Fighting Fraud with Statistics
The voice on the answering machine message claims to be from an employee of the Internal Revenue Service. “You owe back taxes,” it says, and if you do not send a prepaid debit card “the cops will haul you away.”
Of course, this is a scam. The IRS does not call to demand payment, nor does it ask for payment by debit card. And it never threatens to bring in local police to have you arrested or deported for nonpayment. To help fight fraud, you can report such calls to the IRS, the Federal Trade Commission, and your state Attorney General’s office.
But many of the scammers are sophisticated. They may spoof the Caller ID so that “IRS” appears on the display, and follow up a few minutes later with another call where the Caller ID displays the name of your local police department. They may have researched you before calling and sprinkle information about you in the call. In a pandemic twist to this impersonation fraud, they may say that your stimulus check has been held up or was calculated incorrectly, and you need to give them your banking information to receive it (or you need to wire the money to them). The scammers can sound authoritative, and it’s not surprising that many people are frightened into paying.
How many? We finally have a partial answer to that question. The just-released report on Financial Fraud from the Bureau of Justice Statistics states that in 2017, an estimated 94,960 persons in the United States were victims of a scam claiming they did not pay their taxes.
This estimate comes from the inaugural implementation of the Supplemental Fraud Survey in the National Crime Victimization Survey (NCVS; see my book Measuring Crime: Behind the Statistics for a description of the survey and a guide to interpreting its statistics). Adults age 18 and over who participated in the NCVS between October and December 2017 (because NCVS interviews are spread throughout the year, this forms a representative subsample of the NCVS respondents) were asked to answer a supplemental survey about “experiences in which someone convinced you to pay, invest, or donate money, by tricking or lying to you, hiding information, or promising you something that you never received.” More than 50,000 persons answered these questions, and their answers form the basis for the statistics in the report. The questionnaire and data set can be downloaded from the Inter-University Consortium of Political and Social Research at the University of Michigan.
Other highlights from the report:
About 3 million adults (1.25% of the adult population) were victims of financial fraud, losing more than $3.2 billion altogether.
The most common type of victimization, affecting nearly 2 million persons, involved situations where the victim was promised a product or service that was not delivered, and the victim did not get the money back.
Other types of victimizations, with the estimated number of persons affected, included fake charities (340,000 persons), sweepstakes or fake government grant scams (264,000 persons), and relationship or romance fraud (150,000 persons).
Who was most likely to be victimized by financial fraud? There were no statistically significant differences by age or gender, but the percentages did vary by marital status. One percent of married persons, 1.35 percent of never-married persons, and 1.83 percent of divorced persons had experienced fraud.
Five percent of the victims experienced more than one type of fraud victimization.
As I wrote in Measuring Crime: Behind the Statistics, fraud has been one of the most difficult crimes to measure, in part because (1) most crimes are not reported to enforcement authorities and (2) in the past, there have been few large-scale surveys that try to measure fraud. With the Supplemental Fraud Survey, that has now changed. Of course, the survey may also undermeasure fraud, if fraud victims are unaware they have been victimized or are unwilling to report the victimization to the survey. But this survey is a tremendous resource for studying fraud, and for helping Americans become more aware of its costs. The first step toward fixing a problem is learning about its extent.
Copyright (c) 2021 Sharon L. Lohr