[Senate Hearing 118-521]
[From the U.S. Government Publishing Office]
S. Hrg. 118-521
FIGHTING FRAUD:
HOW SCAMMERS ARE STEALING
FROM OLDER ADULTS
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HEARING
BEFORE THE
SPECIAL COMMITTEE ON AGING
UNITED STATES SENATE
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
WASHINGTON, DC
__________
SEPTEMBER 19, 2024
__________
Serial No. 118-23
Printed for the use of the Special Committee on Aging
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
57-777 PDF WASHINGTON : 2025
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SPECIAL COMMITTEE ON AGING
ROBERT P. CASEY, JR., Pennsylvania, Chairman
KIRSTEN E. GILLIBRAND, New York MIKE BRAUN, Indiana
RICHARD BLUMENTHAL, Connecticut TIM SCOTT, South Carolina
ELIZABETH WARREN, Massachusetts MARCO RUBIO, Florida
MARK KELLY, Arizona RICK SCOTT, Florida
RAPHAEL WARNOCK, Georgia J.D. VANCE, Ohio
JOHN FETTERMAN, Pennsylvania PETE RICKETTS, Nebraska
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Elizabeth Letter, Majority Staff Director
Matthew Sommer, Minority Staff Director
C O N T E N T S
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Page
Opening Statement of Senator Robert P. Casey, Jr., Chairman...... 1
Opening Statement of Senator Mike Braun, Ranking Member.......... 2
PANEL OF WITNESSES
Kathy Stokes, Director, Fraud Prevention Programs, AARP Fraud
Watch Network, Washington, D.C................................. 4
Scott Pirrello, Deputy District Attorney, Head of Elder Abuse
Prosecutions, San Diego District Attorney's Office, San Diego,
California..................................................... 6
Susan Whittaker, Administrative Assistant, Lehigh County Aging
and Adult Services, Allentown, Pennsylvania.................... 7
Nancy Gilmer Moore, Program Director, Indiana Senior Medicare
Patrol, Indiana Association of Area Agencies on Aging,
Indianapolis, Indiana.......................................... 9
CLOSING STATEMENT
Closing Statement of Senator Mike Braun, Ranking Member.......... 29
APPENDIX
Prepared Witness Statements
Kathy Stokes, Director, Fraud Prevention Programs, AARP Fraud
Watch Network, Washington, D.C................................. 34
Scott Pirrello, Deputy District Attorney, Head of Elder Abuse
Prosecutions, San Diego District Attorney's Office, San Diego,
California..................................................... 39
Susan Whittaker, Administrative Assistant, Lehigh County Aging
and Adult Services, Allentown, Pennsylvania.................... 42
Nancy Gilmer Moore, Program Director, Indiana Senior Medicare
Patrol, Indiana Association of Area Agencies on Aging,
Indianapolis, Indiana.......................................... 44
Questions for the Record
Kathy Stokes, Director, Fraud Prevention Programs, AARP Fraud
Watch Network, Washington, D.C................................. 48
Scott Pirrello, Deputy District Attorney, Head of Elder Abuse
Prosecutions, San Diego District Attorney's Office, San Diego,
California..................................................... 49
Susan Whittaker, Administrative Assistant, Lehigh County Aging
and Adult Services, Allentown, Pennsylvania.................... 68
Statements for the Record
America's Credit Unions Testimony................................ 71
Defense Credit Union Council Testimony........................... 73
Stop Scams Alliance Testimony.................................... 74
Dr. Stacey Wood Testimony........................................ 80
FIGHTING FRAUD:
HOW SCAMMERS ARE STEALING
FROM OLDER ADULTS
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Thursday, September 19, 2024
U.S. Senate
Special Committee on Aging
Washington, DC.
The Committee met, pursuant to notice, at 10:02 a.m., Room
106, Dirksen Senate Office Building, Hon. Robert P. Casey, Jr.,
Chairman of the Committee, presiding.
Present: Senator Casey, Blumenthal, Kelly, Warnock, Braun,
Rick Scott, and Ricketts.
OPENING STATEMENT OF SENATOR
ROBERT P. CASEY, JR., CHAIRMAN
The Chairman. Well, good morning, everybody. The Senate
Special Committee on Aging will come to order. Welcome to the
Aging Committee's hearing entitled, "Fighting Fraud: How
Scammers Are Stealing From Older Adults."
Every year, this Committee conducts a review of the scams
that target older adults, culminating in this annual hearing
and the release of the Committee's Fraud Book. Here is this
year's edition of that book, "Fighting Fraud: Scams to Watch
For." I am grateful to work with the Ranking Member, Senator
Braun, on this and the Committee.
This Fraud Book is a great resource for older adults
looking to prevent fraud, featuring tips that will help them
identify a scam and resources for those older adults who have
been scammed.
Today's hearing will not only discuss fraud prevention in
the tips highlighted in the Fraud Book, but also how the
Federal Government and law enforcement agencies respond to
reports of fraud. The scams that are perpetrated against older
adults today seem similar to scams that have been around for a
number of years.
We have all heard of these, unfortunately, and so many
families have been the victims of them. Grandparent scams where
a scammer pretends to be a grandchild calling in need of
financial help. Investment scams, government imposter scams,
lottery scams, tech support scams are just a few of the scams
highlighted in our Fraud Book.
However, over the past few years, scammers have gotten
increasingly sophisticated in how they contact and prey on
their targets. With the advent of artificial intelligence, that
we all know is AI, scammers can now make their messages both
online and over the phone more convincing. Email or computer
pop-up scams used to be more easily identifiable, but now are
much harder to detect.
In some cases, scammers go as far as cloning the voice, and
we have testimony in this hearing or this Committee to that
effect, cloning the voice of a loved one to convince the target
of their veracity. It has become nearly impossible to tell
whether the person on the other end of the line is legitimate
or a scammer.
That may explain why recent FBI data shows that fraud
losses among older adults have gone up in recent years,
reaching $3.4 billion in 2023. Leaders in scam prevention and
education like AARP are racing to keep up with these trends and
continue to educate older adults.
Meanwhile, law enforcement is facing an uphill battle when
it comes to responding to reports, investigating, and
identifying the perpetrators, and so many other challenges. I
am thankful that we have Scott Pirrello, who is here today, who
can share more about the work he is doing to fight fraud as
Deputy District Attorney in San Diego, but we have got a lot
more to do.
We need to continue to alert older adults about the scams
they may be targeted with, and we need to work together across
all levels of Government to identify and root out these bad
actors. I will just change that and say criminals. That is what
they are. Furthermore, we need to help those who have been
victimized by scammers.
Earlier this year, I released a report called, "Scammed
Then Taxed," detailing how the 2017 tax bill repealed a
longstanding tax tool that helped scam victims avoid more
losses. Older adults disproportionately use what was known as
the casualty and theft loss deduction.
My report highlighted the crushing financial blow that this
law dealt to scam victims, leaving them paying heavy taxes on
stolen retirement savings. On top of financial losses, this
experience can be emotionally devastating and isolating.
I am grateful to have Susan Whittaker from Lehigh County in
Pennsylvania here with us today. Susan will be sharing her and
her husband's experience with tech support scams. Susan's
testimony is critical for us to hear today.
It is important for older adults across the Nation to know
that they are not alone if they lost money to a scammer. I am
pleased that the Aging Committee can shed light on these
stories, and I will now turn to Ranking Member Braun for his
opening remarks.
STATEMENT OF SENATOR MIKE BRAUN, RANKING MEMBER
Senator Braun. Thank you, Chairman Casey. If you listen
closely, it is worth repeating, $3.4 billion. That is what
scammers got out of American seniors in 2023. They are coming
from all kinds of places, Mexico, China, lot of African
countries. One of these criminals that they received the money,
it is basically gone.
Almost impossible to get it back. They impersonate others,
fabricate stories, make false promises. Many different ways,
and the only way is to prevent it once it just starts to occur.
That is why we need to prioritize education and outreach so
older adults recognize these red flags immediately.
Our community banks and credit unions are often on the
first line of defense, intervening where they can see from
their own past experience if something looks askew. My home
state of Indiana, one community bank already has avoided $1.2
million. In one community bank, that is a lot.
Local law enforcement also play a crucial role in scam
prevention by investigating these cases, alerting the public of
something that is out there. Scammers are always looking for
that next loophole, including Federal programs, because this
place has got so much money, so many programs, and is probably
the defenseless of anything out there.
We have talked about the fraud in Medicare alone, which is
astounding the amount of money, $60 billion due to fraud,
errors, and abuse--most of it fraud. Every dollar lost to fraud
is a dollar that can't be spent on what the program is intended
to do. In these scams, Medicare numbers are used to purchase
medical equipment that a senior doesn't need.
This leads to additional co-payments and out-of-pocket
costs and can use up any enrollee's benefits faster. Medicare
fraud directly hurts taxpayers and individual seniors, and we
are still trying to figure out exactly how pervasive it is
because there is so much spent in that category.
In March, I led a letter to the GAO requesting a full audit
of Medicare fraud. GAO began that audit in July. This will be
the most comprehensive audit in the history of Medicare, long
overdue. The results will uncover just how much fraudsters are
stealing from the American taxpayer in one of our programs that
is so important, along with Social Security, Medicaid, and
ironically the three that drive some of our structural deficits
anyway.
We can't afford one penny of fraud. We know that CMS can do
more to stop fraud, and we are going to keep pushing to see
that they do it. I introduced the Medicare Transaction Fraud
Prevention Act with Senator Cassidy, which empowers CMS to
conduct a fraud detection pilot, utilizing AI to detect scams
so that CMS can quickly alert the Medicare beneficiary.
Similar to what credit card companies do. They are pretty
good at it because that is the place where most fraud occurs in
our country. The 2024 Fraud Book highlights many of the scams
targeting older Americans and provides information on how to
recognize the red flags. Anybody out there listening, get a
hold of your representative, your Senator, and get a hold of
this because it is the best, probably small, sharp, concise
book that can give you a heads up.
Look forward to hearing from our witnesses so we can learn
more about it, and I yield back, Mr. Chairman.
The Chairman. Thank you, Ranking Member Braun. Now we will
begin witness introductions, and after those we will go to the
testimony, but we are pleased to introduce our witnesses.
We are grateful they are here, having traveled here to
provide testimony. Our first witness is Kathy Stokes. Ms.
Stokes is the Director of Fraud Prevention Programs with the
Fraud Watch Network at AARP. She leads AARP social mission work
to educate older adults on the risks that fraud presents to
their financial security.
Ms. Stokes, thank you for sharing your expertise with us
today. Our second witness is Mr. Scott Pirrello. He is the
Deputy District Attorney and head of Elder Abuse Prosecutions
in the San Diego District Attorney's Office in San Diego,
California. Mr. Pirrello, thank you for sharing your expertise
and traveling here today.
Our third witness is a Pennsylvanian, Susan Whittaker. Ms.
Whittaker is the Administrative Assistant at Lehigh County's
Office of Aging and Adult Services in Allentown, Pennsylvania.
That is on the Eastern side of our State, not far from the New
Jersey, Pennsylvania border.
Ms. Whitakker's late husband, Bill, was the victim of a
scam in 2022. We are grateful, Susan, for you being here today
and for sharing your story and Bill's story with us. I will now
turn to Ranking Member Braun to introduce our fourth witness.
Senator Braun. It is my pleasure to introduce Nancy Gilmer
Moore. She is a Program Director for Indiana's Senior Medicare
Patrol. Ms. Moore's work has been nationally recognized.
She received the 2023 Barbara McGinty Award for her
distinguished service as a champion for all in the fight
against health care fraud. Ms. Moore is a graduate of Indiana
University and is dedicated to serving Hoosiers. Thank you so
much for being here.
The Chairman. Thank you, Ranking Member Braun. Now, we will
turn to Ms. Stokes for her opening statement.
STATEMENT OF KATHY STOKES, DIRECTOR, FRAUD
PREVENTION PROGRAMS, AARP FRAUD
WATCH NETWORK, WASHINGTON, D.C.
Ms. Stokes. Good morning. My name is Kathy Stokes, and I am
the Director of Fraud Prevention Programs for AARP. Thank you
for inviting me to testify on behalf of AARP at this important
hearing, and I would also like to thank the AARP volunteers who
are here with me.
This morning, I will shed light on the true impact of
fraud, explain that anyone can be a victim and that it isn't
their fault, and I will speak to the urgent need for a whole of
society response to the fraud crisis. Through the Fraud Watch
Network, AARP educates older adults on the risk that fraud
poses to their financial security, meeting them where they are.
Hundreds of volunteers work with our State offices and
communities across the country to equip older Americans to
avoid fraud. We share information online through newsletters
and a podcast, and we cover fraud in most editions of our
publications that tens of millions of Americans receive.
Our victims support program includes a helpline that
receives 500 calls a day. We also host support groups to
address fraud's emotional impact. It is for people like Dave,
who experienced a year's long romance scam through which
criminals stole his home and his business. He lost his friends
and family, and seriously contemplated suicide. The recent
growth in fraud has been meteoric.
The FTC revealed that estimates of underreporting in 2023,
suggesting that rather than $9 billion reported stolen through
fraud in one year, it is more likely closer to $137 billion,
and criminals don't discriminate. They target every
demographic.
FTC data suggests that younger adults report theft by fraud
more often than older adults, but when the older adults are
victimized, the financial impact can be catastrophic. These
victims are financially ruined. They experience emotional and
health impacts. Often their families are torn apart.
Many once financially secure, hardworking Americans are
left to rely on Government safety nets. In my written
testimony, I describe the sophistication and scale of today's
fraud crime rings, but sophistication and scale alone aren't
the reasons they succeed. Rather, it is because criminals know
how to exploit the human brain.
AARP's own research unveiled that criminals know that to
trigger a heightened emotional State is to bypass logical
thinking. Criminals call it getting targets under the ether,
and academics have shed light on the science behind it.
Linda, a college professor, shared her story with AARP
about the day her life was turned upside down when a tech
support scam that started with a fear inducing computer pop-up
message led to a four-and-a-half month nightmare. It forced her
to retire, and it saw her buying gold bars and putting them
into a stranger's car. She thinks the whole experience could
have killed her.
Becoming a victim is not the victim's fault. It is not
because of their age or because of cognitive decline. They
become a victim because criminals exploit how our brains
function, and while there is no single solution to the fraud
crisis, there are things we could all be doing that could help
turn the tide.
For individuals, it is taking steps like freezing our
credit and using password managers and multifactor
authentication. For educators, focusing on the red flags is
important, but so is training how most scams come at us and
what to do when they do.
For industry, financial institutions must continue to
innovate on fraud mitigation and tech companies must build
safety and security into their product design and
manufacturing, and industry and law enforcement must work
together.
AARP is leading a public-private effort to enhance
coordination through the formation of a national Elder Fraud
Coordination Center, which should launch this year. Its origins
linked to the FBI San Diego County Elder Justice Task Force,
which has proven that gathering data on like cases creates
actionable investigations and prosecutions.
I am honored to be at this table with San Diego's Deputy
DA, Scott Pirrello, who directly supports the work of the Elder
Justice Task Force. Policymakers can address fraud by
supporting resources for State and local law enforcement, and
full-time investigators for DOJ elder justice strike forces,
reinstating the casualty loss deduction to address the taxation
of stolen assets, legislation to limit the damage of crypto
ATMs, and efforts like the National Elder Fraud Coordination
Center.
AARP looks forward to collaborating with you on solutions
to address fraud, and thank you, and I look forward to your
questions.
The Chairman. Ms. Stokes, thanks very much. We will turn
next to Mr. Pirrello.
STATEMENT OF SCOTT PIRRELLO, DEPUTY DISTRICT
ATTORNEY, HEAD OF ELDER ABUSE PROSECUTIONS,
SAN DIEGO DISTRICT ATTORNEY'S
OFFICE, SAN DIEGO, CALIFORNIA
Mr. Pirrello. Good morning, Chairman Casey, Ranking Member
Braun, other members of the Senate Special Committee on Aging.
Thank you for having me here. My name is Scott Pirrello, and I
am a career Elder Abuse Prosecutor for the San Diego District
Attorney's Office.
I had an epiphany in 2018 when I realized I was seeing zero
scam cases. After some digging, I was shocked to learn that
there were hundreds of reports that existed, but once local
police departments determined that the scammers are far away
overseas, the cases are discarded.
I assumed then that someone was in charge of working these
cases. I was wrong. Right at this moment, thousands of seniors
are being scammed by foreign nationals on the verge of having
their lives destroyed. The most prevalent scam impacting
seniors today starts with a pop-up message from Microsoft that
asks the victim to call a spoofed telephone number.
The scammers, mostly operating from Indian call centers,
convince those seniors to download remote access software
authorizing the scammers to see inside their computers and
ultimately convincing them that their bank accounts have also
been compromised.
Victims are instructed that in order to save their money,
they must withdraw tens of thousands of dollars in cash from
their bank or purchase gold bars. They demand that cash be
converted to cryptocurrency and sent through Bitcoin ATM
machines or packaged up in boxes.
They are instructed to either ship the boxes across the
country or they are told a courier will be coming to their
house. This narrative is exactly what occurred in San Diego
just last week. A 94-year-old Air Force veteran lost $143,000
in five separate cash pick-ups over a two-week period.
Hundreds of thousands of victims fight through humiliation
and shame each year and summon the courage to report that this
has happened to them, but these victims are met with the most
regrettable answer, I am sorry, there is nothing that we can do
for you. We should all be ashamed of ourselves.
I am here today on behalf of the millions of elder victims
and their families begging the Government, law enforcement, the
banking and technology industries to help them. Existing
programs are failing to impact the tsunami of fraud that we are
seeing every day, and a national strategy is needed. We are
failing the very people who need us the most, older adults,
many of whom can't afford to lose anything, let alone
everything.
Since 2019, on the backs of a few patriotic former Marines
working in our DA's office in the San Diego FBI office, we have
proven that something could be done to fight this siege.
Instead of surrender, under the leadership of San Diego
County's elected DS Summer Stephan, we worked with the San
Diego FBI in 2021 to launch a first of its kind Elder Justice
Task Force, or EJTF, to combat elder fraud.
We have since learned that scammers abroad depend on
organized networks of money launderers within the United
States, and there are thousands of criminals within these
networks to bring to justice.
