[Senate Hearing 113-904]
[From the U.S. Government Publishing Office]



 


                                                        S. Hrg. 113-904
 
                       HANGING UP ON PHONE SCAMS:
                         PROGRESS AND POTENTIAL
                       SOLUTIONS TO THIS SCOURGE

=======================================================================

                                HEARING

                               BEFORE THE

                       SPECIAL COMMITTEE ON AGING

                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS


                             SECOND SESSION

                               __________

                             WASHINGTON, DC

                               __________

                        WEDNESDAY, JULY 16, 2014

                               __________

                           Serial No. 113-26

         Printed for the use of the Special Committee on Aging
         
         [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
         
         

        Available via the World Wide Web: http://www.govinfo.gov
        
        
	 
	                        ______
	 
	              U.S. GOVERNMENT PUBLISHING OFFICE 
	 46-916PDF          WASHINGTON : 2023
	 
	 
 
        
        
                       SPECIAL COMMITTEE ON AGING

                     BILL NELSON, Florida, Chairman

ROBERT P. CASEY JR., Pennsylvania    SUSAN M. COLLINS, Maine
CLAIRE McCASKILL, Missouri           BOB CORKER, Tennessee
SHELDON WHITEHOUSE, Rhode Island     ORRIN HATCH, Utah
KIRSTEN E. GILLIBRAND, New York      MARK KIRK, Illinois
JOE MANCHIN III, West Virginia       DEAN HELLER, Nevada
RICHARD BLUMENTHAL, Connecticut      JEFF FLAKE, Arizona
TAMMY BALDWIN, Wisconsin             KELLY AYOTTE, New Hampshire
JOE DONNELLY Indiana                 TIM SCOTT, South Carolina
ELIZABETH WARREN, Massachusetts      TED CRUZ, Texas
JOHN E. WALSH, Montana
                              ----------                              
                  Kim Lipsky, Majority Staff Director
               Priscilla Hanley, Minority Staff Director
                         C  O  N  T  E  N  T  S

                              ----------                              

                                                                   Page

Opening Statement of Senator Bill Nelson, Chairman...............     1
Opening Statement of Senator Susan M. Collins, Ranking Member....     2

                           PANEL OF WITNESSES

Mr. W., Grandparent Scam Victim..................................     4
Kevin Rupy, Vice President, Law and Policy, United States Telecom 
  Association....................................................     5
Lois Greisman, Associate Director, Division of Marketing 
  Practices, Bureau of Consumer Protection, Federal Trade 
  Commission.....................................................     7
Joseph S. Campbell, Deputy Assistant Director, Criminal 
  Investigative Division, Federal Bureau of Investigation........     8

                                APPENDIX
                      Prepared Witness Statements

Mr. W., Grandparent Scam Victim..................................    19
Kevin Rupy, Vice President, Law and Policy, United States Telecom 
  Association....................................................    21
Lois Greisman, Associate Director, Division of Marketing 
  Practices, Bureau of Consumer Protection, Federal Trade 
  Commission.....................................................    38
Joseph S. Campbell, Deputy Assistant Director, Criminal 
  Investigative Division, Federal Bureau of Investigation........    55

                        Questions for the Record

Lois Greisman, Associate Director, Division of Marketing 
  Practices, Bureau of Consumer Protection, Federal Trade 
  Commission.....................................................    65
Joseph S. Campbell, Deputy Assistant Director, Criminal 
  Investigative Division, Federal Bureau of Investigation........    67

                       Statements for the Record

CVS Caremark Statement...........................................    73
Daniel J. Eckert, Senior Vice President, Services, Walmart 
  Stores, Inc., Statement........................................    76
Green Dot Corporation Statement..................................    79


                       HANGING UP ON PHONE SCAMS:



                         PROGRESS AND POTENTIAL



                       SOLUTIONS TO THIS SCOURGE

                              ----------                              


                        WEDNESDAY, JULY 16, 2014

                                       U.S. Senate,
                                Special Committee on Aging,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 1:34 p.m., Room 
562, Dirksen Senate Office Building, Hon. Bill Nelson, Chairman 
of the Committee, presiding.
    Present: Senators Nelson, Casey, and Collins.
    Also Present: Senator Murphy.

