Cross Border Fraud

62 Pages Posted: 18 Apr 2022

See all articles by Michel Grosz

Michel Grosz

Federal Trade Commission

Devesh Raval

Federal Trade Commission

Date Written: April 5, 2022

Abstract

We build a theoretical framework for cross-border fraud in which international fraud complaints follow a gravity model. Using several large databases of consumer complaints, we find that complaints exhibit gravity; compared to trade volumes, cultural distance is more important for complaints and physical distance less important. We then use the gravity model estimates to estimate country-level fraud rates and identify clusters of countries with high fraud rates. Finally, in line with our model predictions, high fraud rates are negatively correlated with per-capita GDP and measures of strong regulatory institutions.

Keywords: gravity, fraud, complaints, international trade

Suggested Citation

Grosz, Michel and Raval, Devesh, Cross Border Fraud (April 5, 2022). Available at SSRN: https://ssrn.com/abstract=4076428 or http://dx.doi.org/10.2139/ssrn.4076428

Michel Grosz

Federal Trade Commission ( email )

600 Pennsylvania Avenue NW
Washington, DC 20580
United States

Devesh Raval (Contact Author)

Federal Trade Commission ( email )

600 Pennsylvania Ave NW
Washington, DC 20580
United States

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