The EJTF consists of the DA's office, FBI, Adult Protective
Services, U.S. Attorney's Office, local law enforcement, and
our local fusion center, all working together to turn
individual local fraud investigations into large scale Federal
cases and also using Federal seizure warrants to recover
millions in fraudulent funds for our victims, whether a
criminal investigation is opened or not.
This is the only initiative in the Nation responding to
elder fraud cases in real time by tracking each fraud report
collected by local police, the FBI's IC3 data base, and APS.
This active review of reports and constant contact with victims
enables us to better understand how these transnational
criminal networks operate.
We are disrupting these networks. We are routinely filing
State prosecutions on couriers, which have resulted in Federal
indictments, including July's indictment by the U.S. Attorney's
Office of a money laundering ring responsible for receiving
stolen funds from over 2,000 older victims, totaling $27
million in losses.
The numbers are doubling in San Diego from 2002 to 2023
with $98 million in losses. Investing in education and task
forces are critical to fighting these scams. However, we can't
educate our way out of this problem, nor can we prosecute our
way out. We need a whole of nation strategy.
The cause of fighting elder fraud does not yet have a face.
It is too siloed and unorganized. The U.S. Senate Special
Committee on Aging should take the lead to ensure that not one
more victim falls prey to these scams.
We can actually stop this problem. We can all do more for
these victims, especially for the grandparents who are going to
wake up tomorrow and turn on their computer and have a pop-up
ad. What will our answer be tomorrow when those victims call us
for help? Thank you.
The Chairman. Mr. Pirrello, thank you for your testimony.
We will turn next to Susan Whittaker.
STATEMENT OF SUSAN WHITTAKER, ADMINISTRATIVE
ASSISTANT, LEHIGH COUNTY AGING AND
ADULT SERVICES, ALLENTOWN, PENNSYLVANIA
Ms. Whittaker. Chairman Casey, Ranking Member Braun, and
members of the Special Committee on Aging, thank you for
inviting me here today to hear my story. I am Susan Whittaker,
an Administrative Assistant for the Executive Director of the
Lehigh County Aging and Adult Services in Allentown.
I have been in my current position for four years. My
previous position was 45 years at the Morning Call, a local
newspaper. I am presenting testimony today because my late
husband, Bill, was a victim of a scam. I will also share the
steps I took once I knew the scam had happened and the
unavailability of the bank we entrusted with our personal
account and business account.
It was Tuesday night when I got home, and Bill was more
quiet than normal. He did not talk for the next few days. Bill
suffered from dementia and Alzheimer's, diabetes, congestive
heart failure, pulmonary embolisms, and neuropathy.
At the time of the scam, he was 75. Although Bill had sold
his business, Bill Whitaker and Son Construction, LLC to his
son, Bill stayed on as the office manager. He took care of all
office responsibilities. As the week went on, Bill seemed to be
quieter, and he seemed to be worried.
On Friday night, he started to tell me what had happened.
He told me he received an email from QuickBooks, which was used
to manage bookkeeping for the business. The email said that the
business account had been charged $499 for an upgrade. He said
he didn't order the upgrade.
He contacted what he thought was QuickBooks at that point.
The person told Bill that in order for him to refund Bill's
money, Bill needed to first pay him $500, and then QuickBooks,
who was really the scammer, would send it right back to him via
another payment platform.
He was told not to share this with anyone because if he
did, he would not get his money back. Bill was instructed to
install an application on the computer so he could transfer the
funds directly to the scammer's checking account.
Bill also scanned and sent him a copy of his Social
Security card and driver's license. Once everything had been
set up, the scammer told Bill he would set up a Venmo account.
He walked him through the process.
Finally, he showed Bill how to transfer the $500 via Venmo.
Because the scammer had access to the computer as Bill was in
the middle of typing the number 500, the scammer took control
of the software and added an extra zero. $500 became $5,000. He
started yelling at Bill for making such an error when in
reality Bill had not made a mistake. He said that now Bill
needed to send him the $5,000 in order for him to send back
$5,000.
That Friday night, Bill shared with me, in addition to the
$499 initial fraudulent upgrade fee that needed to be refunded
to the business account, this individual now owed us money from
our personal account due to the numerous Venmo transfers.
Bill said that this individual would be calling him back
tonight at 6.00 p.m. This time I answered the phone. The
scammer was totally surprised to hear from someone other than
Bill. I questioned the process he had put Bill through. I knew
it was a scam, but I asked him to please check with the boss.
He said he would call me back.
At that point I wasn't even sure how much money had been
taken from our accounts. While waiting for the call back, I
shut down the Mac and booted it back up. I created a new login
account and deleted the old information. I found the software
that was installed and uninstalled it.
I also contacted our bank, Truist, through their customer
service department. Since it was after 6.00 p.m., customer
service was closed until Monday morning at eight. Then I called
their fraud number. They too were closed until Monday morning.
Bill called the bank manager at the local branch and asked
for help. The branch manager said he would do what he could,
but he wasn't sure he would be able to get any of our money
back. Monday morning, Bill called local law enforcement. He
spoke with him, and they said they would be in touch with the
bank and would work with them.
The person Bill spoke with was very kind and patient.
During that time, I put a stop on all credit reporting, a hold
on all accounts, and called the Truist headquarters in North
Carolina. I never did get to speak to anyone.
In the end, the scammer took a total of $28,000 from us.
However, the bank, along with the law enforcement, recovered
$8,000 of the money taken from our accounts, because they acted
so quickly, they were able to stop the funds before they were
dispersed. Despite this, we still lost $20,000.
The scam was devastating and had a devastating effect on
Bill, both financially and emotionally. Because we lost $20,000
and Bill had a lot of chronic health issues, he began to ration
his medications. We just couldn't afford them anymore.
Bill also felt responsible and felt that he owed it to a
son to repay the money. He kept saying he was sorry and that he
was stupid. He asked, how could he make such a stupid mistake.
I assured him that he was only trying to save $499 from the
business and that he didn't do anything wrong. For several days
he was very quiet.
After the scam, Bill would not answer the phone unless he
knew the number and he would not open his email unless I
reviewed it. Bill started to doubt himself in everything he
did. His son no longer allowed him to do any work for the
office, and so Bill lost his job. He also lost his sense of
self-worth.
I was really--it was really sad to see this very
intelligent and past business owner become so afraid to read
emails and use the phone. It was a huge setback for him, and I
think contributed to his worsening health conditions. Thank
you.
The Chairman. Susan, thanks for your testimony. I know it
has to be personally difficult to relive that and we are just
grateful you are willing to do it--to testify in a manner that
will help others, so we are grateful for that.
Ms. Whittaker. Thank you.
The Chairman. Finally, Ms. Moore.
STATEMENT OF NANCY GILMER MOORE, PROGRAM
DIRECTOR, INDIANA SENIOR MEDICARE PATROL,
INDIANA ASSOCIATION OF AREA AGENCIES
ON AGING, INDIANAPOLIS, INDIANA
Ms. Moore. I would like to thank Ranking Member Braun,
Chairman Casey, the other witnesses, and all in attendance for
giving me this opportunity to speak about Medicare fraud and
scams that target older adults and people with disabilities.
As the Indiana Senior Medicare Patrol, or SMP Program
Director since 2013, I have learned that one of the biggest
crimes affecting older Americans and people with disabilities
is Medicare fraud, waste, and abuse.
In addition to Medicare's own provider focused fraud
prevention units within the Centers for Medicare and Medicaid
Services, or CMS, the U.S. Administration for Community Living,
ACL, funds and supports the beneficiary focused Senior Medicare
Patrol Program.
With programs in every State, the District of Columbia,
Puerto Rico, Guam, and the U.S. Virgin Islands, SMP's purpose
is to educate beneficiaries, caregivers, and professionals on
how to prevent, detect, and report Medicare fraud.
CMS offers no official estimates of total yearly Medicare
fraud, but health care experts estimate improper Medicare
payments are approximately $60 billion per year. The U.S.
Department of Health and Human Services Office of Inspector
General, OIG, most recent annual report indicated that SMP
projects reported more than $111 million in expected Medicare
recoveries in 2023.
Our Indiana SMP uses volunteers and in-kind members in
partnership with most Area Agencies on Aging four senior
centers and a center for independent living to help us educate
people about fraud, errors, and abuse in Medicare.
Our partners give public presentations, exhibit at Health
and Senior Fairs, and provide individual counseling across
Indiana. We also regularly publish statewide social media
updates, generate earn television and print media through
relationships we cultivate with local investigative reporters,
and periodically conduct SMP marketing campaigns.
We also collaborate with organizations through a coalition
we founded with the Indiana Secretary of State's Office called
the Indiana Council Against Senior Exploitation or INCASE.
Members include the Indiana Secretary of State's Office, the
Indiana Attorney General's Office, State Health Insurance
Assistance Program, or SHIP, the Social Security
Administration, the Internal Revenue Service, the Indiana State
Police, financial institutions, and many others to conduct
joint presentations about Medicare fraud and other financial
scams that target older adults.
SMP programs across the country can provide early detection
and warning of emerging frauds and scams. Here are some
examples of suspected fraud that the Indiana SMP reported to
the OIG during the past year.
In the intermittent urinary catheter fraud scheme, most of
the beneficiaries noticed billing for urinary catheters on
their Medicare statements that they and their doctor neither
ordered, needed, nor received.
Many were billed for multiple months, with Medicare paying
about $1,500 per month for each separate billing. I personally
noticed billings for urinary catheters on my own Medicare
statement for May and June and promptly reported the suspicious
claim to CMS and requested a new Medicare number since mine was
compromised.
Durable medical equipment, or DME fraud is a perennial scam
which includes all types of orthotic braces. Beneficiaries
continue to contact Indiana SMP reporting unsolicited calls
identifying themselves as representing Medicare with an offer
for free orthotic braces.
The scam often begins with an initial contact from a call
center, which makes a referral to an unscrupulous doctor or
telemedicine company and a final referral to a DME provider.
The braces delivered are often inferior and the beneficiary's
personal doctor is not typically notified nor consulted.
The Indiana SMP recommends that all Medicare enrollees and
their caregivers review their Medicare summary notices or MSNs
for Medicare fee for service or explanation of benefits, EOBs
for Medicare Advantage plans. Beneficiaries should be on the
lookout for duplicate billing, services or products not
rendered or received, and services not ordered by their
physician.
We also remind beneficiaries and caregivers that they
should never give their Medicare number or financial
information over the phone to unknown caller and that Medicare
does not make unsolicited phone calls.
Ensuring the financial integrity of Medicare is essential
to the millions of Americans who currently depend on it to
access comprehensive health care services, as well as thousands
of people who become newly eligible for Medicare every day.
As U.S. citizens, we all need to become better, more
conscientious health care consumers, and help identify any
potential improper payments. To that end, we have supported
Senator Braun's and this Committee's work to reduce or
eliminate Medicare fraud.
We assisted Senator Braun's office with the development of
his Medicare Transaction Fraud Prevention Act, which would
enhance the Medicare fraud prevention system to alert the
beneficiary being scammed.
Thank you for allowing me this opportunity to share my
experiences with you today.
The Chairman. Ms. Moore, thanks very much for your
testimony. We are going to move to questions. I will start and
then I will turn to Ranking Member Braun. I want to start with
Susan Whittaker.
Susan, I want to again thank you for providing not just
testimony but sharing your personal experience that you lived
through, and your husband lived through, and the loss you
suffered, both the financial loss, as well as the loss of your
husband.
You had shared, and I think one of the words that come to
mind are red flags. You would share with us that you could
identify some of those red flags, I guess mostly based upon
your work with the Lehigh County Office of Aging and Adult
Services, which is for that county the Area Agency on Aging.
Your work helped you recognize some of these red flags when
Bill shared what had happened during the scam. We know that
education, providing information from, for example, our Fraud
Book is critically important.
We wanted to make sure that we not only had a Fraud Book,
but we have two versions of it. The one on my right is in
English. The one on my left is in Spanish. More will make
reference to the Fraud Book again, but we want folks to know
that you can receive this information. You can go to our
website at aging.senate.gov/scam. I will say that again for
people that are listening, you go to the Aging Committee's
website at aging.senate.gov/scam.
We want to make sure that people can avail themselves of
this information. This isn't limited to one category of
Americans or one age group. This can happen to anyone, and it
is always easier, of course, after the fact to review what
happened in a case and say, oh, I would have noticed that.
Maybe not. No matter what your age and maybe not, and so, we
have all got to be made aware of these scams.
Susan, I wanted to ask you, tell us about the red flags
that you spotted because you walked us through a very detailed
summary of how Bill was drawn into this, and then once he
started telling you about what happened, you were able to act
and to be able to, I guess, counteract what the scammer was
trying, so tell us what were the--you don't have to walk
through every red flag, but just examples of red flags that you
identified and can be helpful for us to know about.
Ms. Whittaker. The first red flag was when Bill said that
he wasn't supposed to tell anyone, or he wouldn't get his money
back.
The Chairman. Right.
Ms. Whittaker. My background at the Morning Call and also
at aging technology, we do constant tests, if you will, on
scams and phishing, and anyone that might be searching for
information, so that is one of the things that is highlighted
for the training--that was highlighted in the training in both
areas. The other thing was, if you knew Bill, he was so
detailed. I mean, he would spend four days trying to find out
where a penny belonged in the checkbook, so for him to make an
error and add a one--you know, add a one in front of the 500 or
an extra zero at the end, that--he would have never done that.
That just wouldn't happen, so that was the second one.
The more Bill talked about the steps that went through, and
when he told me that they had him install software and open a
Venmo account. In order to open a Venmo account, they needed
his driver's license and Social Security number, it was just--
it had just gone further than needing to refund the $500.
Not only that, if the charge was $499, why would you send
us 500 back? It didn't make sense to me.
The Chairman. I think they are all--we all learned from
that from that story and your identification of those red
flags, and so you--and I guess your experience with both the
Area Agencies on Aging of the Aging Office, but also working
for a newspaper that--I guess that helped as well.
Ms. Whittaker. Yes.
The Chairman. I wanted to move next to--and I will turn to
Ranking Member Braun, but because it is a busy Thursday, we
will have Senators in and out, popping in, asking questions,
coming to appear but maybe not able to stay to ask questions.
We will maybe take some extra time at the beginning here,
but I want to turn to Kathy Stokes and Scott Pirrello.
Ms. Stokes, you talked in your testimony about how society
frequently places blame on the victims for falling for the
scams, and that alone has to add considerable trauma to the
experience. The stigma associated with being a scam victim
discourages many older adults from reporting.
I think that is probably an understatement. Really low
reporting levels, I guess. It is critical that this information
is reported to the relevant agencies. I ask you this, why is it
important for older adults to report frauds and scams that
happened to them?
Ms. Stokes. Thank you for the question, Senator. The
reporting is critical. For one thing, it does help people who
are in investigations see what is happening and tie cases
together. I think it is even more important because it will
then help law enforcement and policymakers understand just how
big this problem is.
I had mentioned the FTC data that suggests that rather than
a $9 billion amount of theft in 2022 I believe it was, they
extrapolate underreporting that it was $137 billion. If we are
not reporting it, we can't do much about it.
The Chairman. Yes. You know, one of the best things we can
do is just to continue to encourage people to report.
Ms. Stokes. Yes, absolutely.
The Chairman. As well. Mr. Pirrello, I wanted to ask you
the same question. You know, what can you add to this based
upon your work through the--you know, from the vantage point of
law enforcement?
Mr. Pirrello. Thank you. Thank you, Chairman. There is
disorganization within reporting. Without a mechanism for
centralized reporting, the policymakers are making uninformed
decisions on where to allocate resources.
There are a multitude of places that victims can go to
report their crimes, and we know there's incredible data from
the FBI, and the FTC, and a dozen other sources, including this
own Committee's fraud hotline number. The problem is there is
no body that is consolidating all that data.
There is no organization that is looking at the local
police reports in each jurisdiction, and the huge void that we
encountered and confronted in San Diego was the Adult
Protective Services data from around the country represents a
huge missing piece because they are getting unreported cases
from mandated reporters. The financial institutions are
referring cases to APS.
When you combine all those numbers like we have done in San
Diego, you get the number of actual reported fraud. The problem
is, as Kathy Stokes has mentioned, is you have to add a
multiple to that. We know from all our work in the elder abuse
community that we are only capturing one in twenty cases total.
The FTC numbers were the first numbers to really provide
that estimate.
The Chairman. That is helpful. I know I went over because
we are waiting for some folks, but I want to turn to Ranking
Member Braun.
Senator Braun. Thank you, Mr. Chairman. I want to start
with Ms. Moore. Congratulations on what you have done back in
Indiana. The acknowledgment that you are ferreting out fraud in
our own State.
You know, that estimate and what it is, it was Senator Rick
Scott and I and J.D. Vance that commissioned the GAO to find
out what it is exactly. I know that will be helpful because we
can see there is a wide range of what it might be. One thing
that really caught me by surprise that there could have been
one particular category, it was urinary catheters.
That there was enough information to--that was pretty well,
you know, right under $3 billion, so in Indiana, did we get hit
by that as well? Then tell me what you know about that
particular fraud? What are the other top two or three frauds
involving Medicare that you have personally dealt with?
Ms. Moore. Thank you for your questions, Senator Braun
about Iran. The urinary catheter fraud is still being
investigated, is my understanding, so that we have had about 40
cases reported to us.
Again, if people don't--since you didn't receive any
product, the only way you would know is to read your summary
notices, and a lot of people don't read those. They are
confused by those, or they just, if they don't owe any money,
they are not prone to report it, so it kind of goes under the
radar.
Senator Braun. Did we have any that you actually caught in
our State? In other words, and it is clear that there will be a
lot of unreported because $2.7 billion would mean then that
certain States are doing a pretty good job at it and many other
States aren't, because that is a huge figure.
That is why I was curious in our own State, since it
doesn't sound like there were that many, maybe just 40, did
many actually lose money out of those 40, or did you just hear
about it and then prevent it?
Ms. Moore. No, we reported it. Most of it was after--the
Medicare had already been----
Senator Braun. Billed and the money had gone?
Ms. Moore. Yes. Because it comes on your Medicare
statements, which if you don't have a Medicare.gov account
online, you know, it takes--they are only mailed about once a
quarter, so you wouldn't--like I said, nobody received the
product. In my own case----
Senator Braun. In Indiana, not counting what wasn't maybe
reported, but what was reported, we had kept that down to a
fairly small amount because that wouldn't--that would be such a
small fraction of $2.7 billion.
