Victims of Fraud
Figure 1
Bogus Vacation OpportunitiesFly-by-night Home Repairs
Securities Fraud Advanced Fee Schemes
Mail FraudComputer Fraud
Health Care FraudInsurance Fraud
Pension & Trust Fund FraudCheck/Credit Card fraud
Charity FraudTelemarketing Fraud
Identity TheftLand/Property Schemes
EmbezzlementCommodities/ Investment Fraud
The Cost of Fraud
The United States Department of Justice (DOJ) (2001) estimated that as little as 15% of all fraud crimes are reported to police. The Consumer Sentinel is a database maintained by the FTC for consumer fraud complaints; that is filed with law enforcement agencies on federal, state and local levels. The Sentinel claims that reports of fraud are steadily increasing. From 2000 to 2002, in just two years, the complaints have more than doubled (FTC, 2003). Check fraud accounts for approximately $815 million dollars annually (DOJ, 2001). The financial impact of fraud has a major underlying effects and is far-reaching often going beyond the individual victim such as businesses that have to compensate for the costs; for example identity theft, one of the largest growing, in 2002 alone affected 10 million people and cost businesses and financial institutions approximately $48 billion dollars in damages (CNN, 2003). Businesses absorbing these costs have to compensate for these losses often at the cost of consumers. The fraud cost statistics for internet fraud in 2002 were just above $14.5 million dollars (Fraud Org., 2003). The total damages of all types of fraud combined would be astronomical. Another consequence/cost is that fraud leaves people hesitant of legitimate business and investment opportunities further restricting trade and other economical opportunities (DOJ, 2001).
Why fraud goes unreported
As previously stated very few of the fraud crimes are reported, victims of fraud do not report the offense for various reasons. The main reason for not reporting is fear. Fear of admitting the offense occurred, that they were deceived and taken advantage of. Fear of what others will think if they find out that they were taken advantage of or were not smart enough to prevent it from happening. Fear of the justice system and not knowing how it operates is another reason. The fear or idea that nothing will be done about their loss or that their losses were not large enough to report the incident or for police to be concerned. This is fear is often accompanied by uncertainty. Uncertainty of how to deal with the event, or how does one begin to correct the problem. Uncertainty about whether or not to report it, was their loss big enough to concern police and unsure about what other options there are. Uncertainty about how badly this event will affect the person. Another reason for not reporting is the added strain that going through the formal processes adds to the initial victimization. People who have who have been victimized by fraud often encounter skepticism, suspicion, or contempt if they seek help. The double standard used by the criminal justice system in handling white-collar offenders and their victims, due to the higher status of the accused, is yet another deterrent to reporting (DOJ, 2002).
Characteristics of Fraud Victims
Victims of any type of crime have no demographical stereotypes. Victimization crosses all race, educational, gender, geographical, religious, age and personal characteristical boundaries (DOJ, 2002). Any one can be a victim anywhere and at any time. However, some fraud victims are singled out by the type fraud. This is what fraud somewhat unusual, that the victims are targeted. Violators do target specific types of people for specific types of fraud or schemes. For example telemarketers have been known to target the elderly, because they are easier to persuade into lengthy sales pitches. First reason is because they are more likely to stay on the phone and secondly because they are likely to have money to invest (DOJ, 2001). Some offenders specifically target families that have little money and struggle financially. The perpetrator assumes that these persons will be likely to take a chance to earn large amounts of money, quick.
Anyone can fall victim to fraud. Fraud at its worst can destroy the financial security of a victim’s life as well as the emotional stability. The National Public Survey on White Collar Crime (Rebovich, et. al., 2000) found that younger adults (18 to 34 years of age) and those with some college or college degrees were more likely to be victimized and that fewer than one in ten incidents are reported to law enforcement or protection agencies. FTC (2003) showed that ages 30-49 were the most reported victimizations, with the 19-29 age groups being the second largest.
Effects of Fraud
Fraud is a personal violation. Emotional consequences of fraud very much resemble the emotional responses of many victims of violent crimes, though the wounds are not visible. Though the effects of the crime can vary per individual much experience many of the same initial effects. Some of the more common reactions as provided by the DOJ (2001):
�Self-blame- How could they be deceived so easily? Are they not smart enough to handle their own affairs? How could they have let this happen?