                  OPENING STATEMENT OF SENATOR
                     BILL NELSON, CHAIRMAN

    The Chairman. Good afternoon.
    I have asked all of you to join the table instead of two 
panels because we have a vote that is being called at around 
2:20, so I want to take advantage of going ahead and getting 
all of your testimony.
    This hearing is the latest in a series of investigations 
the committee has conducted on the devastating impact that 
fraud and scams have on senior citizens. Over the last two 
years, we have explored the rise of Jamaican lottery scams, tax 
refund schemes, and Social Security and Medicare fraud, so, 
today, we are going to examine what is now making a comeback in 
the scam world, and it is called the Grandparent or Emergency 
Scam.
    It is quite despicable. It preys on a senior citizen's 
willingness to do anything to help a family member in trouble. 
For example, a scammer convinces the victim over the telephone 
that his or her grandchild or another relative is in jail, is 
in the hospital, or stuck in a foreign country and needs money 
to get out of the predicament.
    Since the beginning of 2012, the Federal Trade Commission 
has received more than 30,000 complaints about scammers who 
claim to be a friend or a family member in distress, and it is 
costing Americans more than $42 million, just since the 
beginning of 2012. Now, this does not tell the whole story 
since a majority of these crimes go unreported. What we do know 
is that the FTC reports that imposter scams have doubled 
between 2009 and 2013.
    Today, we are going to hear from a distinguished panel on 
what authorities are doing to detect and prosecute such crimes 
and how seniors can protect themselves. We are also going to 
hear about private industry's role in combatting these scams.
    The bottom line is that the government alone cannot prevent 
these types of scams. Private companies that sell prepaid debit 
products or offer wire services are the last line of defense 
for consumers before their money is sent, and then it is lost 
forever.
    Now, fortunately, some of these large retailers are 
beginning to take proactive steps to protect their customers, 
and, in addition to issuing consumer warnings about scams, many 
companies are now training their employees to identify and warn 
potential victims.
    We have some good news today from the Green Dot 
Corporation. It makes a product that has been one of the cards 
of choice for fraudsters in many of these schemes. We heard 
about it first in the Jamaican lottery scam. Green Dot has 
announced plans to retire the MoneyPak card from store shelves 
nationwide. They have seen how this product has been used by 
the scammers and have decided to do the right thing, and that 
is to pull it.
    Green Dot, Walmart, and CVS submitted statements for 
today's hearing, which will be a part of the record.
    Going forward, we will have these companies come and join 
in this committee to hear about their experience and their 
progress. We are going to continue to encourage other debit 
card companies and retailers to do the same proactive thing.
    Little by little, we are trying to give visibility to this 
fraud that is being perpetrated particularly on our senior 
citizens.
    Senator Collins.

                 OPENING STATEMENT OF SENATOR 
                SUSAN M. COLLINS, RANKING MEMBER

    Senator Collins. Thank you, Mr. Chairman, and I apologize 
for being a few minutes late. Like you, I am trying to balance 
a lot of different commitments today.
    I want to thank you for calling this hearing to explore 
once again the dangers posed by con artists looking to swindle 
older Americans out of their life savings. This is our seventh 
hearing on such scams, and I appreciate your maintaining the 
committee's focus on this incredibly important topic. In fact, 
a great deal of what we have learned about these scams is the 
result of reports and complaints made to the committee's fraud 
hotline.
    Today's hearing explores a form of impersonation scam that 
we have nicknamed the Grandparent Scam. Basically, it works 
like this. A scammer calls a potential victim and claims to be 
someone he is not who needs cash immediately because of an 
emergency. The scammer plays on the victim's emotions by 
claiming to be a grandchild or another loved one. He says that 
he needs money because he has been in an accident, his car has 
broken down, or he is stranded in a foreign country.
    I, myself, have received an e-mail version of this scam 
from someone purporting to be my nephew, and it sounded just 
like him. He was overseas, supposedly had been robbed, and 
needed money to fly back home. Perhaps unsympathetically, I 
told him to go to the American Embassy for help.
    I then started thinking about it and called his father to 
see what was going on and found out that he was not, in fact, 
overseas.
    In many cases, the scammer asks the victim to send money in 
the fastest way possible, which involves going to a local 
retailer, purchasing a prepaid debit card, and giving the 
scammer the code on the back to allow him to transfer its 
value. Once that money is transferred, it is very difficult, if 
not impossible, to trace.
    One Maine grandparent was called by a scammer impersonating 
his grandson. This so-called grandson told my constituent that 
he had gotten into a car accident in Nicaragua and needed 
$1,800 to pay back the rental car company or he would not be 
allowed to leave the country.
    After my constituent withdrew the money from his savings 
and wired it to his so-called grandson, he got another call.
    This time, the scammer said that the government was 
pursuing criminal charges against him because someone had been 
injured in the accident and he needed $4,000 to hire a lawyer 
right away. Since my constituent thought that his grandson was 
traveling abroad for a wedding, he went to his bank again and 
withdrew $4,000 more from his savings.
    When the scammer pressed his luck and called back a third 
time asking for even more money, my constituent became 
suspicious and thought to ask him some simple questions that he 
wished that he had asked from the start, such as, where were 
you born and who is your mother. It was only when the scammer 
could not answer those questions that this loving and trusting 
grandfather realized that he had been duped. Fortunately, he 
was able to limit his losses because he had not yet released 
the code to transfer the money to Nicaragua.
    Another constituent, Mrs. Sandra Jaeger, got a call last 
fall from someone who claimed to be her son. He said he had 
been in a car accident, that it was his fault, and he did not 
have insurance. He asked for $1,500 to pay off the other party, 
and Mrs. Jaeger, unfortunately, did so, using Western Union to 
wire the money.
    Now, here is the point. When she realized that she had been 
scammed, she contacted everyone she could think of to report 
her case and to get help--local and State law enforcement, the 
FBI--but she was told there was nothing that they could do for 
her.
    As we have learned, these scammers, they are not only 
unscrupulous and aggressive, often calling potential victims 
dozens of times, but they are also technologically savvy. They 
know how to route their calls using Voice Over Internet 
Protocol, which is very hard to trace, and, they know how to 
spoof Caller ID to make it appear that they are calling from a 
trusted source.
    Another version of this impersonation scam might be called 
the Tax Man Scam. In this version, the con artists use the 
spoofed Caller ID that represents a legitimate Washington, DC 
phone number to contact taxpayers and they claim to be calling 
from the Criminal Investigative Division of the IRS. The 
scammer identifies himself as the Investigation Chief and tells 
the taxpayer that he or she owes more than $5,000 in back 
taxes.
    Well, to make a long story short, my staff actually spoke 
to a tax man scam artist as part of the committee's 
investigation. We suspect that the scammer who called himself 
Steve Parker was located outside the United States, but, this 
scam is so elaborate that the scammer was able to claim he was 
calling from the Federal Investigative Department at the IRS, 
was able to give the correct address for IRS headquarters here 
in Washington, and actually included a room number, but, not 
surprisingly, that room number does not exist within the IRS 
Building.
    Mr. Chairman, these scammers are a plague for all 
Americans, but especially to our seniors. I thank you for 
continuing to shine a light on their appalling practices and I 
look forward to hearing from our witnesses.
    The Chairman. You notice a pattern here of all of these 
hearings that we have been having on scams that are perpetrated 
against senior citizens.
    Senator Collins. Absolutely.
    The Chairman. This is just another version, and it is a 
particularly disrespectful one.
    First, we have a victim of a Grandparent Scam, and we are 
not using his full name because he does not want the scammers 
to try to reconnect him. We will call him Mr. W. He is 
accompanied today by one of his grandsons.
    Next, Kevin Rupy, the Vice President of Policy and Law at 
the U.S. Telecom Association.
    Then, Lois Greisman, Associate Director of the Federal 
Trade Commission's Division of Marketing Practices in the 
Bureau of Consumer Protection.
    Then, Joseph Campbell, the Assistant Director of the FBI's 
Criminal Investigative Division. Mr. Campbell, your written 
statement should be very specific on the Grandparent Scheme and 
other imposter phone scams. The FBI's Web site has more 
information on these types of scams compared to the statement 
you have submitted, so I would like in the questioning for you 
to provide additional details.
    Now, because of the fact that we have got a vote coming up, 
and it is at 2:10, I am going to hold you to five minutes so 
that we can get through everybody and get on with the 
questions.
    All right. Mr. W., you are up, and, if you would turn on 
your microphone.

