    [House Hearing, 119 Congress]
    [From the U.S. Government Publishing Office]

                FRAUD IN FOCUS: EXPOSING FINANCIAL THREATS
                          TO AMERICAN FAMILIES
    =======================================================================

                                    HEARING

                                   BEFORE THE

                  SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                    OF THE

                        COMMITTEE ON FINANCIAL SERVICES
                         U.S. HOUSE OF REPRESENTATIVES

                        ONE HUNDRED NINETEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                               SEPTEMBER 18, 2025

                                   __________

                               Serial No. 119-42

           Printed for the use of the Committee on Financial Services

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                                www.govinfo.gov

                                  __________

                            U.S. GOVERNMENT PUBLISHING OFFICE
    63-431 PDF                     WASHINGTON : 2026
    =======================================================================

                     HOUSE COMMITTEE ON FINANCIAL SERVICES

                        FRENCH HILL, Arkansas, Chairman

    BILL HUIZENGA, Michigan, Vice        MAXINE WATERS, California, Ranking
        Chairman                             Member
    FRANK D. LUCAS, Oklahoma             SYLVIA R. GARCIA, Texas, Vice
    PETE SESSIONS, Texas                     Ranking Member
    ANN WAGNER, Missouri                 NYDIA M. VELAZQUEZ, New York
    ANDY BARR, Kentucky                  BRAD SHERMAN, California
    ROGER WILLIAMS, Texas                GREGORY W. MEEKS, New York
    TOM EMMER, Minnesota                 DAVID SCOTT, Georgia
    BARRY LOUDERMILK, Georgia            STEPHEN F. LYNCH, Massachusetts
    WARREN DAVIDSON, Ohio                AL GREEN, Texas
    JOHN W. ROSE, Tennessee              EMANUEL CLEAVER, Missouri
    BRYAN STEIL, Wisconsin               JAMES A. HIMES, Connecticut
    WILLIAM R. TIMMONS, IV, South        BILL FOSTER, Illinois
        Carolina                         JOYCE BEATTY, Ohio
    MARLIN STUTZMAN, Indiana             JUAN VARGAS, California
    RALPH NORMAN, South Carolina         JOSH GOTTHEIMER, New Jersey
    DANIEL MEUSER, Pennsylvania          VICENTE GONZALEZ, Texas
    YOUNG KIM, California                SEAN CASTEN, Illinois
    BYRON DONALDS, Florida               AYANNA PRESSLEY, Massachusetts
    ANDREW R. GARBARINO, New York        RASHIDA TLAIB, Michigan
    SCOTT FITZGERALD, Wisconsin          RITCHIE TORRES, New York
    MIKE FLOOD, Nebraska                 NIKEMA WILLIAMS, Georgia
    MICHAEL LAWLER, New York             BRITTANY PETTERSEN, Colorado
    MONICA DE LA CRUZ, Texas             CLEO FIELDS, Louisiana
    ANDREW OGLES, Tennessee              JANELLE BYNUM, Oregon
    ZACHARY NUNN, Iowa                   SAM LICCARDO, California
    LISA McCLAIN, Michigan
    MARIA SALAZAR, Florida
    TROY DOWNING, Montana
    MIKE HARIDOPOLOS, Florida
    TIM MOORE, North Carolina

                          Ben Johnson, Staff Director

                                     ------

                  SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                     DANIEL MEUSER, Pennsylvania, Chairman

    TIM MOORE, North Carolina, Vice      AL GREEN, Texas, Ranking Member
        Chairman                         RASHIDA TLAIB, Michigan
    ANN WAGNER, Missouri                 NIKEMA WILLIAMS, Georgia
    BARRY LOUDERMILK, Georgia            CLEO FIELDS, Louisiana
    ANDREW R. GARBARINO, New York        SAM LICCARDO, California
    ANDREW OGLES, Tennessee
    MIKE HARIDOPOLOS, Florida

                            C  O  N  T  E  N  T  S

                                  ----------

                          Thursday, September 18, 2025

                               OPENING STATMENTS

                                                                       Page
    Hon. Dan Meuser, Chairman of the Subcommittee on Oversight and
      Investigations, a U.S. Representative from Pennsylvania........     2
    Hon. Al Green, Ranking Member of the Subcommittee on Oversight
      and Investigations, a U.S. Representative from Texas...........     3

                                   STATEMENTS

    Hon. French Hill, Chairman of the Committee on Financial
      Services, a U.S. Representative from Arkansas..................     4

                                   WITNESSES

    Mr. Paul Benda, Executive Vice President of Risk, Fraud, and
      Cybersecurity, American Bankers Association (ABA)..............     5
        Prepared Statement...........................................     8
    Mr. Ian Bednowitz, General Manager, Lifelock at Gen..............    28
        Prepared Statement...........................................    30
    Ms. Kate Griffin, Director, National Task Force on Fraud and Scam
      Prevention, Aspen Institute Financial Security Program.........    38
        Prepared Statement...........................................    40
    Ms. Carla Sanchez-Adams, Senior Attorney, National Consumer Law
      Center (NCLC)..................................................    53
        Prepared Statement...........................................    55