Ms. Moore. Correct. Some people were billed for as many as
12 months or 10 months, because in Medicare, you can bill I
think up to a year, you know, retroactively, so.
Senator Braun. I am a big believer that best practices
among States ought to be shared. It sounds like you are doing a
heck of a job. You have been acknowledged for it.
It seemed to me, Mr. Chairman, that we would want to find
out what other enterprising States are doing, and that would be
one way to share stuff that is already working, so what are the
two or three other scams in Indiana that seem to be most
prevalent?
Ms. Moore. The most recent scams we are hearing about--and
we are still getting, the DME braces scams and Medicare card
saying you need a new Medicare card. One of the new recent ones
is the caller--it is an impostor call saying they are from CVS,
the large pharmacy chain, and that they--you can order your
diabetic supplies through them.
We have only had a few cases of that, but I have connected
with my SMP colleagues throughout the country, and they are
seeing this as well. CVS does have a disclaimer on their
website that this fraud has been prevalent.
Another one which is very similar to the urinary catheter
fraud is people are being billed for ostomy supplies, which
ostomy is any kind of artificial opening like colostomy or
tracheostomy, and people are getting billed for that as well.
We are seeing that in many other States throughout the country.
I think one of our big--what has helped us is having
investigative reporters do stories for us because that really
gets people's attention.
Senator Braun. Well, good. Thank you for the good job you
are doing back in Indiana. I would be interested to see how you
keep track of it, and maybe over the last couple three years,
what we have actually gone on record in terms of true laws in
our own State. I like that idea of sharing what we are doing
with maybe other States. I yield back for now. Thank you.
The Chairman. Thank you, Ranking Member Braun. I will turn
next to Senator Scott.
Senator Rick Scott. Well, first, I want to thank the chair
and ranking member for doing this. I mean, this a significant
issue that is impacting all of our States.
I want to thank you for holding the hearing and I want to
thank you for putting this book together. Hopefully it is going
to help a lot of people not get scammed. First, Ms. Stokes, you
mentioned in your testimony transnational criminal
organizations are behind many of the modern scams.
Are there in any particularly favored countries these
transnational criminal organizations use and hide in to evade
U.S.--our prosecution?
Ms. Stokes. Well, thank you for that question. I think
maybe Scott would be better able to, from a law enforcement
perspective, speak to it. What we know from our own
experiences, big places are India, Africa, Costa Rica, Jamaica,
Canada, and a lot of territories in Southeast Asia currently,
including Myanmar, Cambodia, Philippines.
Senator Rick Scott. Scott, do you want to add anything?
Mr. Pirrello. Thank you, Senator. I echo what Kathy said,
yes, that there is threats abroad. Right now, the most
prevalent scams are tech scams that originate from Indian call
centers.
The issue with enforcement is, is even if we had the
capability to shut a call center down, they could obviously
close up shop and move across the hall and start calling again,
which is why the idea of a whole of nation strategy is really
what would be impactful, because you have to look at the scam
and then every point either upstream or downstream of the scam
to see where we could stop it.
If we could focus on how the Indian call centers, for
example, are contacting our victims, that would be a way to
significantly slow or stop the scam activity because they are
using our own technology against us.
Senator Rick Scott. Right. Do either of you have any sense
whether the State Department is doing anything to prioritize
this with regards--because take India, that is supposed to be
an ally. Is the State Department doing anything to address this
with the Ambassador or anything?
Mr. Pirrello. I do know that the Department of Justice and
the FBI has attaches in these countries, and they are working
and there are some successes to report on. Unfortunately, we
obviously have our finger in the dam.
Senator Rick Scott. Yes. For any of you with recent
breaches in personal information, there could be an explosion
of identity theft as millions of people's names, dates of
birth, and Social Security numbers become available to criminal
networks.
How can we educate seniors to protect themselves and
monitor their information for potential identity thefts that
could result in loans or credit cards being taken out in their
names? I don't know if any of you would answer that.
Ms. Stokes. Thank you, Senator. You know, we at AARP tell
people, you know, your data are already out there. What we are
seeing is just more and more of the same, and we all should be
doing is taking steps to sort of shut it down in the ways that
we can, and one of the most important ways is to freeze your
credit reports.
That way, somebody who tries to use your identifying
information to open credit against you is not able to do that,
by and large. Really, really important is how we deal with
passwords. You know how difficult it is to have, you know, 12-
digit passwords for your 50 online accounts.
I find the password manager, once you kind of figure it
out, is potentially a better way to deal with that, because if
a criminal gets hold of a password that you use over and over,
they are going to take over each account.
Another thing is multifactor authentication and shredding.
I mean, it is online, and it is in--you know, it is in the real
world too. Shredding your documents continues to be very
important.
Senator Rick Scott. Scott, you want to add something?
Mr. Pirrello. Thank you, Senator. I think a distinction
does have to be drawn. Identity theft is a massive problem, and
it is an incredible inconvenience for our victims.
However, in a lot of cases, when there is a victim of
identity theft, there are remedies through the banks, through
financial companies that will recognize that someone has been
the victim of an identity theft that they had nothing to do
with.
With elder scams specifically, our victims are really left
with nothing. They go to their financial institutions, and they
are told that they are out of luck because they walked into the
bank themselves and withdrew the money, and there is no remedy
available to them at all.
Really, when you understand the nuance of these scams and
understand that the scammers in the most popular tech scam that
I have described, the scammers actually tell our victims to
keep their phone on and put it in their purse when they walk
into the bank. They are being listened to by the scammers.
There is a distinction, I think, between the identity theft
and the elder scam victim.
Senator Rick Scott. Well, thanks each of you for being
here, and again, I want to thank the ranking member and the
chair for putting this together.
The Chairman. Thank you, Senator Scott. We will turn next
to Senator Ricketts, if you----
Senator Ricketts. Great. Thank you, Mr. Chairman----
The Chairman. We have other Senators on their way, so as
people----
Senator Ricketts. Well, if they are not here, they don't
get to go.
The Chairman. You can--jump right in. Jump right in.
Senator Ricketts. All right. Good. Thank you very much, Mr.
Chairman. Well, as we know, many seniors and vulnerable
Nebraskans are faced with challenges of protecting themselves
and their loved ones from the threat of fraud, abuse, and
financial exploitation. Financial losses due to scams continue
to rise, particularly among older Americans.
In 2022, consumers reportedly lost $9 billion to scams, a
30 percent increase over the year before. Older adults
reportedly lost over $1.6 billion to scammers. Federal Trade
Commission has reported a tenfold increase in bank scams in the
last three years. Scammers are also taking advantage of complex
health care and insurance coverage decisions by impersonating
the Medicare program.
Last year, late last year, officials with Nebraska groups
that managed care for seniors began noticing a sharp increase
in billings to Medicare for urinary catheters. According to the
Medicare data for One Health in Nebraska indicated that
spending on these devices on behalf of their patients was up an
average of $60 per patient, totaling more than $1 million.
The fall from the scheme and the harm done is still
unknown. Many people affected by the scheme may not even be
aware that they have been scammed. Ms. Whittaker, we know that
elderly population is disproportionately targeted by malicious
scam calls.
Do you believe in education awareness of how these scams
work could better prepare those being targeted? How would you
approach being able to make people aware?
Ms. Whittaker. Thank you. Absolutely, I believe that
education is really important. We at the Area of Aging, we have
put together posters, fliers, pamphlets, magnets, and we have a
folder that we actually take out to each individual that we are
going to see.
This information is right inside the folder, including the
magnet. Who to call in case you are a victim of fraud, or you
feel that there has been a scam taking place.
It includes the fraud hotline, the Attorney General's
number, the local police officer, State police, I believe, is
the phone number that is on there, and it walks you through the
steps of exactly who to call and what to do.
Senator Ricketts. How do you distribute that? How do you
make people--how do you get that information out?
Ms. Whittaker. We have an advisory council and the advisory
council members distribute some of that information for us. In
addition, our assessors take a folder out of all of Aging's
information to every individual that they see. One of our
assessors may--I believe the assessors see about 200 people a
week, if not more.
We are getting that out to at least 200 people, 800, 1,000
people a month. The assessors do walk through that information.
If you are receiving a waiver or option support, that is also
covered by those that are going out. Our Aging care managers
are seeing them.
Senator Ricketts. It is a very one on one type of
education----
Ms. Whittaker. Very one on one. We also did a scam seminar
for the public and for health care workers at DeSales
University. That was just last--that was just this past year. I
don't want to quote the month because I could be wrong, but we
had a huge attendance.
I have learned that Scott's associate was the person
doing--was one of the presenters. We had representation from
the local banks, the District Attorney's Office, some of our
own detectives, Aging. We held that and made that available to
anyone that was interested in attending.
Senator Ricketts. All right. Thank you. Ms. Moore, there is
a long list of ways scammers can take advantage of seniors. Are
there certain methods of scamming that are more prevalent in
rural areas?
Ms. Moore. Oh, thank you. That is a good question. I think
most, you know, most scams start by telephone or text, whether
they are rural or, you know, urban beneficiaries.
I do think the telephone, you know, communications, we need
more safeguards, and calls can be spoofed and labeled to look
like they are coming from a legitimate organization or with
their area code and even prefix, so people tell me they are
more likely to pick up.
We tell people not to answer unsolicited calls or calls
they don't have in their phone or, you know, if they have a
landline sometimes you can put in certain numbers. I would say
the telephone is probably the worst offender. Senator Ricketts.
Do you think, if in rural areas, are there different ways of
outreach or education that we need to approach when we are
thinking about how do we educate seniors in rural areas?
Ms. Moore. That is something we as a program, we, you know,
work on. I think print media is better in rural areas. I do
think, you know, we try to get to the very small towns and
counties in our State through just presentations through Area
Agencies on Aging, or we have some senior centers.
I have one--one of our partners does--she sets up a table
for SMP and other services that the triple-A offers in a free
laundromat day for seniors. We need to think really outside the
box, you know, maybe even hair salons and that kind of thing,
to get to people that maybe aren't on the Internet, don't, you
know, maybe see the news, and that kind of thing.
Senator Ricketts. Yes. I appreciate that, because I think
you are exactly right. Thinking outside the box about how you
reach seniors in rural areas is an important thing to do. I
would just emphasize what you said about print.
You know, those weekly newspapers that are in rural
Nebraska, and I am certain in other parts of the country, they
are read cover to cover, and they stay on the kitchen table or
on the, you know, the coffee table for a week.
If you have an ad or a story or anything like that in
those, that is a great way to reach the seniors because again,
they are read cover to cover and they leave them out for the
week until the next edition comes out. Thank you, Mr. Chairman.
The Chairman. Senator Ricketts, thanks very much. I am
going to do some questions now in a second round, because I
know we have one, two--at least two or three more Senators that
are kind of in transit. I wanted to direct these questions to
Ms. Stokes and Mr. Pirrello.
As I mentioned earlier that we have had for, I guess, a
century prior to 2017, the casualty in theft loss deduction
that theft victims could claim a tax deduction to offset their
loss when they are a victim of a scam or other theft.
That changed in 2017 with the tax bill. The theft loss
deduction was changed. It was repealed. Now victims of fraud
and scams can no longer deduct their losses. They owe huge tax
bills on money they will never benefit from, leaving many older
scam victims to feel that they have been victimized a second
time.
Earlier this year, as I mentioned in my opening, we
released a report entitled, Scammed, then Taxed, and that
legislation or that report outlined what had happened. Both of
you work extensively with older adults, and you have tragically
had the--those adults who have tragically had the entirety of
their life savings stolen from them.
I will start with Ms. Stokes. Have you encountered times
when older adult scam victims were surprised that they owed
taxes on their stolen money? How does that affect them?
Ms. Stokes. Thank you, Senator. The victims that we have
talked to personally through our helpline and through these
online victim support sessions that we have, this is probably
the thing that makes them the most anxious.
It is revictimization, plain and simple. They have had
everything stolen from them, but the IRS sees that as income,
and they tax them on it, and they don't even have the money to
pay that tax. It is an issue of great anxiety for many people
who are experiencing this.
The Chairman. I guess part of the challenge here is that
sometimes tax professionals may not have been--they may not
have updated their information about how the tax law changed
and may not be telling people enough.
We have got to make sure that people know. I think the
remedy here, of course, is to change the law back to the way it
was and reinState that deduction. Mr. Pirrello, how about your
experience with this?
Mr. Pirrello. Thank you, Chairman. I have talked to several
victims who have encountered this, and this is a result of the
scammers elevating their techniques by having our victims not
just drain their checking or savings account, but actually
completely liquidating their 401(k) or retirement account.
We are talking about victims that have lost seven figures,
as you said, the entire nest egg, and the timing of it is that
they go through the trauma of losing everything in their life
and they are just rebounding maybe six months, a year later,
and their accountant tells them that they have a 1099 from
their brokerage company that says they owe, for one of my
victims, a $300,000 tax bill.
I equated that to a gut punch at the end of this. There is
another layer beyond that, because many of these victims have
no recourse, that they have to go online and find a tax
attorney that they have to pay tens of thousands in dollars to.
There is another void just on the IRS's website, has a lot of
information about identity theft. There is no direction.
Our elder scam victims are left bewildered. If they go to
the IRS site, there is nothing for them to click on that says,
you have been scammed. Here are some instructions to follow to
get to this amazing program, the Taxpayer Advocate Service.
Most victims have no idea what that is, and they are just
spending money and being scammed on top of scams. Yes, that is
a significant issue for those victims that have lost the most.
The Chairman. Yes. I think the phrase you used, gut punch,
is a good way to describe it. You know, it is bad enough to be
a victim of a scam, and then to get the gut punch of a tax bill
where that was not happening before that change in 2017.
I will turn next to Ms. Whittaker again and Ms. Stokes. I
said earlier that there is obviously an emotional impact that
people experience, which is probably indescribable. I am going
to be turning to Senator Kelly in a moment, but Ms. Stokes and
Ms. Whittaker, you had made reference to your own experience,
Ms. Whittaker's personal experience, and Ms. Stokes, through
your work.
I mentioned the emotional turmoil that people experience
generally, but then when they are hit with a tax bill, it is
far worse. One of the victims that we described, talked about
the scam as ``an excruciatingly painful experience.''
Another said, ``when I found out I was scammed, I had
suicidal thoughts''. It is clear that these scams do far more
than just take money from people. Ms. Whittaker, can you
describe the feeling that you and your husband had when you
knew that you are a victim of a scam? I guess he was a victim,
and you were learning about it.
Ms. Whittaker. Devastation. Thank you. I was also angry. I
have to admit that I was pretty upset with Bill, and he felt
like he had really, really done something wrong when he was
just really trying to save some money for the company.
He didn't want to be charged something he didn't order.
Then afterwards, it was just--we were devastated. It was the
needing to pay back the money to the business, which he felt
was--he was responsible for losing to begin with.
I understand that it was the right thing to do, but it was
just devastation.
The Chairman. Yes, I can't even imagine it. You know, and I
will keep saying it, it is these scam artists, they obviously
target seniors disproportionately, but it can happen to
anybody. I will turn next to Senator Kelly.
Senator Kelly. Thank you, Mr. Chairman. Thank you for all
of our witnesses for being here today to talk about a topic I
think is sometimes uncomfortable talking about.
Mr. Pirrello, I understand from your testimony that the
Elder Justice Task Force you helped create in San Diego is the
first of its kind, bringing together local law enforcement,
FBI, Adult Protective Services, and the U.S. Department of
Justice.
I am impressed by the task force's ability to collect real
time information and disrupt scams taking hold in your
jurisdiction, especially ones that are originating overseas. I
have gotten some scam calls myself from overseas before and,
you know, have been personally tempted to take them on by
myself.
However, I know it is best left to professionals like
yourself for doing this, and you are proving that here. Mr.
Pirrello, what is the key to the success of your Elder Justice
Task Force?
Mr. Pirrello. Thank you, Senator. San Diego does have a
proud tradition of collaboration between local and Federal
authorities, and amidst all the local authorities, and I think
that is the largest piece.
As we travel around the country and talk to people who want
to duplicate what we are doing, you hear things like that
people can't even get other colleagues from other agencies on a
telephone call.
It requires people that view this issue with passion and
are willing to sacrifice to get a task force like this up and
running.
Senator Kelly. How do we--so, first of all, how much does
it cost to operate your task force?
Mr. Pirrello. Well, it is interesting, Senator. Our task
force started as a collateral responsibility for myself and
every other member of law enforcement or the FBI, and so, there
really wasn't a cost.
It was kind of a side hustle, so to speak, for many of us.
Where the money needs to go is funding investigators, funding
analysts. We need to fill positions. The law enforcement
community is so starved for resources that it is very difficult
to get any agency to dedicate a full body, a full resource to
this.
Sadly, as you go around the country, there probably is not
one single person in law enforcement anywhere, locally or
federally, that 100 percent of their job responsibility is
focusing on elder scams.
Senator Kelly. If it wasn't a collateral duty in your
office and you were going to have dedicated people, how many
people would be doing this?
Mr. Pirrello. Well, Senator, the numbers are staggering. As
successful as we have been in San Diego, we are working less
than one-tenth of one percent of the intake, to give you an
idea of this tsunami of fraud that is coming at us.
We will take one body. We could use an army, obviously. It
really takes, again, a group of people that is committed to
this cause to start building it in each community. We started
and we felt the best first step forward was identifying how big
of a problem it was. It goes back to that underreporting and
lack of centralized reporting mechanism.
As each jurisdiction, locally and then nationally, come up
with the actual loss amounts in their own jurisdictions, that
is the number that we need to go to the policymakers and
decisionmakers to ask for the resources that this problem
merits.
Senator Kelly. Yes. We can understand the amount of
resources, I often think about this in terms of people. If you
were going to stand up for your office, a team of people that
were 100 percent dedicated to this, to actually handle the
demand that you see out there, the fraud that is out there, how
many people are we talking about?
Mr. Pirrello. You could get a task force started with one
local prosecutor like myself, one investigator from the DA's
office or from a local police or sheriff jurisdiction, and then
cooperation from the local FBI office.
You could hit the ground running with the caveat that you
need also the local U.S. Attorney's Office to devote the
resources. The number one obstacle that we faced when we
started our task force was the dirty word called thresholds
within the criminal justice system. To get Federal Agencies
like the FBI or the U.S. Attorney's Office to open up a case,
typically, you needed million dollar cases.