          STATEMENT OF MR. W., GRANDPARENT SCAM VICTIM

    Mr. W. Thank you, Chairman Nelson and Ranking Member 
Collins for the opportunity to tell my story before the Senate 
Special Committee on Aging.
    I am an 81-year-old grandparent from Cincinnati, Ohio. Last 
December, I answered a phone call that sent my life into a tail 
spin and conned me out of $7,000 in what I now know was a phone 
scam. The caller had a young voice and said, ``Grandpa, this is 
your favorite grandson,'' to which I replied, ``I have six 
grandsons and they are all my favorites.''
    His reply was, ``Well, this is your oldest grandson,'' to 
which I replied, ``Tighe, how are you?'' I cannot remember 
exactly his reply, but it was something like, ``I am in jail 
and I need your help to get me out of jail and I do not want 
Mom and Dad to know about this. Talk to this police officer.''
    I cannot remember the officer's name, but he said he 
stopped a car for speeding. The car contained four young men 
who were on their way to a football game. In a search of the 
vehicle, narcotics were found. All four of the young men were 
arrested on narcotics charges. All four denied knowledge of who 
the owner of the narcotics was, but, Tighe had been the most 
cooperative and all he needed was $3,000 cash to get out of 
jail.
    I told the police officer that I needed to go--I was told 
by the police officer that I needed to go to Walmart or CVS and 
load a total of $3,000 into Green Dot MoneyPak cards in 
thousand-dollar denominations and I needed cash to purchase the 
cards. I cashed a check for $3,000 at my bank and went to 
Walmart and bought three MoneyPak cards, each loaded with 
$1,000. I returned home and called the police officer at the 
number with a 438 area code, the area code for Montreal, 
Canada, and gave him the scratch-off numbers on the MoneyPak 
cards.
    Later, the police officer called again and said they needed 
an additional $4,000. However, my checking account would not 
cover that amount. My wife went to the bank and withdrew $4,000 
from her savings account and went to Walmart and loaded four 
MoneyPak cards with $1,000 each. I told the officer the 
scratch-off numbers.
    Subsequently, I received another call from him saying they 
needed another $2,500. At this point, my wife suggested we call 
Tighe's twin brother to see if he had seen him today--that day. 
Dylan said he saw him before he went to work that morning. I 
called Tighe's cell phone and he answered. He was at work. It 
became obvious that Grandpa and Grandma were victims of a scam.
    Looking at the MoneyPak card, there is a warning that says 
in small print--and, I repeat, in small print--it says, ``If 
anyone else asks you for your MoneyPak number, your information 
from your receipt, it is a scam and Green Dot is not 
responsible for paying you back.''
    I believe putting that warning in such small print is 
unconscionable and Green Dot, the maker of the MoneyPak cards, 
has some liability inasmuch as they profited from these 
transactions. I also believe that Walmart has some 
responsibility in that it facilitated and profited from the 
scam with their sale of these MoneyPak cards.
    I reported this scam to the Cincinnati police, who did not 
seem interested. I also contacted the Federal Bureau of 
Investigation, who referred me to the Federal Trade Commission, 
but I am not sure what they have been able to do about it.
    I have some suggestions about what prepaid debit card 
companies could do to protect consumers, which I hope to get 
into later on.
    Thank you for listening to me and giving me this 
opportunity to testify. I am happy to answer questions.
    The Chairman. Thank you, Mr. W. You are very courageous to 
come and share this with us.
    Mr. Rupy.

