In the world of fraud fighting, the release of the Federal Trade Commission’s Consumer Sentinel Data Book is something of a wonky holiday. Yesterday was no exception, with the agency publishing the annual report, which examines trends in the 2 million-plus complaints the FTC receives annually. The headline of the report was depressingly familiar: identity theft continued to be the biggest driver of complaints to the FTC for the 14th straight year.
This trend is one of the reasons NCL produced our State of Identity Theft in 2013 report last year, which examined the continuing threat of ID theft and why we are making the issue of data insecurity a top priority in 2014.
Looking deeper into the Sentinel data, some additional interesting trends and questions come to light, including:
- Does youth correlate with risk of identity theft? The FTC noted that 20% of ID theft complaints came from consumers aged 20-29, who comprise only 13.8% of the population. There is also a steady reduction in ID theft complaint rates as consumers get older. For example, 8% of ID theft complaints come from consumers aged 70-plus, which is consistent with their overall 9% distribution in the population. An open question is whether identity theft risk decreases as consumers age or whether the correlation is due to an increased likelihood that younger consumers will report identity theft.
- The telephone is scammers’ contact method of choice. While recent news has been dominated stories about high-tech data breaches, it appears that scammers are returning to a somewhat old-fashioned tool: the telephone. Last month’s Fraud.org Top Ten Scams report noted that telemarketing fraud was making a major comeback, with 36% of complaints mentioning the telephone as the method of contact. The FTC’s new data confirmed this, finding that 40% of complaints cited the telephone as the method of contact. The telephone is now the preferred method of contact by scammers, overtaking email for the first time since 2011. Congress is taking notice as well. In December, a bipartisan group of legislators introduced the Anti-Spoofing Act, which would crack down on scammers disguising their calls by altering Caller ID information.
- Scammers shifting technique in “grandparent’s scams.” Con artists have long used the story of a loved one in distress to defraud consumers, particularly older adults. Also known as the imposter scam, this fraud starts with the fraudster calling a victim with an urgent appeal for funds to help a friend or family member in need. For example, the scammer might claim that a beloved grandson was in a car accident overseas and needs money to pay a hospital bill or to get bailed out of jail. More than 121,000 consumers reported an imposter scam to the FTC in 2013, an increase of more than 36,000 complaints since 2012. The scam is evolving as well. Whereas fraudsters used to impersonate a friend or family member, they are increasingly claiming to represent a business or government official.
- Encouraging signs in the fight against lottery scams. For the second year in in a row, complaints about this type of fraud have decreased (down by almost more than 10,000 complaints since 2011). Thanks in part to consumer education campaigns like DeliveringTrust.com growing awareness of these scams seems to be having an impact.
More than 2.1 million complaints were filed with the FTC in 2013, with reported losses of more than $1.6 billion. Given that fraud is a chronically underreported crime, we should assume that many millions more consumers were harmed. As we prepare to mark National Consumer Protection Week, this new data should serve as a reminder of the immense toll that fraud takes on U.S. consumers.
This data should push all of us — anti-fraud advocates, law enforcement, policymakers and everyday consumers — to redouble our vigilance in the fight against scammers.