Most of the cases, like unfortunately, Ms. Whittaker's
family start by losing $25,000, even $300,000. You can't get
the FBI or the U.S. attorney's office to open up that case. Our
task force was devoted to working locally to connect the dots,
to show our Federal partners that these were million dollar
cases once you connected the dots, but also for our local task
force, the chain of command at the FBI and the U.S. Attorney's
Office eliminated thresholds, which is a huge--was the only
thing that got us really off the ground so that we can all work
collaboratively on these cases.
Senator Kelly. I will take a couple more minutes. Another
question on communications platforms, Mr. Pirrello. We had a
hearing on this topic last November where we talked about how
artificial intelligence plays a growing role in scams, both
preventing them but also enabling them.
We talked about a constituent of mine who had received a
phone call from somebody she thought was her daughter, and the
daughter was screaming and crying, and a man came on the phone
to say that he was going to do harm to her daughter if the
woman didn't pay $50,000.
Turned out that her daughter was safe at home, and this was
just an AI created scam call using voice cloning technology. We
learned in that hearing how difficult it is to trace and
prosecute a scam if no money has been exchanged, which was the
case here.
Mr. Pirrello, from the law enforcement perspective, why is
that so challenging to trace and prosecute a scam if the scam
wasn't completed?
Mr. Pirrello. Well, Senator, we believe that you have to
devote your limited, scarce resources to where you can have the
greatest impact. When we have talked to a victim and learned
that they almost fell for this scam, there is great relief. As
I mentioned before, the intake is coming at us faster than we
could process.
Every single day we have victims that are losing tens of
thousands of dollars or hundreds of thousands of dollars and
our focus in the first days after someone has been scammed is
not necessarily putting a bad guy in jail. It is, let's do
everything we can to try to pull this money back from them.
On the artificial intelligence piece, that is great
evidence that there is urgency here. We can't sit on the
sideline any longer because AI coming, the scammers are going
to be doing even better than they are doing now, and they are
doing really well without the use of artificial intelligence.
When we look at the numbers, as Kathy mentioned, where the
estimates of actual losses beyond what is reported is over $100
billion a year. If that is how much the scammers are getting
from us without artificial intelligence, this is the time.
The time is now. We are reaching a tipping point. We
couldn't be more grateful for this Committee to take up this
issue.
Senator Kelly. I read this article on CNN about a man in
Virginia who was a victim of a pig butchering scam and met
somebody online, convinced him to invest in crypto. He did it,
never met her in person.
He lost his entire life savings and then he took his own
life. The person on the other side of the screen, you know,
wasn't just someone bored at home over the weekend. It was
probably over in Southeast Asia somewhere--an organized crime
outfit that is doing this at scale and it is very
sophisticated. It is run by professional criminals, and they
are getting older adults, as you mentioned, $100 billion.
A lot of it is probably this, you know, this confidence
investment scam, so what do we do about it? You know, how do
we--you know, they are not going to stop. What kind of negative
incentives can we put to the countries involved?
I know this isn't your area of expertise, but beyond just
informing the public about this, I imagine for you it is hard
to prosecute somebody that you don't know that is in a foreign
country where we may or may not even have an extradition
treaty, and it is hard to identify who these people are.
From a foreign policy standpoint, you have any ideas about
what the Federal Government could be doing at the highest level
to put pressure on the countries that are harboring these
organized criminal groups?
Mr. Pirrello. Thank you, Senator. Sorry, thank you,
Senator. I am actually--I am proud there is leadership coming
from California, from San Diego, with our Elder Justice Task
Force.
The Santa Clara District Attorney's Office is actually a
national leader in combating the pig butchering scams, and
Deputy District Attorney colleague testified in Congress
yesterday on this issue I don't have an answer, a magic pill to
solve that problem, but what I can say is when you do--when we
are dealing with countries that are outside of the reach of
United States law enforcement, I think the effort--and there
are concrete steps that we could take, again, upstream of the
scam to eliminate the ability for the scammers in Southeast
Asia to contact our victims.
That is where resources should be spent and pressure on the
technology industry. Every one of our victims is being
contacted on a spoofed telephone number or a foreign IP address
over the devices and technology that we depend on every day.
There are countries like the UK and Australia that have
implemented programs specifically designed to eliminate that,
and their trends are actually skewing downwards in the last two
years. There is an addendum to my testimony that was submitted
from the Stop Scams Alliance, who is led by a former CIA
analyst, and there is some real concrete, specific things that
the technology and communications companies can do, and so, if
we eliminate the ability for these call centers to reach our
victims, then we don't have to worry about the expense of
chasing them to Myanmar or wherever else they.
Senator Kelly. All right. Thank you. Thank you, Mr.
Chairman.
The Chairman. Thanks, Senator Kelly. We obviously allowed
extended time here, but Senator Kelly had a very important set
of questions. I think this can lead to some good bipartisan
work, and I hope we can stay in touch on this. I will turn next
to Senator Blumenthal.
Senator Blumenthal. Thank you very much, Mr. Chairman, and
thank you for holding this hearing, and for this booklet, which
I think will be very useful to a lot of my constituents,
including the one in Spanish.
I want to thank Senator Casey for putting together these
materials. Very important to educate people. Half of our job on
topics that involve scams is to educate, enlighten, and warn
people, including what law enforcement does, as I know from
having acted against these kinds of scams and con artists as
State Attorney General, as well as United States Attorney in
Connecticut.
Mr. Pirrello and Ms. Stokes, in your testimony, you both
call attention to elder scams involving cryptocurrency ATMs.
Along with Senator Durbin and a number of my colleagues, I
wrote a letter to 10 of the largest Bitcoin ATM operators on
their failures to prevent elder scams despite reports that
criminals are coercing elderly Americans to make large deposits
into these Bitcoin ATMs.
These companies have not taken any steps to ensure their
ATMs are not being used in these scams. I would like to ask
you, what do you think Congress should do to address elder
scams involving Bitcoin ATMs and cryptocurrencies?
Ms. Stokes. Thank you, Senator, for that question. I know
that the cryptocurrency vector is very, very concerning, so
much is being stolen by convincing somebody that something is
in--that something that isn't true and getting them to go to
their bank, take out tens of thousands of dollars in cash, then
telling them where to go to find the crypto machine, and then
them standing there and putting $100 at a time into these
machines and coaching them on how to get that money to the
electronic wallet of where they think that this is going to
solve a problem.
It has just created all that much more--and I know that
AARP State affairs are out there trying to get changes in
crypto regulation. We do definitely need more regulation there,
and some of the things that they are looking at are, you know,
warnings about the fraud types that they are used in.
Transparency around the fees and the rates, and really
importantly, I think daily transaction limits.
Senator Blumenthal. Thank you. Mr. Pirrello.
Mr. Pirrello. Sorry--thank you, Senator. We did have a
recent victim in San Diego who fell victim for the scam,
withdrew $15,000 from her bank and went into a liquor store in
a part of town she shouldn't have been in the middle of the
night to put $15,000 cash into one of these machines.
I echo the sentiment, we have to have transaction limits,
but we clearly need to look at this industry as a whole and how
it exists, and what safeguards and accountability these
companies should have. These companies are relying on the fact
that our victims showed their driver's license to the machine,
so they are complying with the know your customer requirements
of their industry. However, clearly, these victims do not know
what they are caught up in. They don't know where their money
is going, and in this investigation that I just mentioned, we
learned that our victim in Escondido, California put $15,000
into the machine. Within 12 minutes of her putting her cash in
the machine, money was taken from that Bitcoin wallet and
placed on an overseas Bitcoin exchange that is outside the
reach of law enforcement in the United States.
The window is so tight for there to be any intervention,
and so there should be as many safeguards as possible to
prevent these victims from putting their money in these
machines in the first place.
Senator Blumenthal. I take it from both of you that the
companies themselves are doing virtually nothing to try to
forestall this fraud.
Mr. Pirrello. Yes, your honor, they--your honor, I am a
prosecutor. I am sorry, Mr. Blumenthal. Thank you, Senator.
Senator Blumenthal. That is okay.
Mr. Pirrello. I mentioned earlier I was a career
prosecutor. I can't turn that off. Thank you, Senator. The
cryptocurrency, some are being responsible in the sense that
they are submitting suspicious activity reports like a bank
would, but as I mentioned, it is well after the fact that the
victim's money is unrecoverable, and so both within our
jurisdiction and around the country, there is frustration
growing within law enforcement. We have a victim that runs to
the police station and says, I just put $10,000 into this
machine and my money is sitting right there in that machine,
can you get it back for me?
There is an inability to do that because of the nuance of
how these cryptocurrency transactions work. Even a period of
time, just like when you go to wire money, that there is a hold
for 48 hours, just a brief period of time before that
transaction takes place would save millions, there is no
question.
Senator Blumenthal. My time has expired, but I would
welcome from you or any other members of the panel suggestions
on how we can hold these companies accountable. The principle
of accountability, I think, is very important.
They know it is happening. They could stop it. We need to
make sure they do take action to stop it. I would welcome your
additional written responses, if you have any. Thank you.
Thanks, Mr. Chair.
The Chairman. Thank you, Senator Blumenthal. We will turn
finally to Senator Warnock.
Senator Warnock. Thank you very much, Chair Casey, for your
vigilance with protecting American consumers in so many ways
and thank you for your focus on this topic.
According to the FBI's data on elder fraud complaints,
elder fraud complaints, Georgia has the unfortunate distinction
of being in the top 15 States for the number of complaints
filed, and we are in the top 10 for the amount lost, almost $92
million in 2023 alone. This data is stark and deeply
concerning.
It is easy to get caught up in abstract numbers. Even a
high number like $92 million, what does that actually mean for
folks who are paying attention to this hearing? So let me
highlight a story to remind us of what is at stake. Behind the
numbers are real people. My office recently heard the story of
a Georgia senior who was a victim of a financial scam in which
the scammer impersonated an Army office asking this Georgian
for money to pay for his veteran's benefits.
Thankfully, her son, who is also a veteran, was able to
prevent his mother from sending the scammer money, but it was a
close call, and there are too many cases where these scammers
take advantage of seniors. I have seen it up close as a pastor
with members of my own congregation.
It can be difficult to talk about, but I believe the more
we shed light on these deceptive practices, the more we can
remove stigma and shame, and encourage people to report when
something isn't quite right.
Ms. Whittaker, thank you so very much for being here, and
could you talk about your own personal experience with scams
and how it impacted you?
Ms. Whittaker. Okay. Financially--first of all, I think
that the scammers do some sort of research. I am not sure what
they use as the resource, but they clearly are doing research
on their victims because they seem to know exactly what is
available, and what is not available, and when to stop.
This started on a Tuesday, and Bill didn't say anything to
me until Friday. Little chunks of money seem to be missing over
the course of four days, which he was not aware of, and I
wasn't aware of because he didn't say anything. It was in the
end when we took a look at what was lost, and my father had
just passed away, so we had some money from my dad, that
fortunately--well, unfortunately was gone, but it saved us from
actually having even more of a loss than what we already had,
but because there was nothing left in our savings account or
checking account, it affected decisions that had to be made as
far as medicine that was Bill--was needed to take. You know, he
chose not to take certain medicines.
Fortunately in the future I understand that some of those
medicines will be taken care of, but he chose not to take
Repatha which had an out of pocket, a huge out-of-pocket
expense, but it was necessary for his cholesterol, but he
wasn't going to take it.
He chose to not take all of his insulin. He should have
taken insulin twice a day, in the morning and at night. He
chose to cut those back from the number of units that he was
taking until we paid the business back.
Once the business was paid back, and he felt better about
where we were, then he started doing some of the things he
should have done, but not all of them, so it wasn't just a
financial effect, but he sort of stopped living, if I can say
it that way. He was so ashamed of what he had done that he just
made himself not available to people. I am not sure if I----
Senator Warnock. This--no, thank you. This scam had a
material impact on your family.
Ms. Whittaker. It did.
Senator Warnock. Literally dragging the health of your
father down as a result of it, and you know, not putting words
in your mouth, it sounds like it----
Ms. Whittaker. My husband.
Senator Warnock. Your husband, sorry. Then entered the
depression.
Ms. Whittaker. Yes. Depression, actually, for both of us.
Senator Warnock. Yes, yes.
Ms. Whittaker. It was--until you get--and then you reach a
point where you just say, okay, enough is enough. You got to
get up. You got to move on. I was able to do that. He was not.
Senator Warnock. Right, right. Well, thank you so very
much. It takes a lot of courage to come to a place like this
and tell your story, but I wanted folks to hear just a little
bit of it, because I think sometimes, we get lost in the data
and in the numbers. You are the human face of the issues that
we must address.
I look forward to working with Chair Casey and the
Committee to protect seniors and their families from the
scourge of scams, and Ms. Whittaker mentioned the ways in which
our work separately on the issue of capping the cost of
prescription drugs, my bill, which caps claims of insulin and
other drugs, is helping seniors.
Even as we protect them from the big pharmaceutical
companies and their excesses, we also got to protect our
seniors from these scams. Again, thank you so very much for
your testimony.
The Chairman. Thank you, Senator Warnock, and I appreciate
you asking Susan Whittaker those questions. I am going to close
now. We are at the end of our hearing, and we also have a vote
coming up.
We just want to thank our witnesses for their testimony,
the expertise they bring to bear, their own personal stories,
and the wisdom you provide to the Committee to either change a
law or remedy the policy that took away a deduction, but also
to really begin to focus on what the Federal Government can do
more of to combat this problem.
As you heard--for the audience I would say, as you heard
from our witnesses, scam losses are on the rise. Fighting
frauds and scams that target older adults is going to take a
multi-pronged, whole of Government approach, and that means
every level of Government.
I think the Federal Government can do more as we heard
today. As Mr. Pirrello shared in his statement and in answers
to questions, education and prosecution alone won't solve the
problem, but we have to do both.
We need to hold all those involved, whether it is a bank,
or a social media company, or any other perpetrator
accountable, and ensure our law enforcement agencies have the
resources they need to address this issue head on, and I think
there is some--should be some good bipartisan work ahead of us
on that.
We also need to reduce the stigma associated with these
crimes. If you have been scammed, you are not alone. You are a
victim of a crime. You should not blame yourself. If you have
been victimized, please report this to our federal agencies
without shame.
Without knowing the true scope of this issue, Congress
can't provide Federal agencies with the resources needed to
catch these criminals. We would urge people to report the scam
as soon as possible to the FBI's Internet Crime Complaint
Center, also known as IC3. That is letter, capital letter I,
capital C, and the number 3, at ic3.gov, ic3.gov, or to the
Federal Trade Commission at reportfraud.ftc.gov.
We will continue to amplify those resources for folks to
turn to. We also need to support our older adults who have been
scammed--with regard to the financial and emotional impact that
we know is profound and the Federal Government should work to
lessen that blow. Ms. Whittaker's testimony, she just made
reference to a few moments ago about her husband, ``stopped
living in a sense.'' It says it all.
This means that we have got to work together to make sure
that older adults who have been scammed out of their life
savings aren't on the hook for the taxes for withdrawals
associated with the scam.
I also will move to submit for the record the report that I
made reference to earlier, Scammed, Then Taxed, which is a
report about the change in the law that took away that
deduction, and I will also submit for the record a letter from
AARP about the repeal of the theft loss provision.
Both the letter and the Scammed, Then Taxed report will be
made part of the record, so ordered.
The Chairman. For those watching today, I want to emphasize
that the Committee is here as a resource, whether you just want
to learn more about this problem, or in fact, if you have been
targeted by a scammer.
You can access our resources, including the Committee's
newest Fraud Book with information, tips, and resources, and a
helpful book bookmark with quick tips via the Aging Committee's
website at aging.senate.gov/scam.
I will recite that again, aging.senate.gov/scam. Ranking
Member Braun will submit a statement for the record and that
statement will be added to the record, so ordered, when we have
that statement.
The Chairman. I want to thank all of our witnesses once
again for contributing their time and their expertise.
If any Senators have additional questions for the witnesses
or statements to be added to the record, the hearing record
will be kept open until Thursday, September 26th, one week from
today.
Thank you all for participating. This concludes our
hearing.
[Whereupon, at 11:39 a.m., the hearing was adjourned.]
Closing Statement of Senator Mike Braun, Ranking Member
Thank you to our witnesses for sharing your testimonies and
personal experiences.
It's crucial that we examine the frauds and scams that
target older Americans, and how to prevent these crimes through
education and awareness.
Highlighting Medicare fraud is particularly important as it
targets our most vulnerable populations.
Congress needs to address this with innovative solutions
like my Medicare Transaction Fraud Prevention Act. Combatting
fraud is a bipartisan issue.
I commend local banks, credit unions, law enforcement, and
senior Medicare patrols for the work they do to prevent fraud
and scams and educate seniors on what to look out for.
I appreciate our Committee's focus on this issue. I yield
back.
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APPENDIX
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Prepared Witness Statements
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U.S. Senate Special Committee on Aging
"Fighting Fraud: How Scammers are Stealing from Older Adults"
September 19, 2024
Prepared Witness Statement
Kathy Stokes
My name is Kathy Stokes, and I am the Director of Fraud
Prevention Programs for the AARP Fraud Watch Network. I am
honored to be here to testify on behalf of AARP, which
advocates for the more than 100 million Americans age 50 and
older. I would like to thank you and the members of the Senate
Special Committee on Aging for holding this important hearing,
"Fighting Fraud: How Scammers are Stealing from Older Adults."
AARP has long worked to educate consumers, support fraud
victims, and improve fraud detection and prevention at
financial institutions, and we look forward to working with you
towards policy solutions to prevent fraud and protect fraud
victims.
AARP Fraud Prevention Work
The Fraud Watch Network is AARP's program focused on
helping our nation's older adults understand the very real
threat to their financial security that fraud represents.
We show up in communities around the country through all
our state offices and their trained volunteer fraud fighters
spreading the message of fraud prevention. We share robust
information online at aarp.org/fraudwatchnetwork; we cover the
issue in AARP the Magazine and the AARP Bulletin - which reach
tens of millions of readers with each edition; we offer a
biweekly email or text `watchdog alert' newsletter and we
produce an award-winning podcast, AARP's The Perfect Scam - in
the true crime genre but focused on the impact of this type of
crime on victims and their families. We also offer a variety of
virtual educational events, from member teletown halls to
webinars and Facebook live events.