�Shame or Embarrassment- their family will ridicule them, others will see them as dumb or stupid, loss of credibility or respect if people find out, not knowing what to do about the situation.
âÂ?¢Guilt- they lost the entire family’s savings, what will the family do now? How are they going to recover from their mistake?
�Isolation- does not want others to know what they have done and family members or friends deem them as incompetent (especially the case with the elderly), try to keep it to themselves and handle it on their own.
�Anger- at themselves for causing such harm to their family, for being victimized or taken advantage of.
�Disbelief- denial that it really occurred, unable to accept that it happened
�Societal condemnation and indifference- that they got what they deserved for being greedy or stupid, it was their own fault.
�Betrayal- that that person took advantage of you, especially if it was someone you knew personally.
âÂ?¢Your trust in one’s own judgment, and in others, is often shattered.
Some victims express such high degrees of some of these feelings that it causes greater harm. The emotional trauma experienced by fraud victims may not be easily seen and are often overlooked. However, they do experience some of the same immediate crisis reactions if the trauma is severe enough. For example, upon realizing that they have been victimized, lost the family savings, ruined their financial security, the feelings of terror and or helplessness may overcome them and can even consume them. Confusion, is common, about what they should do about it or about will happen or how to begin to correct the problem. Rapid heart rate, hyperventilation, and panic are also very common. Other physical effects such as changes in appetite and sleeping patterns that can affect their daily activities and or ability to function can result (DOJ, 2001). Depression and the lack of enjoyment of usual activities are also very common and can be very detrimental. Sometimes victims will be pre-occupied with the crime, thinking about it constantly, replaying the crime over in their head, wondering what they should have done differently, concern of what others will think and say or that they will be blamed. This may affect their ability to concentrate or to perform daily functions and cause significant strain on their personal relationships. In extreme cases thoughts of suicide have been documented (DOJ, 2001). Frustration may occur, with financial institutions that do not take in regard or seem insensitive to the situation, family members that are unforgiving or abusive (DOJ, 2002).
Financial effects of fraud vary differently per each individual. But it can jeopardize your financial security and independence. It could be a minor offense not really harming the victim’s financial security where they can bounce back relatively easily, with in a pay check or two. Or it could be that it absolutely diminished your financial security all together leaving you filing for bankruptcy and searching for other alternatives just to live. Generally for younger victims of fraud it is easier to rebuild the damage caused because of ability and length of time to correct the problem. However, the elderly or older victims do not have the time, resources, or ability to rebuild their financial security all over again. The National Institute of Justice provided that of “fraud victims, 85% lost money or property; 20% suffered financial or personal credit problems; 14% suffered health or emotional problems directly related to the victimization; and 14% of victims lost time from work (DOJ, 1998).”
The role of victim advocates
The victim advocate plays a crucial role in helping victims of crimes. There are advocates for fraud victims as well. The advocate helps reduce stress, fear, and frustration. The advocate may do so by providing information about the justice system, about case procedures and answering questions about the case. The advocate should inform the victim about court issues such as; the Mandatory Victims’ Restitution Act (MVRA). This law was enacted in 1996 as part of the Antiterrorism and Effective Death Penalty Act its purpose is to “ensure that the offender realizes the damage caused by the offense and pays the debt to the victim as well as society (DOJ, 2001).” This act provides that for certain types of fraud that the offender must be ordered to pay restitution regardless of their ability to pay. Information about submitting a victim impact statement where permissible may help to allow them to input their feelings if the case goes to trial. Advocates can provide the victim with information on how to request and receive restitution and amending restitution ordered by the court and information about how to enforce restitution orders. Provide information on restitution repayment plans and options available. It might be well comforting to the victim to know that, if the prisoner receives damage awards of any type the awards will be paid to the victim to satisfy the outstanding judgment for their restitution. The forfeiture options available under RICO and other federal money laundering statutes for obtaining restitution may also be an option for the victim (DOJ, 2001). Information about civil recovery options (the pros and cons), an overview of civil procedures, and other civil options are helpful. The advocate must prepare them for the likely hood of never receiving any aid and help them with closure, especially if their case never goes to trial and the perpetrator is never known.
