Editor’s Note: The Fraud Culture

Identity theft is a growing problem in the U.S. and in the global economy. But what are we prepared to do about it?

Somewhere in Michigan is an opportunist who has identified a means of generating capital, perhaps to operate a small trucking or transportation operation—three times in recent days, this pillar of business ethics has racked up charges of at least $600 per incident on one of my credit cards.

The correct business nomenclature for someone with those financial skills, I believe, is “jerk.”

Were it a single instance, or a single individual involved, I might be inclined to dismiss it, let the credit-card company do its make-good, eat the lost time spent seeking a resolution, and move on.

But it’s not a single instance. In the last two years, my wife and I have been victimized four times, including by someone who attempted to get an IRS refund by filing a false tax return in our names in Maryland, we’ve been hit (both as individuals and through the Ingram’s corporate accounts) with multiple overcharges from unscrupulous retailers, and other jerks out there have invoked our names and credit histories to engage in new and creative means of identity theft.

Remember when your father would go on those rants about “what’s wrong with America today?” Maybe he was on to something, after all. We’ve got an ethical problem.

So I did a little research to see how much of this issue might be attributed to folks like our friend in Michigan. As it turns out, he has a lot of colleagues embracing the something-for-nothing business model.

Theft, Inc.

According to CreditHub.com, credit-card and debit-card fraud  was a $16.31 billion industry in 2014. Card issuers absorbed 62 percent of those losses, while merchants—and this should be of concern to anyone who runs a small business—were saddled with 38 percent, or more than $6 billion worth of capital destruction.

Counterfeit cards, as I suspect the case in Michigan entailed, were generally the culprits for issuers, while merchants were mainly victimized through transactions where no card is presented, such as on-line, call center or mail-order purchases.

It’s a global economy, so this is not strictly an American issue—transactions in the U.S. accounted for less than half of all fraud worldwide, but it’s not much comfort to know that we’ve got company abroad. And given the numbers and frequencies of massive data breaches taking place here and abroad, it’s likely the numbers of victims, and the sizes of losses, will grow.

When financial institutions are eating $1 billion in debit-card fraud each year—a figure that keeps rising—the rest of us are getting the bill in the form of higher fees and charges. Same with retailers, who must levy higher prices that the rest of us then pay. This in addition to a significant disruption and infringement to our lives and to each financial institution involved.

What disappoints most with this experience, and with these statistics, is the depth and breadth of the nation’s Gimme Culture. I can only wonder why, given the numbers of people victimized over the years, this isn’t a bigger political issue, and why more resources aren’t brought to bear on prosecuting these crimes, seizing the ill-gotten assets of the jerks, and availing those folks of our fine accommodations in federal and state prisons.

Where does the jerks’ mind-set come from? Is the facelessness of the victims what drives the crooks, who can commit robbery without the inconvenience of using a gun? Is it a broader cultural issue that tells people they’re entitled to more, by any means necessary? Does it flow from an incessant bleat in certain quarters that if you don’t have enough, it’s because someone else took more than his share?

We need to reset our moral compass, for sure. But we also need American Know-How to assert itself.

As we’re currently observing in preparations for the July issue’s Corporate Report 100, listing the fastest-growing companies in the Kansas City region, there’s plenty of innovation taking place out there, and the Kansas City area is becoming a center of technology-development excellence. It would be nice if someone in that space could find the magic bullet that would deny these vermin the means to ply their trades.

Any takers?