           STATEMENT OF KEVIN RUPY, VICE PRESIDENT, 
       LAW AND POLICY, UNITED STATES TELECOM ASSOCIATION

    Mr. Rupy. Chairman Nelson, Ranking Member Collins, members 
of the committee, thank you for giving me the opportunity to 
appear before you today. My name is Kevin Rupy and I serve as 
Vice President of Law and Policy at U.S. Telecom.
    U.S. Telecom and our member companies share the committee's 
concern about the problems associated with phone-based imposter 
scams targeted at seniors. Calls using Voice Over Internet 
Protocol, or VoIP, technology, when combined with Caller ID 
spoofing, can be used by scammers to mask their identity and 
location, giving their target a false sense of confidence about 
who is calling.
    Three important developments have occurred in the last year 
that could help address this issue. First, our member companies 
continue to work with government and industry stakeholders to 
develop a more secure form of Caller ID authentication in order 
to more effectively address caller ID spoofing. Last summer, 
the Internet Engineering Task Force, or IETF, created a formal 
working group focused on creating a secure Caller ID for VoIP 
calls. The Secure Telephone Identity Revisited Group, or STIR, 
has been working since then to achieve this goal. Despite 
technological challenges, stakeholders within the IETF believe 
that a cryptographic approach for VoIP can provide a much 
stronger and less spoofable assurance of identity than the 
legacy telephone network provides today. Members of the IETF 
include representatives from industry, including many U.S. 
Telecom members, and government, including the FCC's Chief 
Technologist. In May, the group developed high-level 
requirements for solutions, and less than two weeks ago, it 
released a document outlining a mechanism for securely 
identifying originators of VoIP telephone calls. Any solutions 
developed by this group will become most effective upon a full 
transition to IP-based communications networks, a process that 
is well underway.
    Second, U.S. Telecom member companies and independent 
application developers offer services today that can help older 
Americans reduce unknown and potentially fraudulent calls. For 
example, consumers subscribing to Verizon FIOS digital voice 
service can utilize a ``do not disturb'' feature, which 
prevents some or all incoming calls from ringing a customer's 
phone, sending them instead to voice mail or a general 
announcement. It can be activated for set periods or left on 
indefinitely and also lets consumers establish an ``accepted 
callers'' list for up to ten numbers that will bypass these 
safeguards and allow the call to ring through. Similar 
offerings are available from Century Link, AT&T, and others. In 
addition, third-party services, such as the FTC's Robocall 
Challenge Winner Nomorobo, may also be available to consumers.
    Finally, our industry has ramped up a concerted broad-based 
public-private effort focused exclusively on the issue of 
telephony abuse within the existing framework of the Messaging, 
Malware and Mobile Anti-Abuse Working Group, or MAAWG. 
Participants in the working group include the FCC, the FTC, the 
FBI, the Department of Homeland Security, and a broad range of 
industry members. The MAAWG's Voice and Telephony Abuse Group's 
sole focus is addressing abuse occurring over telephone 
networks. It was created to help protect telephony services 
from criminal activity and abuse by developing best practices, 
technologies, and methods for mitigating phone-based attacks 
and scams.
    In closing, let me thank, again, the committee for holding 
this timely hearing. We share the committee's concerns. We look 
forward to our continued work together to address this 
constantly evolving challenge.
    The Chairman. Double your efforts, Mr. Rupy.
    Ms. Greisman.