                                    APPENDIX

                       MATERIALS SUBMITTED FOR THE RECORD

    Hon. Dan Meuser:.................................................
        Consumer Bankers Association (CBA)...........................   141
        Bank Policy Institute (BPI)..................................   143
        AARP.........................................................   165
        American Financial Services Association (AFSA)...............   177
        Securities Industry and Financial Markets Association (SIFMA)   179
    Hon. Zachary Nunn, Hon. Hon. Josh Gottheimer, Hon. Scott
      Fitzgerald:....................................................
        Capital One..................................................   182

                     RESPONSES TO QUESTIONS FOR THE RECORD

    Written responses to questions for the record from Representative
      Nikema Williams
        Mr. Paul Benda...............................................   185
        Mr. Ian Bednowitz............................................
        Ms. Kate Griffin.............................................   188
        Ms. Carla Sanchez-Adams......................................   190
    Written responses to questions for the record from Representative
      Andrew R. Garbarino
        Ms. Kate Griffin.............................................   192

        FRAUD IN FOCUS: EXPOSING FINANCIAL THREATS TO AMERICAN FAMILIES

                                  ----------

                          Thursday, September 18, 2025

                 U.S. House of Representatives,
          Subcommittee on Oversight and Investigations,
                               Committee on Financial Services,
                                                        Washington, DC.

        The subcommittee met, pursuant to notice, at 10:02 a.m., in
    room 2128, Rayburn House Office Building, Hon. Dan Meuser
    [chairman of the subcommittee] presiding.
        Present: Representatives Meuser, Wagner, Loudermilk, Ogles,
    Haridopolos, Moore, Green, Tlaib, Williams of Georgia, Fields,
    and Liccardo.
        Also present: Representatives Hill, Lucas, Davidson, Steil,
    Nunn, Waters, and Foster.
        Chairman Meuser. Well, good morning, all.
        The Subcommittee on Oversight and Investigations will come
    to order.
        Without objection, the chair is authorized to declare a
    recess of the committee at any time.
        This hearing is entitled ``Fraud in Focus: Exposing
    Financial Threats to American Families.'' The purpose of this
    hearing is to better understand the various types of financial
    fraud that exist, including the meteoric rise in check fraud
    and senior scams.
        This hearing will highlight different types of fraud and
    begin to identify opportunities for Federal agencies, both
    independently and together, and in conjunction and
    cooperatively with the private sector so we better use existing
    authorities to combat the rise in financial fraud and engage in
    consumer education.
        This hearing will be the first in a series of fraud-and
    scam-related committee work. It is that important.
        Without objection, all members will have 5 legislative days
    within which to submit extraneous materials to the chair for
    inclusion in the record.
        Chairman Meuser. I now recognize myself for 4 minutes to
    give an opening statement.

         OPENING STATEMENT OF HON. DAN MEUSER, CHAIRMAN OF THE
         SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, A U.S.
                    REPRESENTATIVE FROM PENNSYLVANIA

        I would like to thank the witnesses for being here today to
    discuss the fraud and scams in the financial sector and the
    threat they pose to consumers.
        In 2024, the Federal Trade Commission (FTC) reported
    receiving 2.6 million reports of fraud and scams, with
    consumers losing over $12 billion, a 25-percent increase from
    just 2023.
        While that figure alone is staggering, it is likely only
    the tip of the iceberg, given that many victims do not report
    their experiences. In fact, the Department of Justice estimates
    that only 15 percent of victims report fraud to law
    enforcement.
        Check fraud alone has more than doubled since 2021.
        Criminals behind fraud and scams are sophisticated. They
    use a wide variety of schemes--check fraud, romance scams, bank
    transfer fraud, identity theft, payment scams, and more--and
    they target all segments of the population. Individuals of all
    ages are falling victim.
        The only way to defeat criminals and defend consumers is
    truly a whole-society approach. Young adults are vulnerable,
    with so much of their personal information readily available
    online. Seniors, meanwhile, are often hit with the most
    devastating financial losses when exploited by scammers. All
    ages are at risk.
        That is why today's hearing is not only about exposing the
    problem but also about discussing how we can best strengthen
    consumer education, highlight best practices for both consumers
    and companies, promote proven systems and models, and improve
    how we track and stop scammers before they strike.
        I commend the Trump Administration for initiating efforts
    to counter fraud and scams in the U.S., including its recent
    sanctions on cyber scam centers based in Southeast Asia.
    President Trump also signed an executive order to move away
    from using checks for government-related payments.
        The Treasury Department, the Federal Reserve, and the
    Securities and Exchange Commission have all recently initiated
    efforts to gain information pertaining to check fraud, payment
    fraud, and cross-border fraud.
        To aid this effort, I sent a letter, along with Chairman
    Hill and Andy Barr, yesterday to Federal Reserve Chairman
    Jerome Powell seeking more information as to the Federal
    Reserve's (Fed's) work on fraud, including how it is
    collaborating with the Office of the Comptroller of the
    Currency (OCC), FDIC, and other stakeholders to address check
    and payment fraud.
        We also requested a briefing on the comments received to
    the Fed's June 2025 request for information as well as the
    Fed's plans to educate consumers moving forward but no single
    actor can stop fraud on their own. To truly protect families,
    we must foster collaboration across all stakeholders. That
    includes working across Federal, State, and local governments,
    within the financial sector, including lending/payment
    companies and fraud protection companies, technology platforms,
    and telecom companies.
        We are already seeing companies step up. Apple's recent iOS
    26 update, for instance, expanded spam text and call screening
    to help consumers block fraud at the source.
        Much more needs to be done, however. Conversations with all
    these stakeholders, including with consumers themselves, will
    be critical as we pursue a whole-of-society approach to combat
    fraud and scams.
        Finally, I want to highlight that my office has just
    recently launched a new online resource at meuser.house.gov/
    scams, where consumers can learn red flags to spot scams,
    useful links to prevent fraud, and guidance on what to do if
    they fall victim.
        So this is just the beginning of the committee's work and
    Congress's work on fraud and on scams. So I look forward to
    working on a bipartisan basis to find real solutions to a
    problem that continues to be the number one financial services
    issue I hear from my constituents, community banks, and law
    enforcement.
        I yield back.
        The chair now recognizes the ranking member of the
    subcommittee, the gentleman from Texas, Mr. Green, for 4
    minutes for an opening statement.