Beyond education, AARP is unique in its focus on supporting
victims of fraud and their families. Our Fraud Watch Network
Helpline receives around 500 calls a day. These calls can be
from people who simply want to report a scam they've
encountered but didn't engage with, from people who aren't sure
whether that Publishers Clearing House letter claiming they've
won $1 million and a Mercedes is legitimate (it's not), and too
often, from victims and their family members in the aftermath
of the crime. We also offer an online victim support group
program, through which trained facilitators run small group
sessions to begin to address the emotional impact of fraud
victimization-helping older Americans rebuild their lives.
AARP has also been leading an effort to reframe the
narrative on fraud victimization. Our society tends to treat
fraud victims differently than other crime victims. We often
blame them with the language we use: they've been tricked, or
duped, or fooled, rather than that a criminal has stolen from
them. We tend to believe that there's nothing law enforcement
can do because the criminals are abroad. Our narrative change
movement is rooted in research that shows how our tendency to
blame fraud victims has served to deprioritize fraud as a
crime. This must change if we are to meaningfully combat this
insidious and devastating crime.
Additionally, AARP has been working as a convener to build
support for a new nonprofit National Elder Fraud Coordination
Center (NEFCC), which should launch before year's end. Similar
to the National Center for Missing and Exploited Children, this
private/public partnership will focus on sharing information to
tie cases together for law enforcement investigation and
prosecution to begin to disrupt the fraud business model.
NEFCC's origin links to the work of the FBI San Diego
County Elder Justice Task Force, which has proven the concept
of gathering data on similar cases to create high-dollar,
actionable investigations and prosecutions. I'm honored to be
at this witness table with Deputy District Attorney Scott
Pirrello from the San Diego DA's office, who directly supports
the work of the Elder Justice Task Force, especially when it
has needed local prosecutions to assist federal investigations.
The Fraud Crisis
The growth in fraud crimes over the past five years has
been meteoric. For example, published report data from the
Federal Trade Commission (FTC) shows more than $10.3 billion
stolen in 2023; the Federal Bureau of Investigation (FBI) shows
$12.5 billion stolen in 2023; and Javelin Strategy and Research
found $43 billion in identity fraud scams alone in 2023.
But these numbers don't begin to tell the true story. In a
2023 report the FTC submitted to Congress, the agency
acknowledged the significant problem of under-reporting. Using
its own estimates of under-reporting, the agency extrapolated
that money stolen from fraud in 2022 was not the reported $8.9
billion, but more like $137.4 billion. The agency acknowledges
a considerable degree of uncertainty with this amount, but most
fraud experts agree the higher number is likely closer to
reality than $8.9 billion.
Fraud criminals know no demographic bounds. They seek to
steal money and sensitive information from targets regardless
of age, educational attainment, or socioeconomic status, but
when they victimize our nation's older adults, the financial
impact is too often profound and life altering. This stands to
reason, as older adults are more likely to have accumulated a
lifetime of savings and are more likely to have housing wealth,
and too often, the criminals steal everything. The victims are
emotionally and financially ruined, often their families are
torn apart, and many are left to rely on already strained
local, state and federal safety nets.
Why Scams Succeed
The days of snake oil salesmen and lone grifters have given
way to transnational organized crime rings with corporate
offices, employees (often enslaved prisoners forced by physical
threat to be frontline scammers), lead lists, personally
identifiable information (PII) from data hacks and breaches,
scripts, and a playbook of how to turn a fraud target into a
fraud victim. These criminal enterprises leverage all methods
of communication and forms of payment along with the latest
technological advances to commit their crimes at scale.
But sophistication and scale alone aren't the reasons they
succeed. The reason scams are successful is largely because of
how the human brain functions. AARP's own research beginning
decades ago unveiled what criminal scammers refer to as getting
their targets "under the ether." They have known since the
beginning of time that to trigger a heightened emotional state
is to bypass logical thinking - it is how our brains work.
What criminals call getting the target "under the ether,
academics refer to as an "amygdala hijack." The amygdala is the
part of our brain that processes emotions. When the amygdala is
hijacked, the part of our brain responsible for logic - the
prefrontal cortex, is bypassed. It's important to recognize
that becoming a fraud victim is not the victim's fault. They
didn't become a victim because of their age, educational level
or cognitive impairment. They became a victim because of how
our brains function.
This message is critical if we are ever to marshal a
meaningful response to the fraud crisis. Until we all
understand that fraud victims are crime victims and that they
aren't responsible for becoming victims, we will fail to
address this crime for the scourge it is.
Concerning Fraud Trends
The tactics of fraud criminals range from old school
(stealing your mail) to high tech (hacks of banks, retail
chains and other companies that stockpile consumer data). They
might pretend to be from the government, utility companies,
banks or big tech firms to steal sensitive personal
information, or they send phishing emails with links that can
infect devices with data-harvesting malware. Sensitive
information is bought and sold among criminals on the dark web
and via apps, which other criminals then use to better target
their victims.
Of the hundreds of fraud types in play, I believe three are
of particular concern: the tech support scam, the bank impostor
scam, and financial grooming.
Tech Support Scam
A tech support scam may originate with a call from someone
claiming to be with Microsoft or Windows tech support, or via a
popup window on your device screen. The target is warned that a
virus has been detected, and to protect their data, they must
go to a web address or call a provided phone number.
Inevitably, the "tech support" person convinces the target to
allow them to remotely access their device, leading often to
even more complexity to the scam and massive financial losses.
Helen, from Southern California, told AARP's Fraud Watch
Helpline that she received a pop-up message on her computer
screen along with a loud voice warning: "Do not turn off your
computer!" Helen was instructed to call the phone number on her
screen, and she soon found herself talking to someone who
claimed to be a tech support staffer from Microsoft. The fake
tech support staffer told her that her computer was under
attack and convinced her to download software that gave him
access to her computer and its data.
Helen didn't realize that the "helpful" technician was part
of a fraud ring, and that the pop up on her computer was a
fake. He offered to put her through to the security department,
where someone posing as a bank official told her that hackers
already were stealing from her account, and she needed to
quickly move her funds to a new, safe account. Helen followed
his instructions, withdrawing cash and buying gift cards and
sending wire transfers and cashier's checks to addresses in
other cities. Most of her retirement nest egg was stolen before
a bank fraud investigator intervened, convincing her to speak
to her family about what was happening.
Bank Impostor Scam
In this growing scam, a target receives a text message from
what appears to be their bank, asking them if a certain
transaction made on their account is legitimate, typically
requesting a Yes or No response. The target sees a transaction
they didn't make and responds No.
A phone call immediately follows, ostensibly from their
bank. The caller explains that they are their bank's fraud
investigator, and their accounts are actively being hacked. The
fake bank investigator then helps the target transfer their
assets to keep them safe. The ending is always the same; it
wasn't the person's actual bank and the victim's assets have
been stolen with little chance of recovery.
Magis, who reached out to AARP's Fraud Watch Network
Helpline, experienced this scheme. She was made to believe that
her bank's fraud investigators were seeking to help her address
fraud in her accounts. They told her that her stolen identity
was being used by foreign cybercriminals who used it to buy
child sexual exploitation materials, murder people, and sell
body parts. The impact grew to affect her retirement account,
and more than $1 million was stolen throughout the scam. Magis
has suffered significant stress and faces the possibility of
being forced to sell her home and face homelessness.
Financial Grooming
Romance scams are sadly common, where a victim is
manipulated over time to believe they are in a deep love affair
with someone they've met online, only to be crushed when they
learn it was all a lie and their savings had been wiped out as
well.
A burgeoning form of this scam typically begins with what
seems like an errant text message such as, "Hey Bob, are we
still on for dinner at 7?" The recipient kindly responds to
tell the sender they have the wrong person, and that is all it
takes to build out a conversation, that turns into a friendship
that becomes a trusted relationship, that leads to a
devastating investment fraud that destroys victims emotionally
and financially.
In this particular scam, there are victims on both ends of
the crime. Southeast Asian organized crime groups lure
frontline scammers with fake job offers. Once they arrive, the
criminals take their passports and force them to phish for
potential scam victims for endless hours a day under threat of
violence and even death. This crime is dubbed by the criminals
who came up with it, Pig Butchering - where they fatten the
victim before slaughter. The term is so loaded with victim
blaming that many in this space refer to it instead as
financial grooming.
Their targets are groomed over weeks or months and at some
point, the scammer explains that they have such a great life
with cars and homes and jewelry because of their investments in
cryptocurrency - and they can show the target how to trade. The
scammer convinces the target to access an online or app-based
crypto exchange and encourages small investments at first. The
returns entice the target to invest larger amounts and the
returns continue to grow. When the victim decides it's time to
cash out, they are told they first have to pay thousands in
taxes. The victim may even cash out other accounts to pay the
taxes, only to find that the entire ordeal was built on a
brutal lie.
While these cases typically focus on fake investments in
cryptocurrency, sometimes the commodity is precious metals.
Forms of Payment in Fraud
Fraud criminals take advantage of about every money
transfer option to steal from victims. They steal credit and
debit card information. They convince victims to withdraw
thousands of dollars in cash and ship it or wait in their home
until one of the gang members stops by to pick it up.
They coerce victims into making money transfers from their
bank accounts or wire transfers from a money service business.
They take advantage of Peer-to-Peer platforms. As described
earlier, they coerce victims into converting cash into
cryptocurrency, and they convince them that purchasing gift
cards and sharing the information on the back of the card will
solve the urgent financial matter, and, more recently, they
convince victims to buy gold bars.
In gold bar schemes, the criminals may convince victims
that their financial accounts are under attack and the safest
course of action is to liquidate the assets and purchase gold
bars to protect their wealth. Criminals like gold bars because
they are easy to transfer across state lines, and it's
untraceable once sold and melted down. Some experts suggest
that older adults are particularly receptive to gold, and its
value has risen significantly in the last five years. At last
look, gold was valued at just over $2,600 an ounce.
As unlikely as it may seem that these ploys work, it's
important to keep in mind that the criminals are using how our
brains function when in a heightened emotional state against
us.
Generative Artificial Intelligence Poses a Threat, But Guidance
is the Same
For all of the promises generative artificial intelligence
(AI) portends, we ignore its potential for harm at our peril.
AI is already being leveraged by fraud criminals to turn
grammatically challenged emails and texts into perfectly formed
and convincing messages. It's being used to animate still
images and create videos and websites from whole cloth. We have
learned that AI is used to target attacks on communities of
color to affect the appropriate dialect to conduct regionally
specific phone-based grandparent scams.
Generative AI is like the industrial revolution for fraud
criminals. It enables them to make every possible scam far more
difficult to discern. As scary as this sounds, we seek to
remind consumers that guidance about scams remains the same.
Stay in the know on fraud trends and defensive actions you can
take so you are better able to avoid engaging with them. A Path
Forward
It may seem that we are in a fraud quagmire with little
hope of getting out. There is no single solution, but there are
roles for each sector of our society that will go a long way to
turning the tide on the fraud tsunami.
For individuals, it's taking steps to better protect
ourselves and our loved ones from fraud attacks. Such actions
include freezing our credit, using a password manager and
multifactor authentication, shredding documents, and keeping
our device operating systems updated to protect against known
vulnerabilities, putting a freeze on credit reports, and not
engaging with incoming messages from unknown persons, and share
what we know. Each of us should make it a point to talk about
the latest we've heard about fraud with our family members and
friends. The more we talk about these scams, the better
protected we will be.
For educators, it is important that we tell consumers about
the signs of the latest scams and their red flags, but what if
we are able to come up with something simpler? If we can train
our brains on how most scams come at us and what to do when it
does, we could probably thwart a lot of crime. Most scams come
as a communication out of the blue that gets us immediately
into a heightened emotional state and contains urgency. If we
could train consumers that this scenario is likely a scam, we
can train them how to react. AARP has been working on this
concept with input from people around the globe and are hopeful
something can be accomplished.
Industry has a critical role to play as well. Financial
institutions must continue to innovate on fraud controls and
mitigation. Tech companies must build security into the design
and manufacture of technology products, so that products come
to market secure by design and safe by default.
Industry and law enforcement should champion the success of
the new National Elder Fraud Coordination Center (NEFCC), noted
earlier. Even with underreporting, law enforcement is swimming
in a sea of elder fraud reports. Scarce resources make it
difficult for investigators to link cases. Jurisdictional
challenges that come with transnational organized crime
investigations limit prosecutions. Developing high-priority,
high-impact cases take time, labor, and analysis. A national
coordination center like NEFCC, with the leads, the data
analysts, and the combined resources of the private and public
sector can overcome these obstacles. In addition to the ability
to create rich law enforcement investigative packages, incoming
data from members could offer opportunities to neutralize known
fraud vectors.
Indeed, just last week, in a new commentary piece for
Fortune, Nasdaq Chair and CEO Adena Friedman unveiled new
research that shows that annual GDP growth in the US would be
0.5% larger without fraud. Friedman says fraudulent acts too
often go unnoticed but can be mitigated by better communication
between the public and private sector. NEFCC marks an important
and imminent means of producing this coordination.
Policymakers have an important role to bring the fight to
fraud crime rings, including legislative solutions such as:
providing more resources to train state and local law
enforcement to investigate fraud crimes; reinstating of the
casualty loss deduction to address the significant tax burden
that fraud victims face having to also pay taxes on the assets
that were stolen; limiting the damage of fraud involving
cryptocurrency ATMs; improving staffing of DOJ's Elder Justice
Strike Forces; and enhanced efforts such as the National Elder
Fraud Coordination Center to bring the public and private
sectors together to build cases for investigation and
prosecution.
Conclusion
Addressing fraud requires more than piecemeal solutions; it
demands a whole-of-society approach. We cannot educate our way
out of the fraud crisis. Industry cannot mitigate and engineer
our way out of it. Policymakers cannot regulate our way out of
it, and law enforcement cannot arrest our way out of it.
But, together, educators, policymakers, law enforcement and
industry can turn the tide against the vicious crime gangs who
hold the power right now. Together, we can disrupt their
business model, protect millions of consumers, and keep
billions of dollars in savings and retirement accounts and in
our economy.
We thank this Committee for bringing attention to this
important issue and look forward to working with you to turn
the tide on fraud criminals.
U.S. Senate Special Committee on Aging
"Fighting Fraud: How Scammers are Stealing from Older Adults"
September 19, 2024
Prepared Witness Statement
Scott Pirrello
Good morning, Chairman Casey, Ranking Member Braun, and
other members of the Senate Special Committee on Aging. I
appreciate the opportunity to share my testimony with you
today.
My name is Scott Pirrello. I am originally from Long
Island, New York and I attended Penn State University. However,
I am now a career Elder Abuse Prosecutor for the San Diego
District Attorney's Office. In 2018, I felt a call to action
after an epiphany that despite being the Elder Abuse Prosecutor
for our county that I was seeing ZERO elder scam cases come
across my desk even though I was contacted by dozens of victims
whenever I was out in the community. When I sought out the
answer to the question of why I had zero cases, I was shocked
to learn that hundreds of reports existed, but once local
police determined that the bad guys were far away overseas, the
cases were filed away and never submitted to local prosecutors.
I assumed then, like so many, that certainly someone or
some agency was in charge of working on these cases, someone
was caring about all these untold victims, and someone was
working to stop this problem from happening. I was wrong.
Right at this moment, there are thousands of American
seniors all throughout the country being scammed - they are
grandparents, aunts and uncles, friends and neighbors,
veterans, best-selling authors, engineers, retired teachers and
police officers. They are living independent and vibrant lives.
They still live in their own homes, still drive a car, help out
their families, and volunteer in their communities. And this
morning as I testify, they are being terrorized by foreign
nationals, on the verge of having their lives destroyed and
forced into financial ruin.
This morning as each of them logged onto their computers to
check in on their grandchildren or to glance at Facebook, a
simple popup message appearing to be from Microsoft may have
appeared on their computer screen saying that something was
wrong with their computer and that they needed to call a given
phone number to fix it. This phone number is often spoofed to
appear like a number local to the victim. The scammers, often
posing as helpful Microsoft support folks, then convince those
seniors to accept a download of a remote access software onto
their devices, which authorizes a trojan horse to allow the
scammers to see inside their computer. Next the scammers begin
to instill fear into their victims by telling the victims that
their computers have been hacked and their information has been
used for some horrific purpose, such as to view child sexual
abuse material, or has been involved in some illegal drug
cartel activities.
Once the scammers have access to their devices, the scam
shifts towards their finances. The fake Microsoft worker tells
the victim that their financial accounts have also been hacked
and must be secured. The scammer then transfers the call to a
"colleague" - another scammer posing as a representative from a
bank security department, the United States Department of the
Treasury, Federal Trade Commission (FTC), U.S. Marshalls, or
any other federal agency.
The fleecing has begun, and the next ask is a test of
whether the scammer has the victim hooked or not. The victims
are instructed to withdraw a high value of money, like $30,000
or more, from their bank - or they are told to purchase gold
bars worth $20 to $40 to $60,000. Once the victim has the cash
or the gold secured, they are instructed to either send cash
through Bitcoin ATM machines or to package it up in cardboard
boxes and instructed to either ship it across the country, or
they are told that a courier posing as a federal agent will be
coming to their house to pick up the package. This will
continue until the victim runs out of funds, or until someone
interferes.
The scenario I just described is not fictional. This
narrative is exactly what occurred in our most recent case in
San Diego last week. A 94-year-old Air Force Veteran lost
$143,000 in five separate pickups of cash over a two-week
period. According to the FBI's most recent Elder Fraud Report,
tech support scams were the most prevalent scams perpetrated
against older adults.
Hundreds of thousands of victims from all around the
country fight through the humiliation and shame these scams
cause each year, and summon the courage to report what has
happened to them. They will call their banks and then reach out
to their local police departments, their local prosecutors
offices, to the Federal Bureau of Investigation (FBI), FTC, or
to their State's Attorney General's and Consumer Protection
Offices, or perhaps they will try to contact the U.S.
Department of Justice (DOJ)'s Transnational Elder Fraud Strike
Force, a program highly promoted by the Department of Justice
as a potential solution to this scam activity. But these
victims will all be met with the most regrettable answer: they
will be told, "I'm sorry, but there is nothing that we can do."
I am here today speaking on behalf of the MILLIONS of
American elder fraud victims in recent years who have been
begging their government, local and federal law enforcement,
and the banking, technology, and retail industries to help
them. Too many very well intended programs are not implemented
in a way to truly impact the tsunami of fraud that we are
facing each day.