        STATEMENT OF LOIS GREISMAN, ASSOCIATE DIRECTOR,

           DIVISION OF MARKETING PRACTICES, BUREAU OF

         CONSUMER PROTECTION, FEDERAL TRADE COMMISSION

    Ms. Greisman. Good afternoon, Chairman Nelson, Ranking 
Member Collins, and members of the committee. I appreciate the 
opportunity to appear before you on behalf of the Federal Trade 
Commission to discuss the Commission's role in combatting 
telemarketing fraud.
    As we have heard, the injury inflicted by telemarketing 
fraud is well known. Horror stories abound. The harm is not 
just economic, but emotional, as well.
    To tackle phone fraud, the FTC uses a three-pronged 
strategy: Law enforcement with close coordination with our 
Federal and international counterparts, education and outreach, 
and an initiative to spur technological innovation to develop 
tools that help consumers avoid unwanted calls and also help 
law enforcers track down the fraudsters.
    First, law enforcement, and with a focus on imposter scams. 
Each of us in our own minds seeks out and relies upon trusted 
sources. That is the very thing scammers use and twist, whether 
they pretend to be from the government, a family member, or 
hide behind a recognizable corporate name. Impersonating 
someone trusted is more than just a door-opener. It is an 
invitation to come in and sit down.
    When it is successful, people lose money, enormous amounts 
of money. As the testimony indicates, during just the past two-
and-a-half years, consumers report having lost more than $200 
million to imposter scams.
    Not surprisingly, in more than 90 percent of the cases 
reported--of the complaints reported to the Commission, 
consumers indicate that the initial contact was by the phone. 
Halting such impersonators is central to the Commission's broad 
telemarketing enforcement program.
    One case we filed early this year typifies the work. 
Defendants allegedly called people, many of whom were elderly, 
and falsely stated that a member of their family or a friend 
had bought for them a medical device alert, and then they lied 
about whether they would have to pay for it.
    Given the nature of such conduct and the fact that we see 
at least some telemarketers engaged in imposter scams emanating 
out of Canada and also out of Jamaica, our Criminal Liaison 
Unit has worked closely with criminal authorities to prosecute 
perpetrators of phone scams through what is known as Project 
COLT, which dates back to 1998, and more recently JOLT.
    Second, consumer education is an indispensable complement 
to law enforcement. The FTC has a wide range of materials 
directly relating to imposter frauds and all telemarketing 
scams. Every year, we reach out to more than--to tens of 
millions of people with those materials.
    I want to highlight Pass It On. I know you have seen it 
before. It is our newest project, and we just launched this 
innovative initiative aimed specifically at older active 
adults, including veterans. Based on research with the target 
audience, it gives older consumers critical information about 
scams so that they can pass it on to those who need it, and, of 
course, that information includes imposter scams and the all 
too common ``You've Just Won'' scam.
    We also went in a new direction in early 2012 when we 
partnered with the AARP Foundation to afford one-to-one peer 
counseling to consumers over age 60 who complained about being 
the victim of certain types of frauds, including imposter 
scams. The Foundation's volunteers have provided advice and 
counsel to more than 1,000 people.
    Finally, we have been keenly focused on spurring innovation 
to tackle illegal calls. With a convergence between our phone 
system and the Internet, as well as other technological 
developments, making fraudulent calls is cheaper than ever, and 
because it is so easy for the scammers to hide, the enforcement 
challenges are huge.
    In late 2012, we met those challenges with our own Robocall 
Challenge, which incentivized creating innovative call blocking 
platforms. I am delighted to say that one of the winners, 
Nomorobo, already launched a new product for consumers that is 
successfully blocking unwanted calls. Mr. Rupy referred to it 
just moments go.
    Our second Robocall Challenge is taking place next month at 
the DEF CON conference in Vegas--this is a conference of 
information security experts--where our contest will focus on 
phone honeypots, how to create them and how to use them to 
fight illegal calls.
    At the same time, the FTC has spearheaded a new working 
group of the London Action Plan International Do Not Call Forum 
to look specifically at Caller ID spoofing issues from an 
international perspective.
    In sum, the Commission's commitment to tackling phone fraud 
through enforcement action, education and outreach, and 
innovation is strong. As I have outlined, the Commission also 
will continue to identify and pursue innovative ways to protect 
consumers and engage Federal international and private industry 
members to do the same.
    Thank you for the opportunity. I look forward to your 
questions.
    The Chairman. Thank you.
    Mr. Campbell, tell us how we put some of these people in 
jail.

