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Internet fraud statistics

Posted by Michael Bloch in ecommerce (Sunday February 11, 2007 )

The FTC has released a rather massive set of statistics relating to fraud in their report; Consumer Fraud and Identity Theft Data January – December 2006. The section regarding Internet related fraud shows some marked increases compared to 2005.

Number of complaints

Over 176,000 complaints were lodged with the FTC in 2006 relating to Internet fraud; an increase of 16,000 over 2005.

Amount paid

Over $590 million dollars was paid by consumers reporting Internet fraud, with the average amount being $3,338 and the median amount being $500; an increase of $158 per incident compared to 2005.

Methods of payment

Credit cards were the most common methods of payment reported for Internet related fraud complaints during 2006 at 35%, followed by wire transfer (22%) and bank account debit (18%). Wire transfer showed a substantial increase throughout 2006.

Method of initial contact

The report shows that in 45% of complaints lodged relating to any sort of fraud during 2006, the initial method of contact from the fraudster was email. This is an increase of 11% over 2005. 15% of complaint stated the method of initial contact was via a web site; a decrease of 5% from 2005.

Age groups

The two most common age groups reporting online fraud were 30 – 39 and 40 – 49 at 24% each.

The top 10 fraud complaint categories (Internet and non-Internet)

1 Identity Theft
2 Shop-at-Home/Catalog Sales
3 Prizes/Sweepstakes and Lotteries
4 Internet Services and Computer Complaints
5 Internet Auctions
6 Foreign Money Offers 20,411
7 Advance-Fee Loans and Credit Protection/Repair
8 Magazines and Buyers Clubs
9 Telephone Services
10 Health Care

Increases in online fraud aren’t good news for anyone – consumers or online businesses. Whether there has been a real increase in fraud or just in the numbers of people lodging complaints is hard to say, but judging by what I see hit my inbox, the former certainly wouldn’t surprise me.

As I’ve mentioned in the past, reports like this do nothing to instil confidence in online shoppers, so you need to ensure you make every effort to reassure your site visitors you are who you say you are, will respect your customers’ privacy, provide adequate levels of security and will deliver the goods you advertise.

Read the full 92 page fraud report from the FTC (PDF)


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1 comment for Internet fraud statistics
  1. […] their bank statement. While the problem is pretty widespread, some experts, like Michael Bloch at Taming the Beast, admit that the drastic figures may or may not be 100% accurate. Still, Bloch argues that […]

    Pingback by Identity Resolution Daily » Blog Archive » Identity Theft = the tip. Identity Fraud = the iceberg. — June 8, 2007 @ 3:05 pm

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