The advocate can also provide the victim with referrals to victim assistance programs, agencies, or organizations that can provide more support, emotional assistance, mental help, or other services if needed. Referrals to credit repair and credit help can be provided and may be essential. Address any self destructive, self medication problems, e.g. substance abuse and knowing when to refer needed mental help. Another important role for the advocate is to express sympathy and pay attention to signs of psychological trauma (DOJ, 2001). Provide emergency help if needed and address any fears they express. Providing information to the victim to reduce the chances of re-victimization can be very helpful (DOJ, 2001). In some cases financial assistance may be provided, not for the fraud itself, but related causes (DOJ, 2001). Begin a support group that includes family members to help recovery.
Conclusion
Fraud is a continually growing problem. New types of schemes evolve and are made to access and violate newer uses of technology and business transactions, further increasing the ways in which a person or business can become a victim. Fraud costs individuals and businesses billion dollars a year and the problem is becoming more difficult to combat. Being a victim of a crime is difficult no matter what classification of crime it falls under. Being victimized changes the person whether it be significant or not so much, it will still have a lasting effect that changes “the person.” Fraud victims may experience fear, shame and guilt, uncertainty and anger, and many other physiological problems that can be associated with the trauma and the stress that it brings. Fraud also can ruin the financial stability of the victim causing the person to lose everything. Some types of crime are more devastating than others, but assistance, knowledge and compassion are always helpful. Informing yourself and asking questions in all business dealings, any investments and everyday financial transactions can be the most powerful tool in battling fraud and making sure you are not a victim. Understanding how important it is to report crime and knowing how you can help to reduce the victimization of others and one’s self is extremely important for combating this problem. Knowledge about help options available, what victims may experience, and how to provide help are extremely important for helping victims. All victims should be given the proper information needed by officials so that they may being the path of recovery, such as access to victim advocates, phone numbers of help lines, pamphlets about what they can do and or should do, about what types of help are currently available. Basic information about how to prevent fraud and information about the different schemes should be readily available to all consumers so that better business decisions can be made and prevent fraud victimization.
Reference Page
Barnett, Cynthia (1999). The measurement of White-Collar Crime Using Uniform Crime Report (UCR) Data. Retrieved October 13, 2003. http://www.fbi.gov/ucr/whitecollarforweb.pdf
Cable News Network FN (2003). Money and Markets, Preventing Identity fraud. September 4, 2003. CNN broadcast.
Department of Justice (1998). Economic Crime. Retrieved September 11, 2003. http://www.ojp.usdoj.gov/ovc/ncvrw/1998/html/econcrme.htm
Department of Justice (2002). National Victim Assistance Academy. Retrieved September 25, 2003. http://www.ojp.usdoj.gov/ovc/assist/nvaa2002/chapter16.html
Department Of Justice (2002). Office of Justice Programs: Bureau of Justice Statistics; National Crime Victimization Survey. Retrieved November 25, 2003. http://www.ojp.usdoj.gov/bjs/cvict.htm
Department of Justice (2001). Providing Services to Victims of Fraud: Resources for Victim/Witness Coordinators. Retrieved September 11, 2003. http://www.ojp.usdoj.gov/ovc/publications/welcome.html
Department of Justice (2002). United States Department Of Justice, Federal Bureau of Investigations; White Collar Crime Study. Retrieved September 11, 2003. http://www.fbi.gov/pressrel/pressrel02/wc3030602.htm
Federal Trade Commission (2003). Consumer Sentinel. Retrieved September 25, 2003. http://www.consumer.gov/sentinel/trends.html
National Fraud Information Center (2003). 2002 Internet Fraud Statistics. Retrieved November 11, 2003. http://www.fraud.org/welcome.htm
Rebovich, D. J., J. Layne, J. Jiandani, and S. Hage. (2000). The National Public Survey on White Collar Crime. Morgantown, WV: National White Collar Crime Center.