Currently, we are all failing the very people who need us
the most: older adults - many of whom can't afford to lose
anything, let alone everything. We are failing in our most
basic duties to protect those in their golden years who are
living off the nest eggs they worked for their entire lives and
who are beyond the ability to rejoin the workforce to make the
money back. These are lives in ruin.
Another failure of the status quo is the inability to
accurately report on Elder Fraud victims and loss amounts.
Without a mechanism for centralized reporting and accounting
for all reported cases from all available sources along with
reasonable estimates for unreported cases, policymakers are not
making informed decisions on resource allocation. By all
reasonable measures, the actual amount of losses each year
attributed to elder scams in this country likely exceeds one
hundred billion dollars.
Since 2019, on the backs of a few patriotic former Marines
working in our DA's office and the San Diego's FBI office, we
have been working to change this narrative and prove that
contrary to the strategy of surrender, something COULD be done
to fight this siege on older adults. To fight the status quo,
we had to develop methods and strategies to at least mount a
counterstrike.
In 2021, under the leadership of San Diego County's elected
DA, Summer Stephan, our office worked with the San Diego FBI to
launch a first of its kind Elder Justice Task Force to combat
elder fraud. While it was previously thought that all
fraudsters were overseas and out of the reach of law
enforcement, we have since learned that scammers abroad depend
on very organized networks of money launderers operating here
within the United States. There are thousands of criminals
within these networks who need to be investigated and
prosecuted, yet there is no effort outside of ours in San Diego
that is dedicated to focusing on these organizations.
The San Diego FBI Elder Justice Task Force (or, EJTF)
brought together partners, including the San Diego County
District Attorney's Office, the FBI, Adult Protective Services
(APS), the DOJ, and our local U.S. Attorney's Office, all local
law enforcement agencies, as well as the San Diego Law
Enforcement Coordination Fusion Center ("LECC") to work
together in an unprecedented fashion to connect the dots and
turn small, local fraud investigations into large scale federal
investigations and prosecutions. By eliminating the barrier of
financial thresholds, the success of each of our EJTF
investigations begins with a single local victim using a
traditional investigation strategy. Cases are then built
through collaboration and utilization of all local resources
from APS and law enforcement, coupled with the FBI's incredible
capabilities to extend the reach of our investigations outside
of our county and throughout the United States, when necessary.
Most of these assets of the EJTF are collocated working out of
one physical location in San Diego.
The EJTF is now committed to serving these core functions:
1) investigating criminal organizations committing or
facilitating fraud within the United States and holding those
perpetrators accountable with both state and federal
prosecutions; 2) regardless of whether a criminal investigation
or prosecution is occurring, working to recover and return
funds lost by elder victims wherever possible, including a new
aggressive effort to use federal seizure warrants to recover
millions of dollars lost by elder fraud victims; 3) collecting
and reporting data on the amount of fraud impacting the County
of San Diego broken down by jurisdiction; and 4) educating the
community, both public and private sectors, about the current
greatest threats.
The San Diego EJTF is the only initiative in the nation
that is proactively responding to actual elder fraud cases in
real time because we are tracking each report of fraud in our
county collected by local law enforcement, FBI's IC3.gov
database, and APS. We are talking every day to new victims and
learning about the new scams and tactics the scammers are using
to hook victims. This constant, real-time review of scam
reports enables us to lead other agencies, localities, and
states when it comes to identifying new scam trends and
understanding how these transnational criminal organizations
are functioning.
For instance, we have identified tech scams originating in
Indian Call Centers as the greatest current threat to our
seniors in San Diego and around the country. These scams are
facilitated by money laundering cells, primarily made up of
foreign actors, who are dispatched from a regional hub, as
couriers, to pick up millions of dollars in scam payments.
In the past two years, the San Diego EJTF has worked to
disrupt these networks. We have paired local investigators and
APS workers with FBI agents to target these networks and we
have had success: we have arrested over a dozen of these
couriers. We are now routinely filing state prosecutions on
these couriers, which have resulted in several federal
indictments, including July's indictment by the US Attorney's
Office in San Diego of a money laundering ring responsible for
receiving stolen funds from over 2,000 victims totaling $27
million in elder fraud losses.
Despite these successes, the data is astonishing and shows
how much work there is still to be done. In our county, we were
shocked to see that the amount of losses doubled from 2022 to
2023, with $98 million from elder victims lost in 2023. Even
more shocking is the reality that despite our progress, we are
only able to work on one tenth of one percent of the cases we
see.
Investing in education, as well as funding task forces like
the EJTF, are critically important components in this fight
against scammers. Both must be funded adequately. However, we
cannot educate ourselves out of this problem nor can we
prosecute our way out of this problem.
The only approach that could truly bend the curve resulting
in more victims and losses each year will be a holistic whole
of nation strategy, similar to what has been assembled in the
United Kingdom and Australia in recent years, to identify every
opportunity both upstream and downstream of the scam and work
to stop the threats. This approach will ultimately eliminate
the scammers' ability to attack our seniors on the technology
we depend on, make the fleecing of financial accounts more
difficult to accomplish, and provide support to the countless
Americans who have reported their cases but have never heard
back from a single person.
The cause of fighting Elder Fraud does not have a face. It
is too siloed and unorganized. The U.S. Senate Special
Committee on Aging should take this opportunity to lead and
work with all relevant decisionmakers to urgently ensure that
not one more victim falls prey to these scams. Through my work,
I have seen that our goal should be loftier than creating
programs, accumulating data, and writing reports. We can stop
this problem entirely and I'm dedicated to joining the
Committee in this fight. Every single one of us can do more for
these victims, especially for the vibrant grandmother or
grandfather who is going to wake up tomorrow to a popup ad from
a scammer on their computer. What will be our answer when that
victim calls us for help?
**For reference, I will direct you to a submission for the
record prepared by another leading advocate in this cause, Ken
Westbrook. Mr. Westbrook retired after 33 years in the CIA and
is currently the Chief Executive Officer of the Stop Scams
Alliance. The Stop Scams Alliance has highlighted the success
of other countries, like the United Kingdom and Australia, at
stopping scams at the source, and shown how the United States
can model these successes.
U.S. Senate Special Committee on Aging
"Fighting Fraud: How Scammers are Stealing from Older Adults"
September 19, 2024
Prepared Witness Statement
Susan Whitaker
Chairman Casey, Ranking Member Braun, and Members of the
Senate Special Committee on Aging, thank you for inviting me
here today to share my story. My name is Susan Whittaker. I am
an Administrative Assistant for the Executive Director of
Lehigh County Aging and Adult Services in Allentown, PA. I have
been in my current position for four years. My previous
employment was for 45 years at The Morning Call, our local
newspaper, and a subsidiary of Tribune Publishing.
I am presenting testimony today because my late husband,
Bill, was the victim of a scam. I will also share the steps I
took once I knew the scam had happened, and the unavailability
of the bank we entrusted with our personal account and the
business account.
It was a Tuesday night and when I got home, Bill was more
quiet than normal. I thought he was just having an off day. He
didn't talk a lot the next few days. Bill suffered from
dementia and Alzheimer's, diabetes, congestive heart failure,
pulmonary embolisms, neuropathy, and gout. At the time of the
scam he was 75. Although Bill had sold his business, Bill
Whittaker & Son Construction LLC, to his son, Bill stayed on as
the office manager. He took care of ordering materials, making
payments, and submitting payroll-all the office
responsibilities. As the week went on, Bill seemed to be
quieter and not talking about anything; he seemed worried.
On Friday night when I came home from work, he started to
tell me what had happened. He told me he received an email from
QuickBooks, which was used to manage bookkeeping for the
business. The email said that the business account had been
charged $499 for an upgrade. He said he didn't order the
upgrade. He contacted what he thought was QuickBooks at that
point. This person told Bill that in order for him to refund
Bill's money, Bill needed to first pay him $500 and then
"QuickBooks," who was really the scammer, would send it right
back to him via another payment platform. He was told not to
share this with anyone because then he would not be able to get
his money back.
Bill was instructed to install an application on the
computer so he could transfer the funds directly into the
scammer's checking account. He walked Bill through step by step
on what he needed to do to give the scammer online access to
install the software. Bill also scanned and sent him a copy of
his Social Security card and driver's license. Once everything
had been setup, the scammer had Bill set up a Venmo account.
Finally, he showed Bill how to transfer the $500 via Venmo.
Because the scammer had access to the computer, as Bill was in
the middle of typing the number 500, the scammer took control
through the software and added an extra zero to the $500. Now
the transfer was for $5000. He started yelling at Bill for
making the error, when in reality Bill had not made a mistake.
He then told Bill, "Look what you've done." He said that now
Bill needed to send him $5000 in order for him to send back the
$5000.
That Friday night when I spoke with Bill, he shared with me
that now, in addition to the $499 initial fraudulent upgrade
fee that needed to be refunded to the business account, this
individual now owed us money from our personal accounts, due to
the numerous Venmo transfers. Bill said that this individual
would be calling him back that night at 6pm. The phone rang
promptly at 6pm. This time, I answered the phone.
The scammer on the other end of the phone was totally
surprised to hear someone other than Bill. I asked him to
explain the situation we were in. He walked me through all of
the charges and Venmo transactions and I questioned his logic
and the process he had put Bill through. At this point, I knew
it was a scam, but I asked him to please check with his boss.
He said he would call me back, and I told him I would be
waiting for his call. At this point, I wasn't even sure how
much money had been taken from our personal account and the
business account.
While waiting for a call back, I shut down the MAC and
booted it back up. I created a new login account and deleted
the old information. I found the software, which had been
installed, and uninstalled it and changed the settings the
scammer had set. I also contacted our bank, Truist, through
their customer service department. I wanted to put a hold on
both accounts to stop the money from being transferred. Since
it was after 6pm, customer service was closed until Monday
morning at 8am. Then I called their fraud phone number. They,
too, were closed until Monday morning at 8am. Fortunately, we
knew the bank manager at the local branch. Bill called him and
asked for his help. He said he would do what he could, but
wasn't sure he would be able to get any money back or stop any
transfers. There never was a call back from the scammer.
Monday morning, while I was at work, Bill called local law
enforcement. They spoke with him, and said they would be in
touch with the bank and would work with them. The person Bill
spoke with was very kind and patient. During that time, I put a
stop on all credit reporting, a hold on all accounts and called
the Truist headquarters in North Carolina. I never did get to
talk to anyone there.
In the end, the scammer took a total of $28,000 from us.
However, the bank, along with law enforcement, recovered $8,000
of the money taken from our accounts. Because I acted so
quickly, they were able to stop these funds before they were
dispersed. Despite this, we still lost a total of $20,000-
$10,000 from our personal accounts and another $10,000 from the
business account.
This scam was devastating and had a devasting effect on
Bill-both financially and emotionally. Because we lost $20,000,
and Bill had a lot of chronic health conditions, Bill began to
ration his medications. We just couldn't afford them anymore.
Bill also felt responsible and felt he owed it to his son to
repay the money. He kept saying he was sorry and that he was so
stupid. He asked how could he make such a stupid mistake. I
assured him that he was only trying to save the business $499,
and that he didn't do anything wrong. For several days, he was
very quiet. After the scam, Bill would not answer the phone
unless he knew the phone number and he would not open his email
until I reviewed it. In addition to not answering emails or
phone calls, Bill started to doubt himself in everything he
needed to do. His son no longer allowed him to do any office
work and so Bill lost his job. He also lost his sense of self-
worth. I was really sad to see this very intelligent and past
business owner, become so afraid to read emails and use a
phone. It was a huge setback for him, and I think contributed
to his worsening health conditions. One thing that I learned is
that any event such as this has a devasting effect on the
victim regardless of the situation and the scam.
Thank you.
U.S. Senate Special Committee on Aging
"Fighting Fraud: How Scammers are Stealing from Older Adults"
September 19, 2024
Prepared Witness Statement
Nancy Gilmer Moore
I would like to thank Ranking Member Braun, Chairman Casey,
the other witnesses, and all in attendance for giving me this
opportunity to speak about Medicare fraud and scams that target
older adults and people with disabilities.
As the Indiana Senior Medicare Patrol (SMP) program
director since 2013, I have learned that one of the biggest
crimes affecting older Americans and people with disabilities
is Medicare fraud, waste, and abuse. In addition to Medicare's
own provider-focused fraud prevention units within the Centers
for Medicare & Medicaid Services (CMS), the U.S. Administration
for Community Living (ACL) funds and supports the beneficiary-
focused Senior Medicare Patrol (SMP) program. With programs in
every state, the District of Columbia, Puerto Rico, Guam, and
the U.S. Virgin Islands, SMP's purpose is to educate
beneficiaries, caregivers and professionals on how to prevent,
detect and report Medicare fraud. In 2023, ACL's 54 SMP
projects had a total of 5,532 active team members who conducted
22,356 group outreach and education events, reaching more than
1.2 million people. In addition, the projects had 270,348 one-
on-one interactions with, or on behalf of Medicare
beneficiaries.
CMS offers no official estimates of total yearly Medicare
fraud, but health care experts estimate improper Medicare
payments are approximately $60 billion per year. The U.S.
Department of Health and Human Services' Office of Inspector
General's (OIG) most recent annual report on SMP indicated that
SMP projects reported more than $111 million in expected
Medicare recoveries in 2023.The majority of these recoveries
were the result of a case identified by the Louisiana state SMP
project where a nurse practitioner was ultimately found guilty
of billing for genetic tests and durable medical equipment that
patients did not need and telemedicine visits that never
occurred..
Our Indiana SMP uses volunteers and in-kind team members,
in partnership with most Area Agencies on Aging, four senior
centers and a Center for Independent Living to help us educate
people about fraud, errors and abuse in Medicare. Our partners
give public presentations, exhibit at health and senior fairs
and provide individual counseling across Indiana. We also
regularly publish statewide social media updates, share social
media resources with our local partners, generate earned
television and print media through relationships we cultivate
with local investigative reporters, and periodically conduct
SMP marketing campaigns.
We also collaborate with organizations through a coalition
we founded with the Indiana Secretary of State's Office called
the Indiana Council Against Senior Exploitation, or IN-CASE.
Members include the Indiana Secretary of State's office, the
Indiana Attorney General's office, State Health Insurance
Assistance Program (SHIP), the Social Security Administration,
the Internal Revenue Service, the Indiana State Police,
financial institutions, and many others to conduct joint
presentations about Medicare fraud and other financial scams
that target older adults. The mission of IN-CASE is to empower
Indiana communities to prevent and end senior financial
exploitation and other forms of abuse.
SMP programs across the country can provide early detection
and warning of emerging frauds and scams. Here are some
examples of suspected fraud that the Indiana SMP reported to
the OIG during the past year:
In the Intermittent Urinary Catheter fraud scheme,
most of the beneficiaries noticed billing for urinary catheters
on their Medicare statements that they and their doctor neither
ordered, needed nor received. Many were billed for multiple
months with Medicare paying about $1,500/per month for each
separate billing. I personally noticed billings for urinary
catheters on my own Medicare statements for May and June and
promptly reported the suspicious claims to CMS and requested a
new Medicare number since mine was compromised. Beneficiaries
may not regularly read or understand their Medicare statements,
and therefore may not realize their Medicare number had been
compromised. They may also not understand the need to report
the fraudulent billing to CMS. Just last week we received a
fraud report from a beneficiary who was billed for ostomy
supplies she neither received, needs nor ordered. Other SMPs
throughout the nation are just now hearing about this fraud
scheme as well.
Another prevalent fraud scheme is genetic testing
scams where beneficiaries receive a phone call, email or text
advising that Medicare is providing free genetic testing for
cancer or heart problems. The caller offers to mail them a
cheek-swab kit, and either requests their Medicare number or
asks them to confirm it. In one case, the beneficiary contacted
Indiana SMP after the scammer called to inform her the swab kit
was on her front porch, and they could walk her through the
testing and mailing process. The beneficiary got suspicious and
fortunately called the IN SMP. As a result, we were able to
educate this beneficiary, help her report the scheme, and
request a new Medicare number.
Durable Medical Equipment (DME) fraud is a perennial
scam which includes all types of orthotic braces. Beneficiaries
continue to contact Indiana SMP reporting unsolicited calls
identifying themselves as representing Medicare with an offer
of free orthotic braces. The scam often begins with an initial
contact from a call center, which makes a referral to an
unscrupulous doctor or telemedicine company, and a final
referral to a DME provider. The braces delivered are often
inferior, and the beneficiary's personal doctor is not
typically notified nor consulted. This fraud scheme is another
avenue the scammers use to get beneficiaries' Medicare numbers.
An emerging scam we are seeing throughout the nation
is beneficiaries receiving calls allegedly from CVS Pharmacy
requesting they order diabetic supplies or medications they do
not need. In the cases we have documented in Indiana, the
caller already has the beneficiary's Medicare number indicating
that the beneficiaries' Medicare number has likely been
compromised. Thankfully, none of our Indiana beneficiaries
impacted by this have noticed any suspicious charges so far but
we have asked them to keep an eye on their notices to ensure no
charges pop up. CVS is aware of this scheme and has posted a
warning on their website.
The Indiana SMP recommends that all Medicare enrollees and
their caregivers review their Medicare Summary Notices (MSNs)
for Medicare fee-for-service or Explanation of Benefits (EOBs)
for Medicare Advantage plans. Beneficiaries should be on the
lookout for duplicate billing, services or products not
rendered or received and services not ordered by their
physician. We also remind beneficiaries and caregivers that
they should never give their Medicare number or financial
information over the telephone to an unknown caller, and that
Medicare does not make unsolicited phone calls.
Ensuring the financial integrity of Medicare is essential
to the millions of Americans who currently depend on it to
access comprehensive health care services as well as the
thousands of people who become newly eligible for Medicare
every day. As US citizens, we all need to become better, more
conscientious health care consumers and help identify any
potential improper payments. To that end, we have supported
Sen. Braun's and this Committee's work to reduce or eliminate
Medicare fraud. We assisted Sen. Braun's office with
information and language regarding his Medicare Transaction
Fraud Prevention Act, which would enhance the Medicare fraud
prevention system to alert the beneficiary being scammed.
Thank you for allowing me this opportunity to share my
experiences with you today.