       OPENING STATEMENT OF HON. AL GREEN, RANKING MEMBER OF THE
         SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, A U.S.
                       REPRESENTATIVE FROM TEXAS

        Mr. Green. I thank the chairman, someone whom I have great
    respect for, and I thank the witnesses for being here as well,
    as well as some other persons who are here at my request to
    show support. We greatly appreciate your attendance.
        The title of this hearing is ``Fraud in Focus: Exposing
    Financial Threats to American Families.'' However, a better
    title for this hearing would be ``Fraud Enabled: How President
    Trump Is Exposing American Families to Financial Threats With
    His Tariff Taxes and His Evisceration of the Consumer Financial
    Protection Bureau,'' the CFPB.
        When President Trump campaigned on imposing steep tariffs
    on both our allies and adversaries, he assured the American
    people that the cost of these tariffs would be paid by foreign
    sellers, not Americans.
        This prevarication has become one of the biggest frauds in
    an administration rife with fraud. Instead of foreign sellers
    paying the price for Trump's tariffs, it is the buying U.S.
    businesses, in tandem with their clienteles, who are suffering
    the cost that foreign sellers will not pay.
        Among the U.S. businesses suffering, small businesses have
    been especially vulnerable to the volatility of Trump's erratic
    economic policies. In July 2025, 67 percent of small businesses
    reported higher expenses over the quarter prior to that time.
    With 60 percent attributing higher costs to Trump's recent
    tariff increases, millions of mom-and-pop businesses are
    closing or are facing the prospect of closing.
        Republicans desiring to combat fraud or financial threats
    to American families should focus on Trump's tariffs that are
    devastating American businesses, especially small businesses,
    as well as how Trump has systematically gutted the principal
    financial protection agency, the CFPB, and how the Consumer
    Financial Protection Bureau is being made ineffective.
        The CFPB was established after the Great Recession to
    protect consumers from financial abuse, including fraud. Since
    its creation, the CFPB has actively protected consumers by
    investigating and punishing financial institutions for their
    abusive and deceptive practices. Since 2011, the CFPB has
    returned more than $20 billion to consumers defrauded by Big
    Banks, debt collectors, and payday lenders.
        Sadly and shamefully, Trump's CFPB has stopped initiating
    new investigations into abuses in the financial industry and
    has discontinued ongoing examinations, dismissed enforcement
    actions, and even rescinded finalized settlements, denying
    consumers agreed-to benefits.
        To add insult to consumer injuries, Republicans cut the
    CFPB's funding, cut it in half, crippling the agency's ability
    to police the payment processors Big Tech platforms and banks
    are using to take advantage of consumers.
        The Republican record is clear: They have defrauded and
    dismantled the CFPB fraud police at the expense of the American
    consumers and have perpetrated a tax fraud on American
    families. Regrettably, this is not oversight; this is
    complicity, coupled with aiding and abetting Trump's fraud.
        I yield back.

      STATEMENT OF HON. FRENCH HILL, CHAIRMAN OF THE COMMITTEE ON
        FINANCIAL SERVICES, A U.S. REPRESENTATIVE FROM ARKANSAS

