- Consumers reported losing $5.9 billion to fraud in 2021, up about 79% from $3.3 billion in 2020, according to a Federal Trade Commission report released Feb. 22. The report shared data collected through the FTC’s Consumer Sentinel Network, which received about 2.8 million reports of fraud last year.
- One-quarter of the fraud reports involved monetary losses, and 16% identified the payment method. Of those that identified how the payment was made, fraudulent bank transfers and payments made up the highest aggregate losses in 2021, amounting to $756 million, closely followed by cryptocurrency, at $750 million.
- The most commonly reported fraud categories were imposter scams, with scammers impersonating government agencies or businesses like e-commerce giant Amazon, and online shopping fraud, where consumers might receive defective products or pay for merchandise that never arrives, said FTC lead data analyst Paul Witt.
Although credit cards were involved in the highest number of fraud reports – about 88,000 – they only accounted for $181 million in fraud losses as a payment method, according to the FTC report. By contrast, cryptocurrency was the payment method in about 39,000 fraud cases, but accounted for an outsized share of losses, $750 million.
Much of that is due to crypto-related investment scams, with scammers proposing bogus investment opportunities on social media platforms. Witt chalked up crypto’s growing presence in the fraud reports to the buzz around it and its burgeoning use as a payment method. The FTC expects to see more crypto payment fraud moving forward, he said.
"Scammers follow the headlines," said FTC spokesperson Juliana Gruenwald Henderson. "When things are hot, they’re going to try to take advantage of those things."
Although the overall median loss was $500, investment-related fraud had the highest median loss, $3,000, of the top ten types, according to the report.
The FTC's data analysts also noted a rise in online shopping scams involving crypto payments. Purported merchants seeking very specific types of payment – insisting payment for merchandise be made in crypto, for example – might be a red flag, Gruenwald Henderson said.
With crypto, "there’s lots of consumer fraud going on, because there’s tons of bad actors that know this is bleeding edge, they know there’s tons of gaps all over the place, so they’re taking advantage," said Cliff Gray, a senior associate with the industry consulting firm Strawhecker Group.
The Consumer Sentinel Network collects reports from consumers themselves, as well as from law enforcement agencies, the Consumer Financial Protection Bureau, the Better Business Bureau, nonprofits and others, according to an FTC news release. Witt noted more reports were collected from international sources in 2021.
He attributed the 70% increase in fraud losses to various factors, from the rise in business imposters to the FTC’s revamped online complaint portal. "It’s an amalgamation of all of those things," Witt said. "It's not uncommon to see an increase over the previous year, and we always have new data contributors."
The No. 1 type of fraud was imposter scams, with business and romance scams among the most common, Witt said. The federal agency collected nearly 1 million reports of imposter scams, which totaled $2.3 billion in losses. With business scams, "a lot of that was being driven by people impersonating Amazon as a company," Witt said.
With online shopping fraud, more than half of consumers who reported that type of fraud lost money, resulting in losses of $392 million. That fraud category has been on the rise with a pandemic-prompted boom in e-commerce, Witt said.
Cash was the payment method in only about 12,500 reports of fraud, but losses amounted to $188 million, which was more than the losses tied to credit cards. Wire transfer losses amounted to $482 million, while gift card or reloadable card losses totaled $233 million, per the FTC report.
While consumers ages 60 to 69 filed the most complaints, at nearly 250,000, consumers ages 30 to 39 reported the highest fraud losses, at $598 million, the report showed. The vast majority of reports involved fraud losses of less than $1,000.