=======================================================================
Questions for the Record
=======================================================================
U.S. Senate Special Committee on Aging
"Fighting Fraud: How Scammers are Stealing from Older Adults"
September 19, 2024
Questions for the Record
Kathy Stokes
Senator Kirsten Gillibrand
Pre-Election Scams
In the leadup to local, state and national elections,
phishing attempts generally tend to increase. Scammers will
circulate emails, text messages, social media messages, and
phone calls pretending to be election authorities, campaigns,
or even candidates themselves, in an attempt to deliberately
misinform voters, extract sensitive personal information from
them, or link them to malicious websites.
Question:
What sort of phishing tactics should older Americans be on
the lookout for as they prepare to vote this November?
In what ways can we prevent older Americans from being
scammed by these increased phishing attempts that soar every
election year?
Response:
Criminals often take advantage of current events to steal
money or personal information from people. For example, during
tax season, we see an increase in tax and IRS impersonation
scams. These can very convincingly mimic the real IRS. At the
holidays, as people are buying more gifts, we see an increase
in holiday-related scams, such as shopping and gift card scams.
Similarly, around elections we may see a variety of election-
related scams, such as voter registration scams, AI-generated
content designed to mislead voters, donation scams, and fake
polls. A search of AARP's scam map shows additional examples of
scams in this space: https://www.aarp.org/money/scams-fraud/
tracking-map/.
While there are many different types of scams, there are
similar indicators across all scams. Key indicators of fraud
include contact initiated by another party out of the blue and
requests for personal information or money, often combined with
a sense of urgency designed to make victims overlook signs that
the request may not be legitimate. We tell consumers that they
must always be on the lookout for scams and verify any
information that you receive unsolicited. Our advice to
consumers is to never respond to text messages, phone calls, or
emails from unknown parties and to go to the purported source
of information directly to verify it. AARP's Fraud Watch
Network Helpline is a free resource to anyone who has questions
about fraud. We speak with people who have been the victim of
fraud, know someone who has, or need more information to help
them determine whether something is fraud.
U.S. Senate Special Committee on Aging
"Fighting Fraud: How Scammers are Stealing from Older Adults"
September 19, 2024
Questions for the Record
Scott Pirrello
Senator Kirsten Gillibrand
Financial Security on Digital Payment Apps
Popular digital payment apps, like Venmo, PayPal, and Cash
App, are increasingly being used as substitutes for a
traditional bank or credit union account, yet they lack the
same deposit insurance and protections against fraud that
traditional banks and credit cards employ.
Question:
How can we improve consumer safeguards to reduce financial
loss among older adults?
To what extent would it be useful to establish standards
for these digital payment companies to provide the same
protections against fraud that banks and credit cards employ?
Scam Reporting Improvements
Data about the extent to which frauds and scams occur in
the United States is imprecise due to the lack of a centralized
reporting network and chronic underreporting.
Question:
How can we improve data collection on frauds and scams, and
in what ways would a centralized reporting database assist in
better identifying, addressing, and preventing the scams
experienced by older Americans on a daily basis?
Response:
It was an honor to be invited to testify last month at the
U.S. Senate Special Committee on Aging's hearing on "Fighting
Fraud: How Scammers are Stealing from Older Adults" held on
September 19, 2024. I was proud to represent the San Diego
District Attorney's Office and San Diego's Elder Justice Task
Force.
I am following up on your request for written supplemental
materials on the topic of holding Bitcoin ATM Machine Companies
accountable for the hundreds of millions of dollars in fraud
that is being facilitated on their machines. The ideas below
are some of the leading ideas being discussed amongst the group
of advocates and experts in the area of elder fraud.
Bitcoin ATM Companies can be more accountable and elder
fraud victims can be saved from losing their life savings by
adopting legislation that could focus on the following areas:
I. Preventing victims from conducting transactions on these
machines at all;
a. Consider banning of Bitcoin ATM machines entirely
like the UK and Singapore already have (please see attached
articles);
b. Transaction Limits. California recently enacted
Assembly Bill 401 limiting transactions to $1,000 per day, per
customer, and takes effect January 1, 2025. This will have a
substantial impact and should be a model for the rest of the
country although we are already seeing our scam victims driving
from store to store using many machines instead of just one;
c. Increase warnings and ensure victims are
acknowledging the warnings. ATM companies rely on compliance
with "Know Your Customer" (or "KYC") policies as their main
safeguard for victims because ATM machine users need to scan
their driver's license on the machine before conducting a
transaction. ATM machines offer warning screens for consumers
but the warnings are oversimplified and ineffective. When the
KYC reveals users of advanced age, there could be even
additional warnings;
d. Enlisting store clerks to help shut down this
activity if they take on the responsibility of hosting a
machine in their business. Most business locations that operate
a Bitcoin ATM machine are convenient stores, liquor stores, and
smoke shops. ATM Companies pay these stores a fee to install
machines in the stores and then a monthly stipend to keep them
there. Store managers often tell us they see nothing but
seniors walking up to these machines and don't know that they
need to intervene. If vendors and store clerks were required to
complete trainings on spotting and stopping victims, especially
elderly people using machines under duress, perhaps paid for by
the ATM machine companies, then our store clerks would know
questions to ask a senior who appears to be out of place and
under duress trying to conduct a transaction at these machines,
just like a bank teller would;
II. Slowing down the transactions so that victim's funds
can't be converted instantaneously into Bitcoin and transferred
across the globe in mere seconds;
a. A holding period or delay of time similar to the
wait required for funds to clear after a large bank deposit or
wire transfer would significantly impact the ease in which
victims are fleeced of their savings using these machines by
allowing time for intervention;
III. Creating civil liability causes of action for victims
to pursue ATM operators if they do not comply with minimum
rules;
a. Creating a cause of action for customers to pursue
ATM companies for failing to comply with certain safeguards
would create accountability.
Overseas scammers are more frequently using Bitcoin ATM
machines as a primary method to get money from elder victims
here in California and around the country. According to the
attached article published by the FTC just last month, American
consumers fed over $110 MILLION in cash into these machines in
2023 instantly losing their well-earned nest eggs.
Elder victims are routinely coerced to drive to convenient
stores, liquor stores, or smoke shops to locate a Bitcoin ATM
machine and feed their cash into it. The cash put into the
machines is used to purchase Bitcoin converting the cash into a
virtual Bitcoin wallet that the scammers overseas can
immediately access and liquidate by transferring the funds onto
another Bitcoin wallet that is held on a foreign exchange
beyond the reach of United States Law Enforcement and legal
process.
Because of the nature of these transactions where United
States currency is converted to Bitcoin currency, law
enforcement's frustration is growing because we cannot seize
the cash from these machines even after a fraud is reported and
search warrants are obtained. The cash sitting in the machine
does not represent the victim's stolen money any longer but
rather are the proceeds of a currency conversion transaction
and is the legal property of the ATM company at that point. Law
enforcement attempting to impound victim's money from these ATM
machines risk a civil lawsuit under the theory of conversion
and so several reports exist around the country, including our
own attempts in San Diego, where victim's money is initially
rescued but ultimately has to be returned to the ATM company
that facilitated the fraud in the first place.
In addition to the ideas proposed above and the attached
Data Spotlight by the FTC, I am also including some additional
articles and references to assist the Committee in your
consideration. As cited in my oral and written testimony,
countries like the UK, Australia, and Singapore are showing how
government action and a whole of government strategy can
actually bend the curve and actually reduce scam activity.
Thank you again for the opportunity to participate in this
critically important dialogue on combatting elder fraud.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
U.S. Senate Special Committee on Aging
"Fighting Fraud: How Scammers are Stealing from Older Adults"
September 19, 2024
Questions for the Record
Susan Whitaker
Senator Kirsten Gillibrand
Scam Reporting Improvements
Data about the extent to which frauds and scams occur in
the United States is imprecise due to the lack of a centralized
reporting network and chronic underreporting.
A consumer fraud survey conducted by the FTC suggests that
less than three percent of individuals who experienced a fraud
or scam reported it to a government entity.
Question:
Why do you think the vast majority of people do not report
experiencing a fraud or scam?
Response:
I think people do not report experiencing fraud or scam
because they are embarrassed to tell anyone. They are older and
have worked hard for their savings. To have it taken away from
them by a stranger is humiliating. They do not want family and
friends to make fun of a mistake they made. (I know this from
experience. It is a joke to those not effected, but hurtful to
the person who experienced the fraud.) Also, for the most part
people in general see the good in others. This allows us to
trust those we shouldn't trust.
Question:
Did you or your husband have any reservations in reporting
the scam he experienced?
Response:
Bill had reservations. He had been told if he tells anyone,
he would not get his money back. He also did not want anyone to
tell him he had made a mistake. He was embarrassed and
humiliated. He did ask me to not tell anyone of the kids. I had
no reservations as I knew this would be the only way to stop
more money from being taken. The information shared at work and
the training provided taught me that reporting the fraud is the
only way to catch the scammers, to help to keep it from
happening to other people.
=======================================================================
Statement for the Record
=======================================================================
U.S. Senate Special Committee on Aging
"Fighting Fraud: How Scammers are Stealing from Older Adults"
September 19, 2024
Statement for the Record
America's Credit Unions Testimony
On behalf of America's Credit Unions, I am writing
regarding the Committee's hearing entitled, "Fighting Fraud:
How Scammers are Stealing from Older Adults." America's Credit
Unions is the voice of consumers' best option for financial
services: credit unions. We advocate for policies that allow
the industry to effectively meet the needs of their over 140
million members nationwide.
We thank you for holding this important hearing on how to
combat efforts targeting older Americans. Credit unions were
pleased to champion the Senior Safe Act and appreciate its
passage in 2018, making it easier for credit union employees to
step in and protect seniors facing financial exploitation.
Many credit unions have instituted financial education and
literacy programs aimed at older Americans and their families
to help educate them about methods of fraud and how to detect
scams, and credit unions have enhanced their use of AI-driven
fraud detection systems and devoted significant resources to
training their staff to recognize signs of elder financial
abuse, which helps employees intervene to prevent scams from
progressing. Many credit unions have adopted the trusted
contact system, which allows elder credit union members to
designate a trusted individual who can be alerted by the credit
union in case of suspicious account activity. Some credit
unions partner with third-party organizations, like Carefull,
to offer more comprehensive fraud protection services
specifically designed to monitor and protect older adults'
finances. These are just some of the ways that credit unions,
as member-owned institutions, work to protect their members.
America's Credit Unions also facilitates credit union
engagement with the National Credit Union Administration and
the Consumer Financial Protection Bureau's Office of Older
Americans to share information on trends in elder financial
exploitation and other resources to help credit unions protect
their older members.
Credit unions also invest significantly in both security
and compliance management systems to prevent unauthorized
electronic fund transfers (EFTs) and support faster, innovative
payment options for their members. The credit union industry's
commitment to relationship banking also gives members
confidence that if they have a problem, they can count on their
credit union to make every effort to resolve the issue. This
emphasis on high touch service means that members will often
seek and receive the help of their credit union even when a
transaction primarily implicates the services of a third party
with which the credit union has no formal, direct relationship.
Member interaction with such services, particularly nonbank
payment platforms, can complicate error resolution procedures,
place strains on a credit union's compliance resources, and
magnify exposure to fraud.
These relationships are also important and necessary
because credit unions are committed to supporting consumer
payment choice. Many credit unions provide their members with
peer-to-peer (P2P) payment services as a convenient, value-
added service for which they do not charge exorbitant fees.
Credit unions are eager to embrace seamless payment
technologies, but to compete effectively against large banks
and nonbank financial giants with similar service offerings
requires a fair regulatory environment. The costs borne by
credit unions stemming from payments-related fraud are growing
exponentially and cannot be sustained without limit. Expanding
the liability for financial institutions for payments-related
fraud would put a major strain on credit union resources and
their ability to collaborate with payments platforms and expand
consumer choice. This is why we strongly oppose S. 4943, the
Protecting Consumers from Payment Scams Act, and believe it is
not the correct solution to this problem.
As member-owned, not-for-profit financial cooperatives,
credit unions exist to provide credit at competitive rates and
offer low-cost services that assist their member-owners in
meeting their individual financial needs. Credit unions support
efforts to stop fraudulent schemes and invest in robust
compliance programs to limit this activity, but an expansion of
credit unions' liability for the misdeeds of fraudulent actors
would have the unintended effect of limiting consumer choice
and access to services. Rather than approaches such as S. 4943,
we believe that legislative efforts are better directed at
steps to prevent fraud before it occurs, educate consumers
about fraud and risks associated with unregulated technologies,
and create a level playing field for currently underregulated
fintech companies and insured depository institutions.
Finally, we must also flag our concerns with S. 1838, the
Credit Card Competition Act, because of the impact it would
have on the industry's efforts to fight fraud. Proponents of
this bill say that it targets large banks and will not hurt
others. They are wrong. The reality is that it will hurt
community financial institutions and consumers, and we strongly
oppose this legislation. This bill would require financial
institutions to allow credit card transactions to be routed via
an alternative network. Additionally, the bill contains an
explicit requirement that card issuers enable all types of
transactions and security protocols, even if a credit union
finds that these methods are unnecessary, unaffordable, or
unsecure. Each time a network is added or changed to keep up
with merchant demands, hundreds of millions of new cards would
have to be issued which would expose consumers to identity
fraud through mail theft and increase the cost of the payments
system.
Any reduction in interchange fees from this legislation
would directly affect credit union investment in fraud
management systems and processes that are dedicated to reducing
fraud risk in the system-forcing credit unions to increase
costs to cover these necessary expenses. This would limit
consumers' choice when it comes to credit cards and would allow
big box retailers to pick which network will process
transactions-resulting in the cheapest and least secure
networks handling consumers' personal financial information.
Critical consumer protections such as fraud protection could
disappear by using these third party, less secure networks.
America's Credit Unions appreciates efforts to promote
consumer and industry resilience to fraud but urges you to
reject these two misguided legislative approaches. Credit
unions are committed to fighting fraud, educating seniors, and
sharing information necessary to prevent financial crime.
Ideally, legislative solutions should aim to prevent fraud
before it occurs and should include bolstering the resources of
law enforcement, educating consumers about fraud and scam
risks, and creating a level playing field between insured
depository institutions and underregulated companies.
We thank you for the opportunity to share our thoughts on
this important topic.
Sincerely,
/s/
Jim Nussle, CUDE
President & CEO
cc: Members of the Special Committee on Aging
U.S. Senate Special Committee on Aging
"Fighting Fraud: How Scammers are Stealing from Older Adults"
September 19, 2024
Statement for the Record
Defense Credit Union Council Testimony
On behalf of America's Defense and Veteran Credit Unions
and our almost 40 million members, I am writing to provide our
views and comments for the September 19, 2024, Senate Special
Committee on Aging hearing titled, Fighting Fraud: How Scammers
are Stealing from Older Adults.
The Defense Credit Union Council (DCUC) is committed to
ensuring that our Nation's veterans receive the highest level
of financial protection and support. As stewards of financial
wellbeing for military members and veterans, we are deeply
aware of the growing prevalence of scams that
disproportionately target these communities. We encourage our
members to take proactive steps to safeguard veterans from
falling victim to financial fraud and scams.
We need to combat scams targeting veterans through robust
education and awareness programs that continuously develop and
disseminate educational resources to veterans and their
families. This ensures they are informed about the latest scam
tactics and how to recognize fraudulent schemes.
Many of DCUC's member credit unions offer a variety of
financial tools and services designed specifically to help
veterans manage their finances securely. These tools empower
veterans to protect themselves from fraud by monitoring their
accounts and making informed financial decisions.
As part of our mission, DCUC engages in policy advocacy at
both the state and federal levels to strengthen protections for
veterans against financial exploitation. We will continue to
actively support legislation that promotes stricter penalties
for fraud targeting veterans and advocate for the development
of stronger consumer protection regulations.
In addition to prevention efforts, our members are focused
on ensuring veterans have access to resources for reporting
fraud and recovering from its effects. Our credit unions
maintain strong fraud reporting systems and offer personalized
support for victims of financial scams.
In addition, DCUC fosters collaboration between financial
institutions, veteran service organizations, and fraud
prevention networks. These partnerships enhance our ability to
create comprehensive solutions that address the unique
financial challenges faced by veterans.
Thank you for the opportunity to bring these matters to
your attention. Should you have any questions or desire
additional information, please do not hesitate to contact me.
Sincerely,
/s/
Jason Stverak
Chief Advocacy Officer
DCUC
cc: Senate Special Committee on Aging Members
U.S. Senate Special Committee on Aging
"Fighting Fraud: How Scammers are Stealing from Older Adults"
September 19, 2024
Statement for the Record
Stop Scams Alliance Testimony
The United States must move rapidly to increase our
defenses against a growing national security threat. Criminals-
principally based overseas-are using increasingly sophisticated
cyber-based techniques to scam Americans at unprecedented
levels. A recent Federal Trade Commission report estimates that
total U.S. fraud losses might now be as high as $137.4 billion
annually. Losses at this level would exceedenual
revenue of such corporations as Verizon, AT&T, or Bank of
America. It would also exceedetal annual budget of the
Department of Homeland Security.
According to a poll conducted by Gallup and the nonprofit
Stop Scams Alliance, eight percent of U.S. adults-roughly 21
million Americans-were scammed in the past year. That's roughly
the population of Florida or New York State. In other words,
more than 57,000 people are being scammed each day in the
United States. That's 40 victims per minute.
Scams are Americans' second-highest crime concern (after
the related crime of identity theft), with 57 percent saying
they frequently or occasionally worry about it.
Scams are now among the most common crimes affecting
Americans, according to Gallup.
The rate of growth of scams is skyrocketing. According to
FBI data, there has been a near 15-fold increase in losses
reported to the FBI since 2014; reported losses ballooned 22
percent between 2022 and 2023 alone.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Meanwhile, government actions in the UK and Australia are
showing signs of progress in the battle against scams. Both
countries report double-digit declines in fraud losses in the
last year or two. The below chart shows that in the UK, fraud
losses and case volumes have declined since 2021, according to
the British trade organization UK Finance.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
The below graphic shows the fraud losses reported to the
Australian government over the last four years. Australia
reports a 13-percent decline between 2022 and 2023.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Why are Australia and the UK making progress in the fight
against scams? Both countries have:
A comprehensive national strategy.
Someone in charge of implementing the strategy (the Home
Secretary in the
UK, the Assistant Treasurer and Minister for Financial
Services in
Australia).
Annual government surveys to measure the extent of
fraud.
Centralized fraud reporting.
A national capability to quickly take down fraudulent
investment websites.
