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Author Topic: Estimating the severity of this fraud.  (Read 2203 times)

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« on: March 10, 2011, 21:14 »
I was curious if every person at iStock received the same percentage of take back as me, what would be the real severity of the fraud that occurred.  Here is how that calculation works out:

$$$ * 1000/MS

where MS is my MarketShare from

This gives the total amount of royalties, assuming everyone had the same percentage of refund as me, that iStock will take back next week.

If we divide this by the average royalty rate in decimal form (e.g. 0.25 for 25%), it gives us the total fraud amount charged on those credit cards.  In my case, that calculation worked out to almost $400,000.  I suspect if one were to do this on other portfolios, we would find the total fraud is actually much more than that.

For example, Mr. sjlocke has an MS of 1.29.  Given his $5000 refund, that gives:

$5000*1000/1.26 = $3.97M

Then, assuming that average royalty rate of 0.25 gives a grand total of just under $16 million dollars in fraud.

I realize that doing such exercises is futile.  Still, I think these numbers are telling of the scale of the problem.


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