and criminal activity," the report states. "The inability to grasp the extent of white-collar crime is a specific example of that larger limitation."

A new method of measuring crime, called the National Incident-Based Reporting System, will collect substantially more information related white-collar crime, but many law enforcement agencies are not yet using it.

Now, white-collar crime is important

For decades, the conventional wisdom in law enforcement was that the public was apathetic about white-collar crime. But according to a survey conducted by the NW3C in 2005, "the general public is seeing white-collar crime in an increasingly harsh light and people are concerned that the government is not doing enough to combat these victimizations."

This survey followed a similar one conducted in 1999. It measured the public's perceptions of and experience with white-collar crime, defined as "illegal or unethical acts that violate fiduciary responsibility or public trust for personal or organizational gain." Here are some of its other findings:

46.5% of households were victimized by white-collar crime in the previous year. This was up from 36% that reported being victimized in the 1999 survey.
A staggering 62.5% of respondents reported being victimized at least once within their lifetimes.
11.4% of survey respondents indicated that they had been victimized by credit card fraud, a vast increase over the 3% reported just five years ago.
Only 30.1% of victimized households reported a crime to an official crime control agency.
Respondents considered white-collar crime to be just as serious as traditional offenses such as burglary and robbery.

No data on sweetheart swindles

Fraud in which the perpetrator and the victim are romantically involved is sometimes called a sweetheart swindle or lothario con. How often these cons occur, and how much money is involved, are absolutely unknown. But the numbers are probably rising.

Here is what Duane Swierczynski says about lothario con men in The Complete Idiot's Guide to Frauds, Scams, and Cons:

"There is an increasing number of these lothario cons every year. Two factors give them the edge. Internet and dating services allow smooth-talking scammers to practically pre-screen their victims before making a move. Plus, there is a larger and larger pool of victims, since more women today are building their own careers and fortunes than ever before. Lothario con men can also count o relatively few victims coming forward, because it's embarrassing to admit you had both your heart broken and your bank account raided by the same slime ball. Few of these slimy studs are ever prosecuted."


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