We know that financial fraud is a problem – and a growing problem. We know about many kinds of financial fraud. We know many of the ways that financial fraud takes place. But, according to a new study from the Stanford Center on Longevity, we do not yet know the full scope of financial fraud – we do not yet have accurate financial fraud estimates.
That’s a real problem, in the view of Martha Deevy, director of the Financial Security Division at the Stanford Center on Longevity. She believes that without accurate and reliable estimates of fraud, “it is difficult to understand what works or does not work to protect victims from harm.”
According to the study:
• Complaint data, though increasing over time, still vastly underestimate the scope of the problem due to the large number of victims who do not report to authorities. For example,
- An estimated 37.8 million incidents of fraud took place in 2011, but just over 1 million fraud complaints were received by authorities.
- An estimated $40 – $50 billion is lost to fraud annually, but victims reported losing $1.4 billion to fraud in 2012, as measured by complaints filed with the Consumer Sentinel Network.
• Clarifying the proper reporting mechanism(s) for consumers would be valuable in reducing the current levels of under-reporting. • Survey estimates of fraud victimization may vary for many reasons, including different sample populations, different prevalence periods, different definitions of fraud, and different question wording. • Researchers and practitioners can look to issues of measurement in other crime domains (like rape, child abuse, and elder abuse) to learn valuable lessons about encouraging reporting behavior and obtaining accurate prevalence estimates.
The complete study is available here: Stanford Report.
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