        Chairman Meuser. The gentleman yields back.
        The chair now recognizes the chairman of the full
    committee, Chairman Hill, for 1 minute.
        Chairman Hill. Thank you, Chairman Meuser.
        Today's hearing is another step in the committee's efforts
    to better understand the various types of financial fraud so
    that we can better help protect American families from these
    financial threats.
        Over the past 3 years, at one State bank trade association
    that I have gone to after another--Georgia, Mississippi,
    Arkansas, Louisiana, Texas, Ohio, among others--this has been
    the top topic.
        Our State attorney generals are witnessing accelerated
    check fraud, debit fraud, and text phishing that are all
    targeting Americans and generating unprecedented losses to both
    consumers and the financial system. Personally, our family was
    a victim of check fraud, thanks to the U.S. post office, in
    2022.
        We will begin today by exploring a proactive set of
    measures that Federal agencies might take and implement to
    counter these threats and better protect all Americans from
    financial fraud.
        We look forward to hearing about emerging technologies like
    AI and blockchain technologies that can help achieve that
    protection.
        I thank our witnesses, and I yield back.
        Chairman Meuser. I thank Chairman Hill.
        We will now move to witness testimony, seeing that the
    ranking member of the full committee is not here.
        I really appreciate--we all appreciate your attendance and
    your, what we expect to be expert testimony.
        We will start off by welcoming Mr. Paul Benda. Mr. Benda is
    the executive vice president of risk, fraud, and cybersecurity
    at the American Bankers Association, where he leads the
    American Bankers Association's (ABA's) initiative on fraud,
    cybersecurity, physical security, and information security and
    chairs the ABA Fraud Coordination Group. Mr. Benda also serves
    as the chair of the International Banking Federation's Scams
    and Fraud Task Force. Mr. Benda's career spanned both public
    and private sectors, having served as an Active Duty U.S. Air
    Force officer and as an official with both the Department of
    Defense and Department of Homeland Security. Mr. Benda received
    a bachelor's and master's degree in mechanical engineering from
    Purdue University.
        Welcome and thank you.
        Mr. Ian Bednowitz: Mr. Bednowitz is the general manager of
    LifeLock at Gen, a leading U.S. identity-theft protection
    service. Prior to joining LifeLock, Mr. Bednowitz was the
    global head of protections at eBay, where he was responsible
    for managing and improving programs to build customers' trust
    for transacting on eBay. Mr. Bednowitz graduated summa cum
    laude with a B.A. in economics from Cornell University and
    holds an MBA from the Kellogg School of Management.
        Thank you very much, and welcome.
        Ms. Kate Griffin: Ms. Griffin is the director of the Aspen
    Institute's Financial Security Program. She also serves as the
    director of the National Task Force on Fraud and Scam
    Prevention, where she leads a multisector collaborative effort
    aimed at creating a national strategy to prevent scammers from
    stealing wealth from everyday Americans. She holds a master's
    from American University and a bachelor's degree from Kenyon
    College.
        So thank you very much.
        Ms. Carla Sanchez-Adams, welcome.
        Ms. Sanchez-Adams is a senior attorney at the National
    Consumer Law Center. She also serves as a board member for the
    National Association of Consumer Advocates and is a fellow with
    the American Bar Association. Prior to joining National
    Consumer Law Center (NCLC), Ms. Sanchez-Adams was a managing
    attorney with Texas RioGrande Legal Aid. Ms. Sanchez-Adams
    graduated with a bachelor's degree from NYU and received her
    Juris Doctor from the University of Texas.
        So thank you very much as well.
        So each of you will be recognized for 5 minutes to give an
    oral presentation of your testimony. Without objection, your
    written statements will be made part of the record.
        So, Mr. Benda, you are now recognized for 5 minutes for
    your oral remarks.

      STATEMENT OF PAUL BENDA, EXECUTIVE VICE PRESIDENT OF RISK,
         FRAUD, AND CYBERSECURITY, AMERICAN BANKERS ASSOCIATION

        Mr. Benda. Thank you, Mr. Chairman.
        Chairman Meuser, Ranking Member Green, and members of the
    subcommittee, thank you for focusing on this critical issue
    today and the opportunity to testify.
        My name is Paul Benda, and I serve as executive vice
    president of risk, fraud, and cybersecurity at the American
    Bankers Association.
        Banks have long been on the front lines of protecting
    consumers from fraud. From chip-enabled cards to multifactor
    authentication, from AI-driven fraud detection to real-time
    alerts, the banking industry has invested billions to make our
    financial system one of the most secure in the world.
        Americans recognize that effort. Surveys show that 9 in 10
    customers say their bank is taking proactive steps to protect
    them from fraud, but criminals are innovating too. They have
    reinvested the $300 billion stolen during the pandemic to build
    highly organized networks that now use deepfakes, spoofed
    caller IDs, stolen checks, and fake social media accounts to
    target Americans.
        This is where banks face a critical limitation. By the time
    a victim is ready to send a payment, they often believe they
    know and trust the scammer. Caller ID might display the bank's
    name. A text message might look identical to a legitimate fraud
    alert. A social media ad might appear to come from a trusted
    company.
        These are tools banks do not control. That is why banks
    cannot fight this battle alone. Other stakeholders must step
    up.
        Telecommunication companies must stop criminals from
    impersonating banks through spoofed phone calls and fraudulent
    texts. Today, a criminal overseas can make a call appear as if
    it is coming from a 1-800 number on the back of your debit
    card. If the phone says it is your bank, most people will
    believe it.
        Social media platforms must remove fake accounts and
    fraudulent ads more quickly. The Wall Street Journal recently
    documented how fake investment promotions on Instagram and
    Facebook have cost consumers their life savings. Banks
    regularly flag these scams, but takedowns are slow and
    inconsistent.
        The Postal Service must strengthen protections against
    check theft, which remains one of the fastest growing forms of
    fraud and law enforcement needs more resources to investigate
    and prosecute cases, because no amount of bank investment can
    replace the deterrence of putting criminals behind bars.
        We urge Congress, the administration, regulatory agencies,
    and others in the private sector to help close these gaps.
        First, the administration should create a White House
    Office of Fraud and Scam Prevention to coordinate Federal
    efforts, unify consumer reporting, and drive a national
    strategy.
        Second, we should require telecom accountability by closing
    loopholes that allow spoofed calls and texts, ban subscriber
    identity module (SIM) boxes that send thousands of scam texts,
    and ensure caller ID cannot be faked.
        Third, we need to hold social media companies responsible
    by mandating quick, free takedown of impersonation accounts and
    impose liability if platforms knowingly allow them to remain.
        Fourth, we must support law enforcement by providing for
    State-level financial crimes units modeled on Texas's Financial
    Crimes Intelligence Center, which has proven effective.
        Fifth, we need to improve information-sharing by creating
    safe harbors for banks and regulators to exchange fraud data
    and require the Federal Communications Commission (finacial )
    to establish a searchable spam text and messaging database.
        Finally, we need to continue to combat check fraud by
    supporting the development of a national check verification
    system to authenticate checks at deposit.
        Banks are proud of the role we play in protecting
    consumers. We continue to invest, to innovate, and to educate.
    ABA has launched several national anti-fraud campaigns,
    including ``Banks Never Ask That'' and ``Practice Safe Checks''
    to help people recognize scams, as well as ``Safe Banking for
    Seniors'' to help combat the ever-growing problem of senior
    fraud but unless every player in the fraud ecosystem accepts
    their responsibility, criminals will continue to victimize
    Americans at an unprecedented scale. Fraud is not just a
    banking problem; it is an ecosystem problem and until all parts
    of that ecosystem are equally committed to protecting
    consumers, the American public will remain at risk.
        Thank you, and I look forward to your questions.

