The Data Desk – Complaints Part II “I’m Not Complaining But… What About Fraud and Scams?”

“I’m Not Complaining But…What About Fraud and Scams?”

In this follow-up to our previous blog on consumer complaints, the CBA Data Desk team digs deeper into the CFPB’s Consumer Complaint Database (“the database”) to understand the extent and nature of consumer experiences with fraud and scams—even when a complaint was not directly tagged for a fraud or scam issue.

The CBA Data Desk team analyzed complaint data with a focus on the pandemic and post-pandemic periods of January 2020 through October 2024 to explore the pervasiveness of fraud and scams, how the products they are associated with have changed over time, and what issues and underlying causes are correlated with fraud and scams. By better understanding the negative experiences of consumers through their complaints and meaningful discussion, industry and policymakers can better understand how to address fraud and scams.

Key findings

• Complaints about fraud and scams are more prevalent in the complaint data than are currently accounted for with at least an additional 80,000 complaints in the database that pertain to fraud and scams but are not directly labeled in the database as such.

• Non-credit reporting related fraud and scams complaints accounted for 1 in 10 non-credit reporting complaints over the studied period.

• COVID-19 likely had a profound effect on the pervasiveness of fraud and scams with the rate of complaints mentioning fraud or scams more than doubling from 2020 through 2023.

• Consumers are increasingly experiencing fraud when it comes to unrecognized purchases, receiving flawed merchandise or no merchandise at all—mirroring the rise in online shopping scams and chargebacks on card purchases.

Fraud and Scams are Big…. Really Big

The Federal Trade Commission’s Consumer Sentinel Network data show that there were over 2.6 million reports of fraud or scams in 2023, which does not account for the many known victims who did not report. The CFPB’s Consumer Complaint Database (“the database”) contains over a million complaints from January 2020 to October 2024. When looking just at the complaints that list “Fraud or scam” as their “issue”, there are just over 20,000. This may strike some readers as surprising as fraud and scams feel so pervasive in our everyday lives and there have been a growing number of reports and news stories about them. Is the media and policy world overreacting?

The answer is no. Consumers will usually select “fraud or scam” as their applicable issue when submitting a fraud or scam complaint, provided that the option is offered.  However, the database does not have this option for all products.

For example, there is no option for fraud or scam issues in the consumer checking or savings account product category, meaning if a consumer was submitting a complaint about an issue with a fraud or scam on their checking account, they would not see the “Fraud or scam” option available to select. Using consumer narratives, we were able to find additional complaints that were related to fraud or scam issues experienced by consumers.

After careful analysis, the data show that the number of complaints during this timeframe dealing with fraud or scams was more than five times higher than the database indicates. In fact, CBA’s analysis shows that from 2020 to 2024 there were over 100,000 complaints having some tie to a fraud or scam issue experienced by a consumer. To understand the nature of fraud and scams more deeply from the consumer perspective, see further analysis below.

The Changing Fraud Landscape

As consumers and the financial industry evolve, unfortunately so do scammers and fraudsters. Analyzing the complaints mentioning fraud or scams since 2011 shows how quarterly complaint volumes by product have changed over time, going from credit cards, to checking accounts, to money transfer services (See Figure 1 below). This analysis also shows that while the trend in complaints for these products was similar to others before the pandemic; during the pandemic, the number of complaints for checking and savings, credit and prepaid card, and money transfer and virtual currency products increased substantially faster, while others remained the same.

Figure 1

Fraud & Scams by Product

Fraud and scam complaints are concentrated in products that involve the primary ways consumers interact with their money. Figure 2 shows that complaints involving fraud and scams from 2020 to 2024 are concentrated in checking and savings accounts, credit and prepaid cards, and, increasingly, money transfer and virtual currency services.

Figure 2

Complaint narratives within these three product categories help us further understand what fraud or scam issues drive these complaint numbers.

For instance:

• Money transfer and virtual currency or money services had a higher number of complainants that cited being tricked into sending money to a scammer.

• Credit cards had a higher incidence of consumers complaining about fraudulent or unknown transactions showing up on their statements or not receiving merchandise that was paid for through their card and asking their bank for a refund (or “chargeback”).