       STATEMENT OF JOSEPH S. CAMPBELL, DEPUTY ASSISTANT

           DIRECTOR, CRIMINAL INVESTIGATIVE DIVISION,

                FEDERAL BUREAU OF INVESTIGATION

    Mr. Campbell. Yes, sir. Chairman Nelson, Ranking Member 
Collins, and members of the committee, thank you for the 
opportunity to discuss the Federal Bureau of Investigation's 
efforts to combat fraud against our nation's seniors. I am 
pleased to appear before the committee today to address this 
important issue.
    At the beginning of 2011, the first of our nation's Baby 
Boomers reached the age of 65. Since then, thousands a day are 
also reaching that milestone. They have many reasons to 
celebrate. Senior citizens are most likely to have a nest egg, 
to own their own home, and to have excellent credit. 
Unfortunately, these are also many of the same qualities which 
make them so attractive to con artists.
    As you may already be aware, the FBI participates in a 
number of working groups and task forces dedicated to 
combatting significant frauds, to include phone scams, against 
our nation's citizens. From mortgage and health care fraud task 
forces to interagency groups, such as the Elder Justice 
Interagency Working Group, many of those resources are focused 
on preventing, detecting, and combatting those frauds which 
harm senior citizens. Unfortunately, though, frauds are limited 
only to the imagination of those who commit such egregious 
crimes.
    Internet and telephone fraud is defined as any illegal 
activity involving phone calls, Web sites, chat rooms, and/or 
e-mail. This fraud involves false communication or fraudulent 
representations to consumers. These crimes may include, but are 
certainly not limited to, advance fee schemes, lottery scams, 
and identity theft.
    In one particular scam, the Grandparent Scam, scammers use 
scenarios that include claims of a relative being arrested or 
in a car accident in another country. These fraudsters often 
pose as the relative, create a sense of urgency, and make a 
desperate plea for money to victims. It is not unusual for 
scammers to beg victims not to tell other family members about 
the situation. This is just one example. Unfortunately, the 
variety of schemes is again limited only by the imagination of 
the con artists who offer them.
    In our continued effort to combat the numerous fraudsters 
who would do our citizens harm, the Federal Bureau of 
Investigation and the National White Collar Crime Center 
established the Internet Crime Complaint Center, IC3. The IC3 
receives, develops, and refers criminal complaints regarding 
the rapidly expanding arena of cyber crime. The IC3 gives the 
victims of cyber crime a convenient and easy to use reporting 
mechanism that alerts authorities of suspected criminal or 
civil violations.
    For law enforcement and regulatory agencies at the Federal, 
State, local, and international level, the IC3 provides a 
central referral mechanism for complaints involving Internet-
related crimes. As complaints are reported online, the IC3 
electronically compiles the data. Trained analysts review and 
research each complaint, disseminating information to the 
appropriate Federal, State, local, or international law 
enforcement or regulatory agencies for criminal, civil, or 
administrative action, as appropriate.
    I can assure you, it will also remain a priority objective 
of the IC3 to establish effective alliances with industry. Such 
alliances enable the IC3 to leverage both intelligence and 
subject matter expert resources pivotal in identifying and in 
crafting an aggressive, proactive approach to combatting the 
crime.
    In conclusion, as you have heard, fraud targeting our 
senior citizens exists in many forms. It is creative in its 
approach and can often leave our most vulnerable citizens with 
little to no savings to enjoy a time in life they have earned. 
The FBI, in partnership with our Federal, State, local, and 
regulatory partners, is committed to identifying this threat 
where it exists and taking aggressive action in response.
    Chairman Nelson and Ranking Member Collins, I would like to 
thank you again for this opportunity to discuss the FBI's 
efforts to combat fraud against our nation's senior citizens. I 
am now happy to answer any questions that you may have.
    The Chairman. Before I turn to Senator Collins, Mr. 
Campbell, the Federal Trade Commission has a separate way to 
file complaints. It is called the Consumer Sentinel Network, 
and, it seems to be a much more expansive database. Do you all 
use that?
    Mr. Campbell. Yes, that is correct that our two agencies do 
coordinate on fraud information, and the IC3 data that we 
receive from potential victims is also fed into the Consumer 
Sentinel database so that we can all benefit from that 
information, analyze it, disseminate it, as appropriate, and 
develop the right strategies to target that criminal activity.
    The Chairman. Have you put somebody in jail for this kind 
of fraud?
    Mr. Campbell. Yes, we have. Yes. Yes, we have. For the 
Grandparent Scam, we had a case that, in fact, we have 
conducted with Project COLT, as referred to. That individual 
has been arrested. He pled guilty to one count of wire fraud, 
and that was an interagency investigation, and that indictment 
took place in 2012.
    The Chairman. I would suggest that you publicize that so 
that--by the way, do you find that these are criminal 
enterprises that do other kind of criminal things, as well as 
this?
    Mr. Campbell. Yes. That is a very important point, because, 
yes, there are individuals, and maybe smaller groups out there 
perpetrating these scams, but in some cases, they can be tied 
to organized crime or transnational organized crime 
enterprises, or they also may be more expansive fraud rings 
engaged in a variety of frauds relative to this. That is 
correct.
    The Chairman. All right. We are going to try to get 
everybody's questions in before you have to go to this vote.
    Senator Collins.
    Senator Collins. Thank you, Mr. Chairman.
    Mr. Campbell, I do appreciate the work that you are doing, 
but until we put in jail a lot of people who are committing 
these scams, we are not going to see real progress. The FTC has 
told us that there were 127,000 imposter scams last year alone, 
so, how many of these cases were prosecuted? In response to the 
Chairman, you mentioned just one case in 2012. How many?
    Mr. Campbell. Right. We do not track specific numbers 
regarding, say, a Grandparent Scam or particular individuals 
who have been targeted, but, we have invested a wide variety of 
individuals in regard to these types of fraud which have taken 
place. We have had a number of convictions related to those and 
we are pursuing them. It certainly is a priority for us, as I 
noted in regard to the establishment of IC3, to target this 
