A government database that has a main diet of complaints about consumer fraud is having to loosen its belt a notch these days.
A record 2.1 million consumer complaints were entered into the database, called the Consumer Sentinel Network, in 2012, up from 1.9 million the year before, the Federal Trade Commission reported last week.
The CSN collects reports from around the nation of identity theft, grandparent scams, abusive debt-collection practices, runaway overdraft fees and other questionable practices. Complaint totals have risen yearly since 2006, and that may have as much to do with better reporting by police and watchdog agencies than a rise in fraud.
Those complainants who reported an amount lost in 2012 were cheated out of more than $1.4 billion.
Identity theft: Top problem
For the 13th consecutive year, identity theft has been the top complaint. The largest and fastest growing kind of ID theft is tax or wage-related fraud, where someone either files a tax return or gets a job by using someone else’s personal information. Those activities accounted for 43 percent of all identity theft complaints in 2012, almost double that of the year before.
Increasingly, criminals are filing fraudulent tax returns and are receiving refunds meant for legitimate taxpayers. “This is the season when we suddenly get hit with a lot of calls and complaints” about tax-related identity theft, said David Torok, FTC’s director of planning and information.
It happened last year to Jeanette Sporlein of Minneapolis. She had had extra taxes withheld from her paycheck, with the idea that the refund would come at just the right time to pay her property tax bill. But the $1,700 refund never arrived. Someone used her name and Social Security number to file a tax return and collected the refund instead of her.
Sporlein said the IRS gave her little hope she would get her money, but in February after contacting Sen. Amy Klobuchar’s office, she received her refund — with interest.
There were more than 1 million incidents of tax-related identity theft in 2011, and almost 1.2 million in the first nine months of 2012, according to the Treasury Inspector General for Tax Administration.
The next largest categories of complaints last year were debt collection (10 percent), banks and lenders (6 percent), shop-at-home and catalog sales (6 percent) and prizes, sweepstakes and lotteries (5 percent).
Minnesota in the middle
Almost 25,000 complaints were registered by Minnesotans last year, putting the state in about the middle of the pack nationally.
Minnesotans reported losing $15.7 million to fraudulent schemes, not including identity theft.
Florida had the most fraud complaints per capita, and its residents were scammed out of the highest amount of money, on average.
The Twin Cities metro area ranked 183rd in the number of identity theft complaints per capita in 2012 among 388 metro areas with a population of at least 100,000. The Twin Cities was ranked much further back in 2011, at 268th place.
Minnesota ranked 110th for all other complaints in 2012, up drastically from 253rd place in 2011. Torok could not explain the jump in rankings, but he ventured a guess.
“These complaints are self-reported. It could very well have been because there were more news stories in Minnesota over the last year that happened to contain the FTC’s name and contact information in them. So more consumers learned about us last year.”
The value of the data
“The database is the basis for virtually all of our fraud cases that we’ve brought,” Torok said.
Last month, a business “coaching” scheme based in Nevada that allegedly took more than $100 million from consumers was shut down in part based on an investigation into complaints lodged by victims.
Beginning in 2007, Ivy Capital Inc. and 39 co-defendants promised to help consumers set up a successful Internet business. They overstated the earnings potential and charged up to $20,000 or more depending on the credit limit on the customers’ credit cards, according to the FTC’s complaint. Most customers later found it nearly impossible to use the plan to start a business. The defendants failed to disclose or honor their refund policy, according to the FTC. Defendants were ordered to hand over two houses and eight cars, among other assets.
To file a complaint related to fraud, identity theft or use of the do-not-call registry, go to www.ftc.gov or call 1-800-FTC-HELP.
Go to www.startribune.com/a2097 for the full report.
Hard Data digs into public records and puts a spotlight on rule breakers in Minnesota. Contact me at firstname.lastname@example.org.