FTC Issues New Consumer Fraud Survey for 2011

The Federal Trade Commission just issued the third in a series of surveys measuring consumer fraud in the United States. According to the FTC survey's estimate, in 2011 some 25.6 million adults – 10.8 percent of the adult population – were victims of one or more types of fraud that the survey covered.

(The types of frauds most frequently reported included “fraudulent weight-loss products, fraudulent prize promotions, being billed for a buyers’ club membership that one had not agreed to purchase, being billed for Internet services that one had not agreed to purchase, and fraudulent work-at-home programs.”)

The report is noteworthy, among other reasons, for highlighting various factors that appear more predictive of whether a person will fall victim to consumer fraud:

·         “[T]hose who reported a high general willingness to take risks were more than twice as likely to have been victimized as were those who reported a low willingness.”
·         “Almost one-quarter of those who engaged in Risky Purchasing Practices as defined were victims of one or more of the included frauds (Table 16 and Figure 16). This is almost three times the rate of those who did not meet the definition (24.8 percent v. 8.5 percent).” [Note: Risky Purchasing Practices were defined as situations in which “(i) the consumer purchased a product or service as a result of a telemarketing call, after seeing a television advertisement or infomercial, or after receiving an unsolicited commercial (“SPAM”) email, (ii) the purchase was from a company with whom the consumer had not previously done business, and (iii) the consumer did not make the purchase at a store or the seller’s place of business, but rather purchased the item via the Internet or by telephone.”]
·         “Survey participants who had experienced a serious negative life event in the last two years – events such as a divorce, the death of a family member or close friend, a serious injury or illness in their family, or the loss of a job – were more than two-and-a-half times as likely to have experienced fraud as were those who had not suffered such a negative event . . . .”
·         “[T]hose who reported being highly patient were 7.0 percentage points less likely to have been a victim of one or more of the frauds in the survey than those with low patience . . . .”
·         “Those with the lowest numeric skills were at least 50 percent more likely to have been victims of the frauds covered by the survey than were those with greater numeric skills . . . . Those with the lowest numeric skills were particularly susceptible to prize promotion frauds.”
·         “[T]hose who indicated that they had more personal debt than they could handle financially were significantly more likely to have been a victim than those with less debt.”
·         “African Americans were almost twice as likely to have experienced one or more of the surveyed frauds as were non-Hispanic whites . . . [and] Hispanics were also more likely than non-Hispanic whites to have been victims of the surveyed frauds.”
·         “Those between 55 and 74 had the greatest chance of being victims of fraudulent prize promotions: 2.8 percent of those between 65 and 74 were victims of fraudulent prize promotions as were 1.8 percent of those between 55 and 64 . . . .”