threat and to dedicate the resources that we can with our 
interagency partners against this threat.
    Senator Collins. Well, what worries me is what I am hearing 
sounds very bureaucratic. It sounds like there are a lot of 
task forces going on and there is a lot of discussion back and 
forth, but, 127,000 imposter scams last year alone, nine 
million scams of various kinds reported to the FTC--nine 
million cases like Mr. W., where a trusting senior has lost 
thousands of dollars--and what I am hearing from law 
enforcement is they are too small individually for us to bother 
with them. Well, you can be sure that the person who ripped off 
Mr. W. went on to rip off other people. That is just one case. 
He did not rip off Mr. W, and say, ``Boy, I am done now. I am 
going to pack it up.'' And, in fact, we know from our previous 
hearings that there are boiler room operations that do this, 
with people having scripts.
    I just think, as with the Jamaican lottery scam, where we 
got Jamaica to change its laws and we started seeing a more 
aggressive prosecution in this country, that until that 
happens, we are going to continue to see our seniors and others 
ripped off.
    I would like some statistics from you that show me that you 
are making this a priority and that you consider these scams to 
be important, even if they are reported one by one, a few 
thousand dollars, a few thousand dollars here, a few thousand 
dollars there. In the aggregate, it is a lot of money, and even 
for the individual, where it may be what law enforcement 
considers to be a small amount of money, it can be devastating 
to their life savings.
    Mr. Campbell. I certainly agree with you, and you used a 
key word there, ``aggregate.'' It is important that we do 
receive this information and the complaints, because in some 
cases, we do find them tied together, and that enables us then 
to effectively devote resources against that and work with the 
prosecutors at the State and local level, as well, so, we agree 
that this is a tragic circumstance and all available resources 
should be dedicated to it, and we are certainly committed to 
that, and, the more intelligence that we can receive--we 
encourage the public to report--the more it can help us be 
effective in regard to this targeting.
    Senator Collins. Well, the public is reporting, if you have 
got nine million scams reported to the FTC, including 127,000 
imposter scams just this year.
    My time has expired. We have got others to question, but, 
Ms. Greisman, for the record, I would like an answer from you 
on how often and how well law enforcement uses that wealth of 
data that you have collected at the FTC, if I could have that 
for the record since my time----
    The Chairman. Provide that for the record, that 
information.
    Ms. Greisman. Certainly.
    The Chairman. Okay. We are honored to have Senator Murphy 
come and join us.
    Let me call on our committee member, Senator Casey.
    Senator Casey. Mr. Chairman, thanks very much. I know we 
have limited time. I will be brief.
    I want to get a sense of what works, because often around 
here, as you may have detected from reading the newspaper, we 
do not pass a lot of substantial bills on a regular basis, so, 
we often have to think of other ways to have an impact, because 
legislation takes a long time and there are other problems with 
getting it passed, so, we have to try to use our staff, our 
resources, and a lot of them in-State to have an impact on a 
problem like this.
    In our office, we have a Web site, and I know other offices 
have similar strategies, and it is a Web site to provide older 
adults and family members with information and tips about scams 
or fraud of various kinds. I am just going to ask Mr. W., just 
from kind of your own perspective and your own experience, what 
do you think works in terms of--or, I should say, what kind of 
information would you hope would be available if it were on a 
Web site of an elected Member of Congress or any other 
information that families are not getting that you hope they 
would get? Does that make sense?
    Mr. W. Well, one, I do not--I am not sure--I already knew 
about this Grandparent Scam. Then, I became a victim of it. I 
had read about it and I knew--I heard about it, but the way it 
was set up--when I was contacted, I was in kind of a--it was a 
family member who had been hospitalized and I was interested in 
his condition. I thought his wife was calling when I received 
this call.
    Normally, I look at the Caller ID, and if it was a 438 
number, I would just disregard it, but, because I am slow to 
get around, I was in the living room where we do not have the 
telephone and by the time I got to there, it was already the 
third ring, and on the fourth ring, it stops working, so, I 
answered the phone without looking at the Caller ID. Looking at 
the Caller ID is clearly one way of--if you look at the Caller 
ID and it is either not a number with which you are familiar or 
some of the things that this gentleman talked about, there are 
some possibilities, but, I mean, it--and, there are other 
things that are involved in this.
    Beyond that, it is these MoneyPak cards, so I am glad to 
hear that the Green Dot is getting out of that business, but, I 
am sure that there will be another--there is a market for it, 
so I am sure somebody is going to fill that market.
    I do not know any good answer for that. I am not sure that 
being on the--no disrespect to your Web site, but I do not 
think many senior citizens look at their Senator's Web site----
    Senator Casey. Right. Right.
    Mr. W. [continuing] with any frequency.
    Senator Casey. I guess we have got to promote it.
    No, but that is helpful, and if there are other ways you 
think we can put in place preventative strategies, that would 
be helpful, and, of course, you, over time, can add to your 
answer and send us written advice, as well, so we appreciate 
that.
    I know we are limited on time, but Ms. Greisman, I just 
wanted to ask you about--we know that the Do Not Call Registry 
has been effective in a lot of ways, but I would ask you, 
because, apparently, in addition to what benefit we get from 
the Do Not Call Registry, we know that consumers will often 
post comments that are associated with these kinds of 
fraudulent calls, they will post them on different message 
boards online, and, I am just wondering if the FTC would 
consider or has considered creating some kind of a message 
board system or clearinghouse that kind of aggregates 
information about these kinds of fraudulent calls. Anything 
that--and, I missed your testimony. Maybe you spoke to this, 
but, anything that----
    Ms. Greisman. No, it is a fair question. It is a fair 
question. We are constantly evaluating, reevaluating what to do 
with our complaint data and how best to utilize it. It is 
