Fraud Victims Total 7.5% in 2008, Study Shows
Research company Gartner, Inc., Stamford, CT, released results yesterday of a study that analyzed financial fraud rates in 2008.
The news wasn’t good. According to the results of the study, some 7.5% of adults in the U.S. were affected by financial fraud in some way during the past year.
Gartner also said that conviction rates for financial fraud were comparatively low, due in part to about one-third of victims not reporting the crimes—a surprising and discouraging finding.
Unsettling Findings
Gartner surveyed 5000 U.S. adults and, as part of the study, asked about the impact of financial fraud.
Most financial fraud in 2008 occurred in the form of payment card fraud, which includes ATM, credit and debit transactions, analysts said. In fact, these types of financial crimes rose a very unsettling 36% over the previous year.
According to analysts, far fewer new-account crimes—which entail identity theft and the opening of accounts in the victim’s name—were committed, but the low results could be due to underreporting, Gartner executives stated.
The Impact of Financial Fraud
The study also revealed that consumers are changing their financial transactions habits in light of increasing fraud and ID theft rates.
These include changing banks on the part of victims of financial fraud due to a lowered confidence in the bank where the fraud occurred.
Online and on-site shopping are changing among former victims, too, and this isn’t surprising, according to Avivah Litan, vice president and distinguished analyst, Gartner.
“When compared with the average consumer, nearly twice as many people who lost money to fraud in 2008 changed their shopping, payment and e-commerce,” Ms. Litan said.
Fraud victims “are also more cautious about brick-and-mortar stores they shop at and how they pay for goods when they get there, demonstrating more awareness of the risk of data breaches.”
Credit, ATM Losses Sometimes Recoverable
Gartner analysts said new-account, credit card and brokerage losses averaged between $900 and just under $1100 per incident depending upon the category.
But the news wasn’t all bad. When it came to credit, debit or ATM fraud/theft in 2008, victims who reported the crimes were able to recover 77-100% of their losses.
Reporting is Crucial
These findings would seem to indicate that suffering in silence—or “swallowing” a loss—isn’t the right way to respond to ID theft and/or financial fraud. Though this fact would seem to be elementary, as many as one-third of financial fraud incidents were NOT reported in 2008, according to the Gartner study.
It makes sense, then, for any individual, group or company to report tampering, hacking and/or theft of money or accounts, no matter how small the loss may seem. By the same token, banks and credit card companies should treat any negative report seriously.
“Financial institutions that take security seriously will be rewarded with greater customer retention,” Ms. Litan pointed out, a smart stance as “…the cost of acquiring new customers is typically much higher than the cost of retaining existing ones.”
See the media release here for full details.