• Checking and savings account complaint narratives had an even balance between these two types of issues, with consumers citing being tricked into sending money to scammers and not recognizing transactions on their accounts.

• Many consumer complaints tied to checking and savings products also mentioned the fraud or scam resolution process with their bank. While consumers may not have discussed the exact nature of the fraud or scam, we can see from their narratives that trying to resolve fraud or scam issues with their accounts can be complex, confusing, and frustrating for them and banking staff.

Fraud & Scams by Listed Issue/Sub-Issue

Complaint narratives show fraud and scams are often related to other issues consumers experience. As a result, consumers often submit complaints about fraud and scams under different, seemingly unrelated issues. Figure 3 shows that, excluding the direct fraud or scam option, the top three issues related to fraud and scams are “managing an account,” “problems with a purchase on a statement,” and “getting a credit card.”

Figure 3

For account management issues, there were a wide range of underlying causes including issues with deposits and withdrawals, debit and ATM card transactions, and inaccuracies in the handling and disbursement of funds. Looking into the narratives of these complaints, we found that most dealt with unrecognized or known fraud transactions. In some cases, consumers cited having sent funds to what was ultimately a scammer and documented their frustration or trouble with trying to get the funds back.

Most customers reporting problems with purchases on their statements reported either issues resolving disputed transactions, being charged for items they did not purchase, or being overcharged for certain purchases. All three of these sub-issues align with an increase in chargebacks and disputes seen during and after the pandemic.

While the “getting a card” issue may seem out of place, the overwhelming underlying cause for this selection was consumers stating that a credit card was opened fraudulently in their name, without their consent or knowledge, and without them having submitted an application. To be certain, just over 85 percent of complaints in this category listed the “sub-issue” (underlying cause) as “card opened as a result of identity theft or fraud”.

Conclusion

The CFPB can incorporate the “fraud” and “scam” reporting functions better in its consumer complaint submission form to more accurately identify which products and sub-issues are related to fraud or scams, while also improving data accuracy and our understanding of consumer fraud or scams pain points. The industry can use this data to enhance its products, customer experiences, and consumer education on fraud and scams. This information can also be helpful in helping firms understand where in the process consumer issues with fraud and scams break down and improve them moving forward. Helping companies and policymakers better understand how and where to make improvements is by no means a panacea but should be at least one of our goals in combatting fraud and scams.

About the Analysis

The complete dataset CBA analyzed runs from January 1, 2011, through October 25, 2024 (the date our data was collected). Some complaints received by the CFPB during October of 2024 may not have been published when our dataset was downloaded, resulting in slight differences in the raw totals, but percentages should be within a whole percentage point.

We excluded credit reporting complaints to get a better picture of complaints related to traditional consumer retail banking products and for reasons discussed in our previous blog post. We also focus our primary analysis on the period of January 2020 to October 2024 to capture fraud and scam complaints during the entire pandemic and post-pandemic period.

Our team started by including all complaints that had in their listed “issue” or “sub-issue” “Fraud or Scams” tag. CBA then found that consumers also often include their experiences with fraud and scams in their complaint narratives where “Fraud or scam” was not one of the available options to select. Using the CFPB’s own search tool and additional analysis to verify complaint narratives, CBA found that many complaints that did not have a fraud or scam tag involved some sort of consumer experience with fraud or scams. For instance, Complaint ID #7440856 from August 2023 has its issue tagged as “Managing an account” and the sub-issue listed as “Deposits and withdrawals” while the narrative describes a textbook example of the types of financial scams impacting a growing number of consumers.

Limitations: It is important to note that we are only working with a sample of the complaints the CFPB receives. Further, we only analyze complaints with consumer narratives as those narratives contain the phrases and key words necessary to search for complaints with underlying fraud or scam issues. This necessarily limits our sample further as not every consumer who may have experienced fraud, or scams would leave a narrative or consent to have their narrative or complaint shared. Additionally, many victims of fraud or scams fail to report for a number of reasons including shame or fear. To summarize, while we find more widespread fraud and scam issues in the CFPB Consumer Complaint Database than the currently available tags suggest, we are likely still undercounting the extent of the issue. As we recommend, additional research and the inclusion of a universal fraud or scam tag could increase data accuracy and estimates.