widely available to law enforcement and law enforcement does 
use it extensively.
    We consider the consumer complaints we receive, and we 
receive a great many relating to Do Not Call. In any given 
month, we may get 270,000, 280,000 complaints relating to Do 
Not Call or robocalls. We consider them non-public, so we 
cannot just put them out on the public record, but, that is a 
fair question that we will continue to evaluate.
    Senator Casey. Thank you very much. Thank you, Mr. 
Chairman.
    The Chairman. Senator Murphy.
    Senator Murphy. Thank you very much, Mr. Chairman. Thank 
you for your generosity in allowing me to sit as part of this 
panel today. We have had a string of these Grandparent Scams in 
Connecticut, along our shoreline, which is the reason that I 
have had some interest in this issue over the past several 
months.
    I just want to ask one simple question, knowing that we are 
short on time, and this is probably for Mr. Campbell and Ms. 
Greisman, and that is about this issue of how you get 
information from local law enforcement. There has been some 
information compiled by this committee that suggests that local 
law enforcement often does not know where to report these scams 
when they get word of it, and they very often are not reporting 
into the database. This nine million is a pretty stunning 
umber, but imagine what the actual number is if local law 
enforcement was sending all of that information.
    Given the fact that you are only prosecuting where you see 
volume, given your limited resources, it seems like an 
imperative to make sure that local law enforcement is 
communicating up the chain to these databases and to the FBI, 
to the FTC, when they get information about these scams, so, 
what is the status, in both of your opinion, as to the flow of 
information from local law enforcement to the databases and to 
Federal law enforcement, and what can we do to make it better?
    Mr. Campbell. Sure. Well, this is an area that, for years, 
we have worked at many levels to have that dialogue with law 
enforcement in regard to these scams. We work with law 
enforcement in regard to these scams. We work with associations 
like the IACP and so forth in regard to this issue. We also 
have what is now called Operation Wellspring, which is 
coordinated out of the IC3, and that involves passing these 
violations to our field offices across the country. The data is 
analyzed to determine if it can be investigated and prosecuted 
federally, and if not, then that information is passed to our 
State and local officers for them to review and determine what 
action they can take, and, that has increased that information 
sharing both ways, and so we are working to promote that 
initiative more, to encourage that type of dialogue, as well, 
to drive together against this threat.
    Senator Murphy. Ms. Greisman.
    Ms. Greisman. Yes, thank you. We work extensively with 
local police departments and sheriffs' offices to encourage 
them both to contribute data into the Sentinel system and also 
to use the Sentinel system, and, we engage in hands-on training 
for them, as well, so that they can access it in a smart and 
intelligent way.
    Senator Murphy. Well, I think we need to do better. I 
appreciate those efforts, and, frankly, Mr. Rupy, I think 
industry can be involved in this, as well. If this is a matter 
of disseminating information, it is obviously in your interest 
to make sure that all this information from local law 
enforcement gets to the places in which it can be actionable 
and aggregated, and so this seems to be a perfect example of a 
place where limited public resources can be paired with 
potentially more bountiful private resources to make sure that 
local law enforcement reports all of the relevant information.
    Thank you very much, Mr. Chairman, for allowing me the 
time.
    The Chairman. Mr. Rupy, what can a telephone company do to 
help a senior citizen when they call them and say they have 
been hammered?
    Mr. Rupy. That is an excellent question, Chairman, and that 
is something that the phone companies will work with the 
consumer, based on the tools that they have and also based on 
the specific situation at hand, so, as an example, where a 
consumer reaches out to the phone company complaining about, 
perhaps, calls that they are receiving, the phone company can 
work with that consumer to identify tools that may be available 
to that consumer so that they can either----
    The Chairman. Such as? You could have the technology that 
if a spoofed number comes up, that, somehow, it alerts the 
customer?
    Mr. Rupy. That is--that is actually the ultimate goal of 
the STIR that I was talking about in my oral and written 
testimony, Mr. Chairman, and, essentially, the end game of that 
technology is that you will have an authentication between the 
person being called and the calling party, so that----
    The Chairman. Is that technology available today?
    Mr. Rupy. It is not yet available today, Mr. Chairman, but 
we do have intense industry and government involvement on 
developing those standards, because we have to develop the 
standard in order to implement that technology into the 
network.
    The Chairman. Well, if you could have heard all the 
hearings that we have, and just to complicate matters, a lot of 
them do not originate in this country. They are from a foreign 
country, and, that means you have got to work with another 
government in order to get them to cooperate to go after the 
guys, so, that makes it doubly difficult and longer and longer, 
and, therefore, the development of technology that will help 
someone identify a number, if it is spoofed, that would be 
extremely helpful in the protection of senior citizens, indeed, 
protection of customers, because of the vote that is now 
occurring, I want to say that I want to bring to the table 
retailers who offer the services to send money, such as Western 
Union and MoneyGram and the various cards. We are going to have 
a future hearing on that.
    Now, they have been reluctant to come. I want to tell them 
that, obviously, we will treat them very fairly, but they are 
being used to perpetrate fraud on our people and we do not like 
this and the American people do not like it, so, we want them 
to come and help work with us and with law enforcement and the 
agencies, the regulatory agencies. I am encouraged by the 
action of some retailers and debit card companies that they 
have taken, but several of them were reluctant to come. Well, 
if we have to, we will compel them to come, because we are 
going to get at the bottom of this.
    Thank you all. The meeting is adjourned.
    [Whereupon, at 2:26 p.m., the committee was adjourned.]

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                                APPENDIX

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