Everybody Pays for Fraud!

Higher Insurance Rates
[ Chinese Version ]

The Canadian Coalition Against Insurance Fraud defines insurance fraud as any act or omission with a view to illegally obtaining an insurance benefit -- in other words, any action where a claimant walks away with money that he or she is not entitled to.

Insurance fraud includes a full range of fraudulent acts. Examples include: completely fabricated claims, inflation or padding of genuine claims, false statements on insurance applications, and internal fraud. Fraudulent claims represent approximately 10 to 15% of claims paid out. General insurance fraud amounts to approximately $1.3 billion per year in Canada. Honest policyholders through increased premiums pay this cost.

When the toll on other societal resources is factored in, insurance fraud costs an additional $1 billion per year. Police must investigate crimes in which the details have been altered, making the investigation more costly and time-consuming, or which, in fact, never occurred; firefighters risk their lives and expend valuable resources to extinguish arson fires; fire marshals investigate the cause of the fire; health service providers treat patients injured in arson fires or staged accidents, or who fake injury to make claims.

Higher Costs at the Store
[ Chinese Version ]

Retailers reported in the 2000 survey that customer theft is responsible for more than $3 million in losses a day, closely followed by almost $3 million in daily losses related to dishonest employees. Paperwork errors and vendor fraud account for the remainder of the losses.

Respondents to the 2000 survey reported the average loss per customer theft incident was $152, and average per employee theft incident was $609. Employees are retail's greatest assets, but employees who engage in criminal activity can significantly hurt retail operations.

Higher Costs For Your Health Insurance
[ Chinese Version ]

Health Insurance fraud costs Canadian policyholders over $1 billion each year. To the average citizen, that means at least ten percent of their total insurance premiums are used to cover the cost of fraud.

Higher Costs For Your Communication Services
[ Chinese Version ]

Even though long distance rates have plummeted over the last few years, theft of long distance service is big business. It Canada, it works out to about $100 million annually. And the problem is growing.

Higher Bank Charges
[ Chinese Version ]

If someone runs up credit card bills in your name, you are only liable for $50.00 in this country, but it would be wrong to assume that the issuing bank covers all the cost of the fraud. Earlier this year, when pushed by the government to explain why credit card interest rates still go as high as 28% when we had the lowest prime rate in 40 years, bankers listed the cost of fraud as one of the reasons, so if you don't pay off your balance every month, you are absorbing a part of that cost.

In Canada, such fraud has escalated since the early 1990s, as more and more people choose plastic over cash. In 1999, there were over 37 million genuine credit cards in circulation. In the year 2000, the total value of fraudulent credit card losses was $205 million, according to Sgt Michael Duncan - Economic Crime - RCMP Headquarters Ottawa Ontario, and nearly half that number were losses due to counterfeiting.

Higher Personal Costs
[ Chinese Version ]

Complaints about identity theft have risen 73 percent from a year ago, according to a new report from the Federal Trade Commission.

Identity theft topped the list of consumer complaints in 2002, accounting for 43 percent of all complaints. The Ontario Privacy Commission's findings have calculated typical victim financial losses at over $36,000. Victims usually claim extensive costs associated with; telephone contacts, notarized statements, lost wages, lawyers fees etc.

" The average victim spends 175 hours and $808 (USD) in out of pocket expenses to clear their names."
Detective Joseph Pendleton - Edmonton Police Service (currently seconded to Alberta Government Services - Registries as an Identity Theft expert)

According to StatsCan the incidence of fraud in Canada rose from 278.8 to 284.2/100,000 between the year 2000 and 2001. Alberta has Canada's 4th largest population but has the 3rd highest reported rate of fraud.

And it will get worse!
Fraud is expensive to investigate and requires a specialized group of individuals. Law enforcement budgets are shrinking to the point where thresholds and prioritization will mean that there will be no available resources to investigate most of the consumer fraud. Reporting agencies have simply quit reporting fraud since nothing is going to be done.