WASHINGTON (3/16/15)--Nearly two thirds of self-reported financial fraud victims experienced at least one nonfinancial cost of fraud to a serious degree--including severe stress, anxiety, difficulty sleeping and depression, according to new report from the FINRA Investor Education Foundation.
While the Stanford Financial Fraud Research Center estimates that $50 billion is lost to financial fraud every year, the FINRA Foundation's research examines the broader psychological and emotional impact of financial fraud.
"Fraud's effects linger and cause distress well after the scam is over," said FINRA Foundation President Gerri Walsh. "For the first time, we have data on the deep toll that fraud exerts on its victims, and the results are sobering."
The most commonly cited nonfinancial costs of fraud are severe stress (50%), anxiety (44%), difficulty sleeping (38%) and depression (35%).
The report found that, beyond the psychological and emotional costs, nearly half of fraud victims reported incurring indirect financial costs associated with the fraud, such as late fees, legal fees and bounced checks. Twenty-nine percent of respondents reported incurring more than $1,000 in indirect costs, and 9% declared bankruptcy as a result of the fraud.
A recent survey by Los Angeles-based Bizrate found that nearly two-thirds of consumers believe merchant payment security is inadequate, a number largely driven by massive data breaches at stores such as Target and Home Depot (News Now Feb. 5).
Those under 35 were the least concerned at 45%, while the oldest group, those over 65, worried the most at 77% (Pymnts.com Feb. 4). Nearly 5,000 people were polled online.
CUNA continues to press lawmakers to pass legislation that would require merchants to meet the same strict payment data security standards required of financial institutions.