The optimal amount of fraud is non-zero (2022)
Fraud in financial and online systems can never be completely eliminated without making legitimate transactions unbearably difficult, so some non-zero level is effectively “optimal” once costs, false positives, and usability are taken into account. Commenters connect this tradeoff to real-world examples: national ID schemes vs. privacy, aggressive anti-fraud systems that lock out legitimate travelers or online shoppers, and safer payment architectures like strong 2FA or bank-mediated flows. The broader theme is that societies and businesses must balance security against convenience and opportunity costs, accepting a residual level of fraud much as they accept non-zero levels of accidents, pollution, or other harms.
Core idea: “Optimal” fraud vs zero fraud
- Many commenters restate the thesis as: eliminating all fraud is too costly; there is a trade‑off between fraud losses and friction, bureaucracy, or lost business.
- Some argue this is obvious diminishing‑returns economics; others say the “optimal non‑zero fraud” framing is unintuitive and emotionally jarring.
- Distinction emphasized between “desirable” (zero fraud) and “optimal in the real world” (some fraud, given costs and tradeoffs).
Fraud, usability, and security tradeoffs
- Analogies: computer security vs ease of use; road safety vs speed; pollution vs economic activity; airline accidents vs the cost or feasibility of zero risk.
- Several stress that beyond a point, stricter controls mostly increase false positives and harm legitimate users (e.g., social benefits cutoffs, overbearing KYC/AML).
Identity systems and national IDs
- Strong national IDs (e.g., Spain, various EU countries) are portrayed as making certain frauds and “identity theft” much harder compared to the US’s SSN/driver’s license patchwork.
- Some advocate cryptographic digital ID with zero‑knowledge proofs and non‑transferable credentials to reduce impersonation and over‑collection of data.
- Others worry about centralized power, surveillance, and widespread reuse of a single ID by “crappy companies” that will inevitably leak it.
Payments infrastructure and card fraud
- Extensive discussion of US‑style card‑number‑only payments vs PIN/3‑D Secure / bank‑redirect systems common in Europe, which are seen as causing far less fraud and fewer blocks.
- Examples of banks and card networks aggressively flagging legitimate high‑value or travel transactions (e.g., iPhone launch days, international travel), causing major user pain.
- Disagreement on how much is driven by regulation vs bank/network choices or specific large merchants’ setups.
Over‑aggressive anti‑fraud and user harm
- Multiple reports of cards and accounts frozen, ecommerce orders silently canceled, and identity quizzes failing due to data errors or name collisions.
- Some feel anti‑fraud systems increasingly resemble a “stupid big brother,” making normal life and travel difficult.
Moral and rhetorical critiques
- Several object to language like “welcome fraud,” arguing it confuses “can’t cost‑effectively eliminate” with “good.”
- Debate over whether it’s misleading to say “the optimal amount of fraud/deaths/disasters is non‑zero” versus saying “we can’t justify infinite spending or infinite friction to get to zero.”