Measures to block fraudulent investment advertisements.
Measures to block spoofed phone calls and text messages.
Mechanisms for enhanced public-private partnership.
Nationwide education campaigns.
New government investment in anti-scam efforts. Each
country has found
that the investment of a few hundred million dollars can
significantly reduce
fraud losses.
The United States currently has not taken the above
measures. That could change with Congressional action.
Recommendations for Congressional Consideration
It's time to make the fight against foreign organized crime
gangs a national priority. We MUST:
1. Create a national strategy to combat consumer fraud
Congress should prioritize the creation of a national anti-
scam strategy, as a matter of financial stability and national
security. The strategy should establish a national-level task
force, clarify authorities about who is in charge in the US
Government, and include enhanced public-private partnership
involving the tech, telecom, and financial sectors.
Resolution of scam issues is complex and cuts across a
number of US agency and Congressional jurisdictions. We need a
national strategy that includes a top-down, holistic, across-
the-government approach. Congress recently directed US Treasury
to do just that:
Financial Fraud.--The Committee is aware that there
has
been an increase in financial fraud related
activity.
Accordingly, the Committee urges the Treasury
Department to
facilitate a public-private partnership to enhance
Americans'
financial security and prevent the proliferation of
financial
fraud and scam schemes. This multisectoral, whole-
of-society
effort should include the relevant Federal and
State financialK
regulators, consumer protection agencies, law
enforcement,
financial institutions, trade associations,
consumer and
privacy advocates, and other stakeholders. This
public-private
partnership should encourage information sharing
among
participants, develop best practices for relevant
stakeholders,
including the larger public, develop educational
materials to
enhance awareness of financial fraud schemes across
sectors,
share leading practices and tools, and encourage
innovations in
counter-fraud technologies, data-analytics, and
approaches. The
Treasury Department should report to the Committee
no later
than 1 year after enactment of this act on its
progress,
including within that report any appropriation or
statutory
recommendations necessary for achieving this
directive.
(Financial Services and General Government
Appropriations Bill, 2024,
S.Rpt. 118-61, July 13, 2023, Cong-Sess:118-1)
The Senate Special Committee on Aging should engage with
the Treasury Department to ensure the Committee's views and
priorities are taken into account.
Given the severity of the fraud threat, Congress should
consider creating a permanent caucus similar to the Senate
Caucus on International Narcotics Control. Such a body would
help coordinate a holistic response to a complex problem that
involves many Committees. Congress could also authorize a
Federal Advisory Committee to create a whole-of-government
strategy with goals and metrics, drawing on expertise from both
the public and private sector experts.
With the proper strategy, we can turn the tide and save
millions of victims and tens of billions in losses to the US
economy.her countries like the UK and Australia are showing
significant success in the battle against scams by using a
holistic approach to stop scams at the source.e US can do the
same.
2. Create a formal mechanism for enhanced public-private
partnership
The British government is working closely with the private
sector, including tech, telecoms and financial institutions. In
an "Online Fraud Charter" announced in November 2023, large
tech companies volunteered to take nine major steps to reduce
fraud on their platforms. If Britain can partner with Google,
Microsoft, Facebook, and Amazon to fight scams, so can the
United States.
3. Measure the problem
Good public policy requires good data. Congress should
direct the Census Bureau to add scams to the biannual National
Crime Victimization Survey so we can accurately count victims
and losses, and determine the most common threat vectors. The
last fraud survey conducted by the Justice Department/Bureau of
Justice Statistics (BJS) was in 2017. Congress must provide the
funds for annual fraud surveys, which is how the UK and
Australia collect the appropriate data to craft their anti-scam
strategies.
GAO should combine the siloed information on scams
collected by the US government and create the first-ever
national estimate of consumer fraud losses. GAO should also
recommend ways to improve information collection and sharing
across the government.
4. Centralize reporting and enhance information sharing
Centralization and information sharing across government
and the private sector will help us identify the threats and
respond. Nine nations around the world now have national anti-
scam centers-why not the United States?
-A central clearinghouse similar to the National Center
for Missing and Exploited Children could efficiently collect
the appropriate data, enable quicker action to help victims,
and serve as a one-stop shop for educating the public.
-The PATRIOT Act Section 314(b) must be expanded to allow
safe-harbor sharing of fraud-related information at scale
across industries, including the tech, social media, and
telecommunications sectors. (Section 314(b) currently applies
only to financial institutions.)
5. A national capability to quickly take down fraudulent
investment websites
Centralized data collection, plus expanded authorities for law
enforcement, would allow the US to quickly take down fake
investment websites, which has proven to be a very effective
way to reduce fraud losses due to investment scams. The US
government currently takes down some malicious websites, but
our process is cumbersome and ad hoc. Meanwhile,
-The Australian Securities and Investment Commission
(ASIC) has coordinated the removal of more than 7,300 phishing
and investment scam websites since July 2023. The result:
Investment scam losses decreased by 29rcent in the second half
of 2023. (In the United States, the latest FBI/IC3 report says:
"Losses to investment scams rose from $3.31 billion in 2022 to
$4.57 billion in 2023-a 38% increase.")
-In the UK, most website takedowns are done by the
National Cyber Security Centre, an arm of GCHQ (equivalent to
our National Security Agency). UK organizations and citizens
send 20,000 reports a day of suspicious emails and URLs. The
result: 235,000 malicious URLs have been removed since April
2020. Malicious URLs are removed in less than six hours on
average, and the median uptime for a cryptocurrency scam
website is one hour, according to NCSC. As a result, the number
of cryptocurrency scam websites found by the UK government has
decreased dramatically since 2021.
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6. Reduce fake advertising via improved verification procedures
Criminals use fake advertising to entice victims to engage
in fraudulent investments. The US should respond by adopting
common-sense measures to ensure that financial ads can only be
placed by legitimate businesses.
-In the UK, Google says it has seen a "pronounced decline
in reports of ads promoting financial scams" since 2021. That's
when Google began requiring financial services advertisers to
demonstrate that they are on a British government authorized
list. In 2022, Google announced that it was expanding its
fraudulent ads policy to Australia, Singapore, and Taiwan.
-Meta announced in 2024 that in the UK, financial ads
must be authorized by the UK's Financial Conduct Authority
before the ad is permitted on Meta's platforms. A similar
policy is in place in Taiwan as of 1 August 2024. Meta's policy
includes: insurance products, mortgages, loans, investment
products and opportunities, and credit card applications.
7. Measures to block spoofed phone calls and text messages
Congress should direct the Federal Communications
Commission (FCC) to recommend ways to reduce the ability of
criminals to pretend to be legitimate US companies. For
example, 12 countries-including the UK and Australia-block
inbound international phone calls that spoof domestic numbers.
(Example: A call from India that pretends to be calling from
Los Angeles.) Because most scams emanate from foreign
criminals, this measure has achieved significant results. Spain
has announced that it will soon become the 13th country to
adopt this common-sense control, which has been proven to an
effective tool in the fight against scams.
The Truth in Caller Act of 2009 is antiquated and needs to
be revised to keep up with the increased threat environment.
-The Act currently allows spoofing, as long as the
spoofing is not done for fraudulent purposes, but it is very
difficult for regulators to determine intent, so the Act is
rarely enforced. A better approach would be to define certain
calls as illegal, regardless of intent. Example: calls that use
a spoofed area code or impersonate a business or government
agency. (According to the FTC, "Scams that impersonate well-
known businesses and government agencies are consistently among
the top frauds reported to the FTC.")
-In addition, the penalties in the 2009 Act have eroded
with inflation, so they should be increased to deter scammers
who pretend they are representing reputable companies.
8. Boost law enforcement resources and intelligence priorities
The UK is adding 400 new investigators and ordering their
intelligence community to "relentlessly pursue fraudsters
wherever they are in the world." In the US, because of resource
constraints, less than 1/10th of 1 percent of fraud cases are
investigated, according to a report from the Senate Committee
on Aging. A recent study by Syracuse University shows that
prosecutions of white-collar crime are down 30 percent from
levels reported in 2019. US law enforcement clearly lacks the
resources to keep up with the skyrocketing growth of scams.
Congress must bolster funding for investigators and provide
adequate funds to improve scam training for law enforcement
personnel.
9. Mount a focused government-industry effort to combat the
"tech support scam"
Measured by the number of victims, the "tech support scam"
is the number one scam affecting Americans over the age of 60-
by far. The FBI says that this scam has more than double the
number of victims than any other scam they measure. The FBI's
IC3 report says:
Call centers overwhelmingly target older adults, to
devastating effect. Complainants over the age of 60 lost more
to these scams than all other age groups combined, and
reportedly remortgaged/foreclosed homes, emptied retirement
accounts, and borrowed from family and friends to cover losses
in these scams. Some incidents have resulted in suicide because
of shame or loss of sustainable income. Tech/Customer Support
and Government Impersonation are responsible for over $1.3
billion in losses.
(Total losses, including unreported, are far higher-perhaps
exceeding $10 billion.)Losses due to tech support/call center
fraud are skyrocketing-up more than 14-fold since 2018.
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This scam often begins with a "pop-up" that takes over a
person's computer. Criminals pose as technology support
representatives and often gain remote access to victims'
devices with software that persists for the life of computer,
which enables revictimization.
The Committee should request that the Department of
Homeland Security consult with industry partners and deliver a
plan to significantly reduce the threat of the tech support
scam. The scam begins with malicious software that can be
detected or blocked. The report should also include
recommendations for reducing the risk imposed by remote access
software that can be installed with or without a person's
knowledge and runs without warnings--forever.
The good news is that we can turn the tide. The UK and
Australian governments have shown that with an organized and
adequately-funded approach, the United States would quickly
save millions of victims and tens of billions in losses to the
US economy.
U.S. Senate Special Committee on Aging
"Fighting Fraud: How Scammers are Stealing from Older Adults"
September 19, 2024
Statement for the Record
Dr. Stacey Wood Testimony
Introduction:
Thank you to Chairman Casey and Ranking Member Braun and
the Special Committee on Aging for the opportunity to provide
this written testimony.
I am a board certified, licensed clinical psychologist (CA
PSY 16805) and hold an endowed chair, the Molly Mason Jones
Professor of Psychology at Scripps College. I received a B.A.
in Bio-Psychology from Middlebury College, and a PhD in
Clinical Neuropsychology from the University of Houston.
My area of research broadly is decision making in older
adults with specific application to scam susceptibility across
the lifespan. I am a member of the National Institute of
Justice's study section panel on financial elder abuse.
Furthermore, I have written over 80 publications including
books, articles, and chapters related to my research on
decision making abilities across the lifespan, undue influence
and capacity. My lab's research currently has two major areas
of focus at present: (1) scam susceptibility, and (2) the non-
economic and emotional impact of fraud victimization on
consumers.
I am an active member of the Riverside County Elder Abuse
Forensic Center (EAFC) and San Bernardino's Adult Protective
Services (APS) in California. In these roles, I conduct
interviews and assessments out in the field with older fraud
victims, draft reports for the EAFC and APS, and when needed
testify in court. I frequently serve as a court appointed
Evidence Code section 730 expert for the courts in Southern
California on issues related to capacity, undue influence,
conservatorships, fraud and financial elder exploitation. I
have qualified as an expert in over 50 court proceedings
including those in state and federal jurisdictions, civil and
criminal proceedings, as well as FINRA hearings.
Susceptibility to Lottery Type Scam Solicitations:
About 10 years ago, I started to become interested in why
older adults were complying with lottery sweepstakes type scams
which at least to me appeared to be obviously "scammy". Many
experiments later, we have learned that all consumers can be
susceptible to these types of scams, although there are
particular risks for older adults.
Even today based on 2023 Federal Trade Commission data,
lottery and sweepstakes scams are the third most commonly
reported scams. These scams have high compliance rates of
around 15%, and losses average $800.00. These scams result in
$210.9 million dollars in annual losses. Moving to individuals
over 80, sweepstakes / lottery scams are the fourth most common
scam but the median loss in this population is $5,500./1/ In
our lab data, we see high compliance rates, closer to 25% with
our simulated studies with the following factors increasing
risk of compliance: (1) low education, (2) overconfidence, and
(3) Bullshxt Receptivity\2\ (rating statements like, "Hidden
meaning transforms unparalleled abstract beauty" as profound).
Other groups have noted depression, a negative life event, and
lower housing wealth as factors\3\. However, the most potent
predictor in our lab-based studies of compliance has been the
consumers' in the moment risk assessment where they are asked
to estimate the risks and benefits of the solicitations offers.
Consumers are overconfident in their ability to detect risk and
minimize potential threats while focusing on possible rewards
in the moment. These findings echo others' work on the role of
emotional arousal and decision-making that increases scam
compliance.\4\
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\1\ https://public.tableau.com/app/profile/
federal.trade.commission/viz/TheBigViewAllSentinelReports/
TopReportshttps://www.theguardian.com/money/2023/jun/12/older-people-
hired-as-money-mules-by-gangs-as-cost-of-living-crisis-bites
\2\ Add citation for WHY comply, also our JEP article on scams and
compliance.
\3\ Add Deliema 2018. Anderson 2013.
\4\ Add Kircanski-https:// scholar.google.com/citations? view--
op=view--citation &hl=en&user= vRVx7dgAAAAJ&citation--for--
view=vRVx7dgAAAAJ:i2xiXl-TujoC
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As the Committee may note, none of these factors is
necessarily overrepresented in older adults. A good question is
why do older adults lose so much more money / victimization. We
suspect it relates to scammers' higher efforts to target older
adults, higher net worth of older adults' accumulated wealth,
and some increase in compliance once a scammer has developed a
relationship with the victim. We believe that increased
education informing consumers that foreign lotteries are
illegal and structural protections (flagging suspicious bank
transfers, temporary holds on funds) are needed to address this
persistent and damaging scam.
Non-Economic and Emotional Impact of Scams on Victims:
Recent research on the emotional impact of financial fraud
has consistently found that the victim's perception of the
emotional impact of fraud victimization is usually more severe
than the victim's perception of the financial losses across
fraud types.\5\,\6\ Victims may also report feelings of anger,
distrust and betrayal.\7\ This is particularly true when
scammers use the names of trusted institutions such as a well-
respected national company, like Microsoft as is common in tech
scams as part of the pitch to the senior.
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\5\ Modic, D. & Anderson, R. (2015). Its all over but the crying:
The emotional and financial impact of internet fraud. IEEE Security &
Privacy September / October 2015.
\6\ European Commission, January 2020. Survey on "Scams and Fraud
Experienced by Consumers". https://ec.europa.eu/info/sites/default/
files/aid--development--cooperation--fundamental--rights/ensuring--
aid--effectiveness/documents/survey--on--scams--and--fraud--
experienced--by--consumers-----final--report.pdf
\7\ Spalek, B. (1999). Exploring the impact of financial crime: A
study looking into the effects of the Maxwell Pensioners. Int R
Victimology, 1999, Vol. 6 pp 213 - 230.
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Victims who are confused about the details of fraud are far
more likely to report non-financial costs such as stress and
health problems as a result.\8\ This is often the case as
scammers will try to confuse victims, implicating multiple
companies or banking institutions in the pitches.
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\8\ FINRA (2015). Non-Traditional Costs of Financial Fraud.
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Financial fraud victimization has been linked to poor
health, poor sleep and poor quality of life.\9\ Common symptoms
after a financial setback are stress, anxiety, worry,
rumination, and lack of sleep.\10\,\11\,\12\ There is some
indication that when funds are restored, stress decreases and
health may improve.
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\9\ Zunzunegui, M.V. (2017). Financial Fraud and Health: The Case
of Spain. GAc Sanit. 2017; (31(4) 313-319.
\10\ Button, Lewis & Tapley (2014). Not A Victimless Crime: The
Impact of fraud on individual victims and their families. Security
Journal, 27(1), 36-54.
\11\ Freshman, A. (2012). Financial Disaster as a Risk factor for
Post-traumatic stress disorder: Internet survey of Trauma in Victim of
the Madoff Ponzi Scheme. Health & Social Work. 2012 FEB; 37 (1): 39-48
DOI 10.1093/hsw/ls/002.
\12\ Ganzini L., McFarland, B. & Bloom, J.D. (1990). Victims of
Fraud: Comparing Victims of White Collar and Violent Crimes. Bull Am J
Psychiatry Law, Vol. 18, No.1. pp 55 - 63.
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Feeling foolish, humiliation, embarrassment, and self-blame
result in secondary victimization among fraud victims and
decreases their willingness to report fraud. Secondary
victimization, resulted from self-blaming, impacts subsequent
decision-making and shakes confidence.\13\ These events
ultimately cause a decrease in confidence in consumers' general
financial decision making who feel that they can't trust
themselves and fear making another mistake. I have had several
victims say something like, "I can't make another mistake" and
choose to do nothing with their remaining funds and push away
helpful others.
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\13\ Modic, D. & Anderson, R. (2015). Its all over but the crying:
The emotional and financial impact of internet fraud. IEEE Security &
Privacy September / October 2015.
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There are also additional non-economic aspects of
victimization, including the time and hassle it can take to
report and address the issues and additional expenses. As we
can probably all relate, it takes time to report fraudulent
charges and monitor that funds have been returned. Elder fraud
victims have also reported to me their distress at decimated
FICO scores that were built up over a lifetime of prudent
behavior. Because scammers may coach victims to tap retirement
funds, there can be severe tax implications resulting not only
in a devastating loss, but also debt with additional taxes due
to the IRS.
Older adults in particular are vulnerable to these impacts
as they often live on a fixed income and cannot recover
financially in the same way that a younger adult can recover
from financial setbacks leading to overall reduced quality of
life. It is not realistic for many older adults to return to
work to make up for the lost funds. Because of the decreased
time horizon for older adults (less time to recover), financial
exploitation can have a larger impact on seniors and result in
increased worry and fear of living in diminished circumstances
as an elderly person. These circumstances can tap into deep
seated fears of older adults who grew up during the depression
and lived frugally and worked hard to avoid poverty in late
life only to face a devastating financial loss later in life.
Acknowledgements
I would like to thank my collaborators, Yaniv Hanoch,
Marian Liu, and David Hengerer for their contributions to this
program of research as well as the many undergraduate lab
members at the Wood Neuropsychology of Decision-Making Lab of
Scripps College. I also want to acknowledge the work of the
Riverside County Elder Abuse Forensic Center and San Bernardino
Aging and Adult Services for their leadership in the community
on this issue.
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