Jerrold Leichter wrote:

| > Credit card fraud has gone *down* since 1992, and is actually falling:
| >
| > 1992:  $2.6B
| > 2003:  $882M
| > 2004:  $788M
| >
| > We're on the order of 4.7 cents on the $100.
| >
| >
| >
The article also mentions that the loss rate for 1992 was 15.7 cents per $100.

Something doesn't add up.  Combining the dollar values above with the loss
rate per $100, I calculate that the total charges handled in 1992 was about
$165 billion - which seems a bit low, but reasonable.  However, the
corresponding calculation for 2004 shows a total charges of about $16 billion,
which is clearly nonsense.

I don't actually see the $2.6B figure anywhere in the article.  Where did it
come from?

I did the math. 15.7 / 4.7 ~= 3.34. 3.34 * $778M = $2.6B. There's a problem here, but I'll get to it in a sec.

Hmm...lets verify the rest of this:

4.7 cents per 100 is 0.047 dollars per 100 dollars is 0.00047 dollars per dollar.

x * 0.00047 = $778M

x = $778M / 0.00047
x = 1655319M = 1.65T

Looking at Federal Reserve data ( ), there was about $2T in overall consumer credit. I can envision the vast majority, but not all of this being on plastic. So, $1.65T works.

If you try to repeat this for 1992, though, you'll find an interesting transactions in 1992 were also about 1.65T. Gee, it's almost like I assumed credit card usage rates were constant over the 12 year period...oops :) But then there's inflation, which alters dollar figures substantially. So oops in the other direction.

The fundamental point stands, fraud has been managed surprisingly well (though some people have said fraud is understated by ~~200%).


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