developing a taxonomy for measuring fraud · developing a taxonomy for measuring fraud philadelphia...
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U.S. Department of Justice
Office of Justice Programs
BUREAU OF JUSTICE STATISTICS
Developing a Taxonomy for
Measuring Fraud
Philadelphia Reserve Bank Conference on Aging, Cognition, and Financial Health
Lynn Langton, Ph.D. Chief, Victimization Statistics Bureau of Justice Statistics
November 29, 2017
2 www.bjs.gov
Bureau of Justice Statistics
• BJS = Independent statistical arm of the U.S. Department of Justice
• BJS mission: To collect, analyze, publish, and disseminate information on crime, criminal offenders, victims of crime, and the operation of justice systems at all levels of government. These data are critical to federal, state, and local policymakers in combating crime and ensuring that justice is both efficient and evenhanded.
• Authorizing legislation: First established on December 27, 1979 under the Justice Systems Improvement Act of 1979, Public Law 96-157 (the 1979 Amendment to the Omnibus Crime Control and Safe Streets Act of 1968, Public Law 90-351).
3 www.bjs.gov
Value of reliable statistical crime data
Provides the ability to* -
• Identify/diagnose emerging problems
• Measure change over time in incident levels
• Compare among subgroups to identify risk
• Monitor victim and institutional responses to these incidents
• Evaluate impact of policy changes
*Hinges on the internal and external consistency of data collected to ensure comparability of estimates
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Need for statistical classification scheme
“A proper classification provides a strong basis for structuring and organizing information, and so provides a useful blueprint for operationalizing actual information collection.”
-National Academies of Sciences, 2016
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Principles of crime classification
United Nations Statistical Commission
Statistical classification - “A set of discrete categories, which may be assigned to a specific variable registered in a statistical survey or in an administrative file and used in the production and presentation of statistics.”
International Classification of Crime for Statistical Purposes
“A set of discrete, exhaustive and mutually exclusive categories which can be assigned to one or more variables used in the collection and presentation of data, which describe the characteristics of a particular population.” -United Nations Office on Drugs and Crime
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Fraud taxonomy
Need for standardized measure of fraud: extant estimates of fraud prevalence vary widely
• Not accounted for in either of the US primary crime measures • BJS National Crime Victimization Survey • FBI Uniform Crime Reporting Program
• Inconsistent definitions of fraud
• Differences in the types of fraud studied
• Variation in the populations surveyed
• Under-/over - reporting of fraud
• Inability to examine trends
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Fraud taxonomy
Goals:
1. To create a comprehensive uniform classification scheme for all types of financial fraud
2. To inform the development of a fraud prevalence survey for the BJS National Crime Victimization Survey (NCVS)
• More detailed focus on individual financial fraud rather than fraud against organizations, the government, or society
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Fraud taxonomy
Definition of Fraud:
Intentionally deceiving the victim by misrepresenting, concealing, or omitting facts about promised goods, services, or other benefits and consequences that are nonexistent, unnecessary, never intended to be provided, or deliberately distorted for the purpose of monetary gain.
Primary Fraud Classifications (level II):
• Investment fraud
• Consumer products & services fraud
• Job opportunity scams
• Prize and lottery fraud
• Phantom debt collection
• Charity fraud
• Relationship & trust fraud
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Fraud taxonomy
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National Crime Victimization Survey (NCVS)
• Initiated in 1972 as the National Crime Survey • Redesigned in 1993 and has remained largely unchanged since that point
• Key Goals: • Designed to capture the ‘dark figure’ of crime; serve as a complement to
police statistics • Obtain information on characteristics of crime victims and crime events • Provide estimates of the level of crime and year to year change
• Produces national rates and levels of violent and property victimization, information on the characteristics of crimes and victims, and consequences of victimization
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NCVS Methodology
• Interviews with ~130,000 households each year, ~220,000 persons
• Interviews conducted by the U.S. Census Bureau.
• Households/persons are interviewed every 6 months over a 3 year period
• Mode – first interviews in person, subsequent interviews conducted either in person or by phone • Interviews conducted with all persons age 12 or older in sampled households • Response rate ~84%
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NCVS Utility for Measuring Fraud
• Nationally representative • Good coverage and high response rates for populations most at risk/key
populations • Asks respondent about personal experiences with fraud
• Captures information about the response and impact on the victim • Ability to measure frauds reported and not reported to police/consumer
complaints • Official police statistics will not reflect the true magnitude of the fraud
problem • Large sample sizes allow for disaggregation of estimates by key
characteristics • Routine administration allows for the assessment of change over time
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Types of estimates to be generated
• National prevalence of fraud victimization for persons age 18 or older
• Prevalence by specific types of financial fraud
• Prevalence by victim demographic characteristics
• Among the elderly
• Among persons with disabilities
• Monetary losses and other consequences
• Victim reporting behaviors
• Law enforcement
• Consumer protection agency
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Timeline
• Currently being administered as an NCVS supplement to persons age 18 or older who completed the core NCVS (October-December 2017)
• Census Bureau delivers data file (Spring 2018)
• BJS report on fraud victimization published (Winter 2018)
• 2017 SFS Public Use File (PUF) and codebook archived (Winter 2018)
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Other Considerations
• BJS currently administers a separate supplement on identity theft, every two years • Kept separate from fraud on the taxonomy
• Fraud taxonomy is currently being used to collect survey data but a similar taxonomy could be used with administrative data as well
• Taxonomy initially tested on complaint data
• Taxonomy allows data to be collected differently across organizations for operational purposes, but reported out using consistent categories
• Value of using survey data in conjunction with administrative data
• Triangulation
• More complete picture of crime