        [The prepared statement of Mr. Benda follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman Meuser. Thank you as well.
        Mr. Bednowitz, you are now recognized for 5 minutes for
    your opening remarks.

      STATEMENT OF IAN BEDNOWITZ, GENERAL MANAGER, LIFELOCK AT GEN

        Mr. Bednowitz. Thank you.
        Chairman Meuser, Ranking Member Green, and members of the
    committee, good morning, and thank you for this opportunity to
    testify on this critical topic of fraud affecting American
    families.
        My name is Ian Bednowitz, and I am the general manager of
    LifeLock. LifeLock is the leading identity-theft protection
    service in the U.S. and LifeLock is part of a larger company,
    Gen, a global S&P 500 company that has over 500 million
    consumers that we protect through our brands NortonLifeLock and
    Avast.
        Fraud today is not just growing; it is accelerating at an
    unprecedented rate. You know, multiple people have highlighted
    statistics. The statistics we have is that the American
    consumer lost $16.6 billion in reported losses last year. That
    is a 33-percent increase year on year, and that translates into
    $51 for every person in this country.
        At LifeLock, we have sent over 81 million identity theft
    alerts, and the number of Social Security numbers that are on
    the dark web that are being exposed to breaches increased from
    8 million to 300 million in just 1 year.
        These are not just statistics. Behind these facts are
    seniors that are losing their life savings, are young people
    whose financial futures are ruined before they even start their
    careers, and families who are blindsided by fraud.
        Fraud, unfortunately, does not discriminate. Young people
    get victimized more frequently because they are online more
    often, whereas seniors experience much larger fraud when it
    happens--or much larger losses. The average senior lost $35,000
    in reported fraud, and, in total, seniors lost a staggering $5
    billion.
        Yet, despite these statistics, over two-thirds of seniors
    say that they feel invincible, that they feel safe from the
    risks of fraud and scams. This represents a huge disconnect
    between perception and reality and artificial intelligence is
    only increasing this gap. In the hands of criminal
    organizations, artificial intelligence is allowing them to
    industrialize fraud, allowing them to make phishing emails that
    are perfect, voice clones that are compelling, deepfakes that
    can fool even the most sophisticated American citizen.
        AI, on the other hand, is also our best defense against
    these criminal organizations. At Gen, we use AI to go through
    millions and millions of data points to detect fraud in real-
    time. We use it to detect deepfakes and to protect consumers,
    to prevent scams from ever getting to consumers in the first
    place but technology is not enough. We also invest in
    education, in partnerships, and sharing intelligence with law
    enforcement.
        Congress has a critical role to play in this fight. Based
    on our experience, we urge three primary priorities.
        We have to stop fraud before it happens; raise awareness of
    the threats through national education campaigns that focus on
    scams, fraud, identity theft; modernize breach notifications;
    and invest in public-private partnerships that raise digital
    literacy.
        Two, we have to disrupt the scam supply chain. So the
    social media networks, the companies, the data brokers that
    trade in personal information that are fueling the rise of
    scams, we need to better regulate them and we need to empower
    our law enforcement to be able to go after international
    organizations across borders, give them the tools to be able to
    take down the infrastructure and to be able to collaborate
    across countries.
        Then, third, we need to empower victims and support local
    law enforcement. Local law enforcement needs the education and
    the tools to be able to deal with these types of scams and
    fraud and victims need to be able to have a centralized
    repository of breaches and actions that they can take to
    remediate and address when they are victimized.
        Fraud now represents a systemic threat to our digital
    economy and to the trust that consumers have in their digital
    lives. Together, government, industry, and civil society must
    work together and collaborate to protect American families,
    restore confidence, and secure the digital economy for every
    American.
        Thank you, and I look forward to your questions.

        [The prepared statement of Mr. Bednowitz follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman Meuser. Thank you very, very much.
        Ms. Griffin, you are now recognized for 5 minutes.

