Survey of Fraud against Businesses

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About 57% of retail establishments experienced some type of fraudulent activity in 2007/2008. The vast majority of fraud-related losses for retail establishments did not exceed $20,000. The most commonly experienced fraud among retailers was "return fraud", which refers to the return of stolen merchandise or merchandise using counterfeit receipts to obtain a monetary refund.

Nearly half of retail business establishments never, or rarely, contacted police when they detected fraud, suggesting that fraud, like many crimes, is under-reported. In more than half of the cases, businesses considered the fraud too minor to involve police.

Of the retail establishments reporting fraud, 80% had financial losses as a direct consequence.

Among these businesses, 89% experienced losses of $20,000 or less. About 5% lost between $20,000 and $60,000, 4% lost between $60,000 and $100,000, and another 2% lost more than $100,000.

In 2008, return fraud accounted for nearly one-third (32%) of all fraudulent incidents perpetrated against retailers. Credit card fraud and the use of counterfeit money were the next most frequently reported type of fraud against retail establishments, with each accounting for 15% of retail fraud.

Among retail establishments that experienced fraud, 56% reported recovering fraud-related losses as a result of detecting fraudulent activity.

About 47% of all retail business establishments, regardless of whether they had experienced fraud in the previous 12-month period, reported that they never or only rarely notified law enforcement in cases of fraud.

The most commonly cited reason by retailers (56%) for not informing police was that the incident was considered too minor to involve the law.

Still, 34% of retail establishments said they always or often reported incidents of fraud to police and 18% indicated that police were called sometimes. Police were more likely to be notified when losses were substantial.

About 45% of health and property insurance establishments experienced fraud, with more than three-quarters (77%) of all fraud incidents against these establishments involving false or inflated claims. Of the individual health and property insurance establishments experiencing fraud, about 7 in 10 reported financial losses as a consequence.

Nearly half (46%) of all health and property insurance establishments indicated that police were never or rarely contacted in cases of fraud. About 36% said that they did so on occasion. Overall, the most common reasons for not contacting police were that the incident was too minor (34%) or that it was handled in some other way (33%).

About 18% of all individual health and property insurance establishments said that they always or often reported fraud to police.

Note: The Survey of Fraud against Businesses was undertaken for the first time in 2008 to address key gaps in data on business fraud in Canada. It was conducted by Statistics Canada in partnership with Public Safety Canada through funds from the Policy Research Initiative.

This report provides data at the national level on various issues. These include: the prevalence and types of fraud experienced (e.g., return fraud, credit and debit card fraud, fraudulent use of cheques, use of false information, false billing, false insurance claims and information on the use of counterfeit currency), how businesses respond to incidents of fraud, the monetary and non-monetary costs of fraud and fraud detection and prevention practices.

The survey covered about 7,500 business establishments and head offices from the retail, banking, and health and property insurance sectors. For about 90% of the sample, information was collected from individual business establishments directly. For the remainder, information was collected from head offices representing multiple establishments, then, where feasible, broken down to the level of single establishments. The sample estimates were weighted to represent industries as a whole.

Definitions, data sources and methods: survey number 5133.

The publication Fraud Against Businesses in Canada: Results from a National Survey, 2007/2008 (85-571-X, free), is now available from the Key resource module of our website, under Publications.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Information and Client Services (toll-free 1-800-387-2231; 613-951-9023; fax: 613-951-6615), Canadian Centre for Justice Statistics.