Fraud Tax Increase
We recently featured a link to an article titled “You may be paying $400 to $600 a year to offset shoplifting costs”. When we coined the phrase “fraud tax” in a previous post, we estimated the cost of both property and casualty insurance and retail fraud combined to be about $600 per household.
In fact, we estimate that the cost of insurance fraud (plus retail fraud) adds up to over $600 per year for every American household, a number we like to call the “fraud tax”.
Apparently, we may need to adjust our figure if retail theft alone costs as much as $600 per person, as is speculated in the article.
“There was this fear that the media would uncover our dirty little secrets,” Doyle said. “But now we want the public to know about it, because they’re paying for it. They pay $400 to $600 a year more for merchandise because of retail theft.” The extra money is not just the cost of markups to cover the losses, but also the cost of insurance, electronic tags and in-store cameras. “All of that stuff comes at a price,” Doyle said. “We want the public to be angry about it.”
If Doyle’s estimate reflects the cost per person for adults and children, then the cost of retail fraud would be $2,400 for a family of four (using the high end of Doyle’s range). Add insurance fraud to that, and you’ve got a nice trip to Disneyland.
If you’ve been a regular reader then you know that there’s an existing solution for both retail fraud (including organized retail crime and e-fencing) and insurance claims fraud. If more companies instituted identity (or entity) resolution software, fraud losses could be greatly reduced.
So are you “mad as hell and not going to take this anymore”? Or do you see the fraud tax as just the price of admission so to speak? Leave a comment and let us know.
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March 28th, 2008 at 2:40 am
Tax increase is is okay as long as the government will use the money wisely not for corruption.