      STATEMENT OF KATE GRIFFIN, DIRECTOR, NATIONAL TASK FORCE ON
     FRAUD AND SCAM PREVENTION, ASPEN INSTITUTE FINANCIAL SECURITY
                                PROGRAM

        Ms. Griffin. Chairman Meuser, Ranking Member Green,
    distinguished members of the subcommittee, thank you for
    inviting me.
        My name is Kate Griffin, and I am director of the National
    Task Force on Fraud and Scam Prevention at the Aspen Institute
    Financial Security Program.
        Over the last year, hundreds of experts from more than 80
    institutions, public and private, have spent thousands of hours
    together to mount a coordinated defense against scams--the
    ability for criminals to deploy sophisticated social-
    engineering techniques that lure victims to send their hard-
    earned money.
        As my colleagues have outlined, scams are a growing threat
    to all of society. Every day, roughly 50,000 Americans become
    victims. We believe one in five Americans have been affected to
    date and these people are young and old, urban and rural, rich
    and poor. Everyone is at potential risk.
        Because of this, every week, more than $2 billion is
    flowing out of American pocketbooks and into the hands of
    foreign criminal enterprises, who use those funds to fuel other
    illicit crimes, including drug and human trafficking. Research
    suggests that this scams industry now rivals the size of the
    illicit drug trade, and scam losses reported to law enforcement
    have more than tripled since 2019.
        Those reports, though, are only a fraction of what is
    really happening. In fact, the FTC has estimated that actual
    fraud-related losses, accounting for this under-reporting,
    exceed $158 billion per year.
        The vectors of attack are varied, which is why we will talk
    about this as an ecosystem or whole-of-society problem.
    Scammers target victims on all of the core systems of American
    commerce and communication: telecoms, messaging, digital
    platforms such as social media or paid advertising, retail, and
    financial services spanning banking, payments, fintech, crypto,
    and investments.
        Most U.S. adults report receiving scam messages through
    those means daily or weekly and those consumers are asking for
    your help. They do not know where to turn.
        Being tricked by a scammer to send money or provide access
    to a financial account is the second-largest crime concern in
    the U.S., second only to identity theft. People are worried
    more about scams than they are about violent crime or burglary
    and they rarely report when it happens to law enforcement. In
    fact, most victims, 7 in 10, will report directly to their
    financial institution, while only a small fraction of that will
    report to local law enforcement or a Federal agency.
        That is why preventing scams requires this whole-of-
    ecosystem response. Leaders in our task force are very
    sophisticated fraud fighters, but they are asking for help with
    scams. They have underscored the need for collaboration across
    all those sectors and the desire for strong leadership from the
    Federal Government in doing so. No single entity in the scam's
    lifecycle can do this alone.
        We will have a detailed set of recommendations in a
    forthcoming report from the task force in a few weeks which
    will provide a blueprint for a national strategy to prevent
    scams.
        A few highlights from that report include a call for bold
    government leadership, which includes naming scams as a
    national priority, asking congressional leadership to mount a
    coordinated response, and empowering leaders within government
    to marshal our resources toward a coordinated response.
        It will also require driving better law enforcement and
    intelligence outcomes by providing top officials with clear
    anti-scam goals and sufficient funding. We must enhance their
    powers to prosecute while upgrading their capabilities.
    Criminals are using the most sophisticated technologies, and so
    must we.
        Of course, the private sector has a role to play as well.
    Specific actions related to the private sector in the report
    will include things like enacting robust anti-scam policies,
    strengthening system defenses around the better vetting of
    platform users, investing in cross-sector information
    exchanges, and improving the effectiveness of just-in-time
    warnings and interventions.
        In closing, I want to tell you how inspired I have been
    over the last year by leaders in government and the private
    sector who are committed to taking serious action.
        The American public is asking all of us to take this
    seriously. Bipartisan majorities of U.S. adults say the Federal
    Government is doing a bad job of handling online scam attacks
    and there is lots of upside to working on this, not the least
    of which is returning $158 billion a year to our economy.
        Thank you.

        [The prepared statement of Ms. Griffin follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman Meuser. Thank you very, very much. We look forward
    to your report.
        Ms. Sanchez-Adams, you are now recognized for 5 minutes.

