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Home >> Scams/Fraud
Settling an Argument About Fraud Stats
My son was recently the victim of a scam where a company called him, asked him to verify his account number, and as a young kid, he did. My wife and I mildly argued thereafter about how this sort of activity has increased since the advent of the internet. She claims that per transaction, check, bank, and transaction fraud has not increased in the past 30 years. I find that very hard to believe. Are there some sort of statistics you can supply that will either prove her point, or prove mine. I'll be a big boy either way.
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 We don't have statistics readily available for this and different entities have different statistics, but with the new channel of the internet and improved technologies, we cannot imagine fraud has not increased. Internet fraud itself has increased over the years, although there are some numbers that indicate it may be leveling or actually declining. The fact that it didn't exist in the past and now does tells us there is an increase, and not a replacement of old methods. Many more victims can now be reached via email, phishing, and data breaches as well as online sales of merchandise and credit card information. The following are some headline clips from the Homeland Security daily briefings:
03-06-07 "The rate of identity theft-related fraud has risen sharply since 2003, a report from research firm Gartner suggests. Gartner's study, released Tuesday, March 6, shows that from mid-2005 until mid-2006, about 15 million Americans were victims of fraud that stemmed from identity theft, an increase of more than 50 percent from the estimated 9.9 million in 2003. It should be noted that the 2003 statistics and the mid-2006 statistics came from two different sources--and hence, two different statistical methodologies. The original 9.9 million figure came from the Federal Trade Commission, whereas the 15 million statistic is Gartner's own. According to the study, identity theft victims are also recovering less of the lost cash. In 2005, an average of 87 percent of funds were recovered; in 2006, that had dropped to 61 percent. The study attributed the rise in identity theft fraud to increased levels of electronic identity theft. However, the supposed rise in identity theft is a controversial claim. Last month, research firm Javelin Strategy & Research released a report that suggested certain identity-theft statistics--the number of fraudulent accounts opened, for example--are actually on the decline."
03-15-07 "Losses from online banking fraud have leapt 44 percent from $44.9 million in 2005 to $64.8 million in 2006, but banks are pointing to signs that the tide may be turning. Figures released by banking body Apacs show that online fraud is outstripping any other type of fraud, and the number of phishing attacks on banks has reached a new high, rising from 1,714 to 14,156 over the same period. However, there has been a sharp slowdown in losses. ‘Online banking fraud figures break down to about $43.5 million lost in the first half of 2006 and $19.6 million in the second half,’ said Andy Muddimer, head of online banking at Alliance & Leicester (A&L). Muddimer says A&L’s picture-based, two-factor authentication has improved consumer confidence and encouraged a 25 percent rise in online banking transactions in the past year. Banking giant HSBC says there are many ways to combat online fraud, and two-factor authentication is not the only solution. Ant Allan, research vice president at analyst Gartner, says to some extent two-factor authentication is implemented for show. ‘Banks also need to invest in fraud detection, which is necessary to deal with more sophisticated attacks that are easily able to bypass two-factor authentication,’ he said."
03-26-07 "One in 10 Internet users fell victim to online fraud last year, losing an average of $1,720 each, according to a survey on Monday, March 26. Many failed to take basic steps to protect themselves online and fewer than half felt they were wholly responsible for their safety while using the Internet. Six percent had suffered fraud while shopping online, four percent had experienced general fraud and three percent were subject to bank or credit card crime. The survey of 2,400 people was carried out by YouGov for Get Safe Online, a campaign group set up by the UK government, police and private companies. Nearly half said they did not have protection from spyware, computer software that secretly collects personal information when people use the Internet."
03-30-07 "Identity theft is being propelled forward by explosive growth in two of its biggest drivers -- phishing and malware, according to a new study. In the first two months of this year, alone, phishing attacks grew by 50 percent and malware attacks dramatically increased by 200 percent, according to a study from Cyveillance, a risk monitoring company. The number of companies being phished has been consistently growing by more than 200 new victims each quarter, with a recent increase of 50 percent from January to February. The Cyveillance data supports a study that came out earlier this month showing that identity theft is exploding in the U.S., with 15 million Americans victimized in just a 12-month period. Credit Unions are showing the biggest growth as phishing targets, with a 584 percent increase this year, according to Cyveillance. Banks are getting picked on 325 percent more, insurance company attacks are up 300 percent, and singling out payment service companies increased by 285 percent. Cyveillance also reported a 200 percent increase in malware attacks in the first two months of 2007 with more than 1 million unique Webpages containing some type of malicious code."
04-03-07 "Americans lost a record amount to Internet fraud schemes last year, and the notorious "Nigerian 419" scam is blamed for the largest individual losses. A government report on 2006 Internet crimes also records the sudden emergence of extortionists who use e-mail to deliver ominous threats that grave consequences await unless money is sent. The new federal statistics show that Americans reported losing an all-time high of $198.4 million to Internet fraud in 2006, up 8 percent from 2005 levels of $183 million and 191 percent from 2004 levels of $68 million. Law enforcement officials believe that actual losses are higher -- many victims don't report the crimes because they are embarrassed or afraid to do so. Of the Internet criminals who could be traced to their location, 61 percent resided inside the United States, followed by criminals based in the United Kingdom at 16 percent. Nigeria-based criminals were next at 6 percent. The FBI has received about 159 complaints since the scam emerged, said John Hambrick, the top FBI official at the Internet Crime Complaint Center. The FBI has received no reports of money loss or murder threats that were carried out, he said in an interview."
Published on BankingQuestions.com 4/26/07
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