      STATEMENT OF CARLA SANCHEZ-ADAMS, SENIOR ATTORNEY, NATIONAL
                          CONSUMER LAW CENTER

        Ms. Sanchez-Adams. Chairman Meuser, Ranking Member Green,
    members of the committee, thank you for the opportunity to
    testify on behalf of the National Consumer Law Center's low-
    income clients.
        Payment fraud is a national crisis demanding a national,
    holistic response from our government. Payment fraud impacts
    all Americans regardless of age, race, education, income, or
    political affiliation.
        Now, technology has enabled criminal fraudsters to use
    older forms of payment--like bank-to-bank wire transfers and
    checks--to steal money, and these lack sufficient protections.
    Newer forms of payment, such as peer-to-peer transactions and
    crypto transfers, also enable criminals to steal and launder
    money in an easier form.
        Payment fraud can be sorted into two buckets: unauthorized
    and fraudulently induced.
        Unauthorized transactions occur when a criminal fraudster
    initiates a transaction on behalf of the victim but without
    their knowledge or permission.
        On the other hand, fraudulently induced transactions occur
    when the consumer or the victim themselves initiates the
    transaction but only as a result of a fraud scheme using
    deception or manipulation.
        Now, as you have heard, criminal fraudsters, they spoof
    real numbers of financial institutions via text message or
    phone call. They use deepfakes, take over accounts through
    malware or breaches, resort to manipulative psychological
    practices, and even use violence to get victims to initiate
    payments.
        Americans are plagued by both types of fraud, and we need
    to address both if we are going to combat fraud and instill
    confidence in our banking and payment systems but the responses
    that fraud victims get vary greatly depending on the payment
    method used. A victim's best chance at getting their money back
    is if there was an unauthorized breach of their accounts
    because of the strong protections of the Electronic Fund
    Transfer Act, or EFTA.
        But EFTA's Regulation E exempts certain wire transfers,
    leaving victims with weak State laws, while electronic benefit
    transfer (EBT) cards are unprotected entirely and if the
    transaction was fraudulently induced, which you all call a
    scam, then usually the victim is going to hear, ``Sorry, there
    is nothing we can do,'' because there are no clear protections
    under the law.
        We therefore need to update antiquated laws that offer
    little to no protection to victims impacted by fraud. In this
    day and age, where the vast majority of transactions occur
    online or through a mobile app, it makes no sense that only
    some of these transactions are covered by EFTA and not others.
        We also need to update EFTA to include fraudulently induced
    transfers, following the example of the U.K., which recently
    adopted rules reimbursing victims of authorized push-payment
    fraud, with industry recognition that making consumers safe is
    central to confidence in the payment systems.
        Protecting victims should be central to any discussion
    about combating fraud. We absolutely cannot push the burden of
    fraud entirely onto its victims. Consumer education is
    important and necessary, but it alone will not solve the
    problem of fraud, especially with fraud schemes and technology
    that are ever evolving.
        However, there are steps that we can collectively take to
    keep the impacts of fraud on innocent consumers and even
    financial institutions to a minimum and to incentivize more
    effective use of innovation to prevent fraud and make our
    system safe.
        I agree that telecommunication and social media companies
    must take action to prevent fraud in the first instance,
    especially since some know that they are carrying fraudulent
    traffic. If a criminal fraudster cannot contact a victim
    through fake texts, spam calls, or social media schemes, then
    the fraud cannot occur.
        Payment systems and financial institutions must also bear
    greater responsibility in the fight against fraud. Criminal
    fraudsters need a way to receive those stolen funds. If these
    criminals cannot get access to our payment rails or deposit
    holding accounts, then innocent victims will not lose money
    that way.
        As such, we need a stronger focus on the know-your-customer
    obligations of the financial institution or payment provider
    that allowed the fraudster or money mule to open an account and
    receive the fraudulent funds.
        Victims should be reimbursed by the banks, who, in turn,
    should be reimbursed by the institution that received the
    fraudulent payment. If they bear liability, they will use more
    innovative technology to detect and stop fraud. This already
    happens on certain payment networks when there are claims of
    unauthorized use.
        Simultaneously, we must give innocent consumers the right
    to a swift resolution if their funds are frozen or closed by
    overly aggressive fraud reporting.
        This is not the time to be weakening consumer protection or
    the agencies that protect consumers. This CFPB was actively
    working on addressing fraud but is now in tatters and Congress
    blocked the CFPB from supervising peer-to-peer (P2P) apps,
    which would have helped fraud victims and with the change in
    leadership, the CFPB dismissed an enforcement action involving
    fraud on Zelle.
        Meanwhile, President Trump has sparked an effort to reduce
    the number of checks sent through the mail to and from the
    government, which is incredibly important given the rash of
    check washing fraud, but people will not be comfortable making
    or receiving electronic payments if fraud is rampant.
        Moreover, we should not encourage the use of stablecoins,
    crypto assets, and the crypto exchanges when they are a vector
    for fraud and scams. These payment forms and systems cannot be
    outside of our consumer protection laws.
        Thank you, and I am happy to take any questions.

        [The prepared statement of Ms. Sanchez-Adams follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman Meuser. Thank you very much for your testimony.
        We will now turn to member questions. The chair recognizes
    himself for 5 minutes.
        Fraud and scams are not new concepts. I am extremely
    concerned by how rampant--as we all are--it has become in
    recent years.
        Ms. Griffin, I would like to start with you. Can you
    briefly explain the difference between fraud and a scam and
    then elaborate--when you mentioned that fraud is a national
    security crisis, who is behind the scams? Who is behind the
    fraud? Many think it is lone actors. Others think, as you are
    expressing, it is criminal networks. If you could expand,
    please.
        Ms. Griffin. Yes, absolutely.
        Within the financial services ecosystem, a fraud occurs
    when the customer has no knowledge or participation in the
    transaction. So, if you buy a coffee on the street here in DC
    and simultaneously your card is used to buy a computer in
    Texas, your financial institution says, ``Hey, something is
    going on here that is not right,'' but you had no knowledge of
    that transaction.
        In a scam, you have, perhaps, met someone online; you
    received a phone call from someone you believe is the Federal
    Bureau of Investigation (FBI) asking you to move funds. You
    authorize that transaction to your financial institution and
    are part of the process. In that case, the financial
    institution has very different sets of information about what
    is happening in that transaction because you have authorized
    it.
        You ask about who is behind this. The ``Annual Threat
    Assessment of the U.S. Intelligence Community'' has identified
    these scams--authorized transactions--as part of a nexus of
    criminal activity threatening the United States perpetuated by
    transnational criminal organizations and state-affiliated
    groups that also engage in human trafficking, drug trafficking,
    weapons and human smuggling.
        North Korean hackers, Mexican cartels, Russian crime
    syndicates, and triad gangs affiliated with the Chinese
    Communist Party (CCP) are among the U.S. adversaries that are
    benefiting from these crimes.
        We also know that they are using human trafficking victims
    in some places to commit those crimes. Scam compounds in
    Southeast Asia may have as many as 400,000 enslaved people
    forced to commit those scams against U.S. and other countries'
    citizens.
        Chairman Meuser. Well, thank you. That is quite compelling.
        Mr. Bednowitz, what are some of the explanations for the
    rise in financial fraud and scams? You mentioned it is a 33-
    percent increase, I think you said, over a 2-year period. I
    really appreciate you saying these are not just statistics;
    these are people that are truly being seriously victimized.
        If you would, please.
        Mr. Bednowitz. Yes. Thank you for the question, Chairman.
        There are three primary drivers of the increase in scams
    and fraud over time.
        Chairman Meuser. Lean into the mic a little bit.
        Mr. Bednowitz. Oh, sorry.
        There are three primary drivers of the increase in scams
    and fraud over time: the increase in data breaches, the
    industrialization of fraud, and the rise of AI.
        Data breaches have tripled since 2020, and that means there
    is a plethora--this is according to the Interstate Technology &
    Regulatory Council (ITRC) and our own data. What that means is,
    there are now billions and billions of pieces of personal
    information that are exposed on the dark web that criminals can
    use to target people--to target them with compelling messages
    from their banks, target them with spoofed numbers. That
    information is very critical.
        Then you take that--as Ms. Griffin said, it is no longer an
    individual in a basement somewhere. You have criminal
    organizations across the world that are professional, that have
    large staffs, at times human-trafficked themselves, that are
    doing this and targeting victims day-in and day-out.
        Those two on their own are enough to drive the growth, but
    then you take AI into it. I said AI was a double-edged sword.
    In the hands of these organizations----
        Chairman Meuser. Right.
        Mr. Bednowitz [continuing]. you know, what would have taken
    more time and cost to take that information that is out there
    in the dark web and combine it with information from social
    media and public internet, would be harder--that has become
    easier and easier, so that no longer do we have the days of the
    Nigerian prince scam with all of the spelling errors----
        Chairman Meuser. Right.
        Mr. Bednowitz [continuing]. but, instead, you have emails
    that look like they are from your bank, that have your account
    number in there, that have your name----
        Chairman Meuser. Right. Thank you. Great answers.
        Mr. Benda, relatively quickly, the Office of Scam and Fraud
    Prevention you brought up. There are a lot of discrepancies,
    whether it is $12 billion, $16 billion of loss from these
    scammers and fraud experts. Talk about that, how important that
    would be, to interconnect government agencies with them.
        Mr. Benda. Sure. I think the challenge we have--we have
    heard that the numbers that Americans are experiencing scams
    could be $100 billion, and yet you have to ask yourself the
    question, who is in charge of scam and fraud prevention in the
    U.S. Government? Is it the Treasury Department? Is it
    Department of Justice? Is it Department of Commerce? We have no
    central point to report these.
        In fact, consumers are confused as to where they should
    even report a scam or fraud. Should they report to the FBI?
    Should they report to the CFPB? Should they report to FTC and
    others?
        So having a central place where we could report this
    information, that could be acted upon, to actually take action
    for the consumer----
        Chairman Meuser. My apologies. We will have to finish this
    later.
        Mr. Benda [continuing]. would be helpful.
        Chairman Meuser. My time has expired.
        We will now turn to the gentleman from California, Mr.
    Liccardo, for 5 minutes.
        Mr. Liccardo. Thank you, Mr. Chair.
        Thank you, each one of you, for your testimony.
        I wanted to ask one question and ask for hopefully the
    feedback of each of you, if we can get it all done in 5
    minutes. Let me describe the basis of the question.
        We have been very active in this committee in attempting to
    set up rules to govern cryptocurrency and that is long overdue.
    I think many in the industry would agree that this is an area
    that needs some settled regulation rather than regulation by
    litigation or other approaches that have been taken in the
    past.
        We know that trillions of dollars are transacted in
    centralized exchanges and decentralized protocols every year.
    That number is increasing rapidly and with that quantity of
    exchange, obviously, to the extent that particularly it is
    happening off of decentralized exchanges, there is increasing
    opportunity for fraud and for theft, as well as money
    laundering and other kinds of criminal activity.
        We have recently in the House of Representatives passed a
    bill, the CLARITY Act, that governs what happens on centralized
    exchanges and perfectly or imperfectly, it has established
    know-your-customer requirements, anti-money-laundering
    requirements, other rules to establish centralized exchanges.
        We know, increasingly, the activity is moving from
    centralized to decentralized, to decentralized finance (DeFi)
    protocols and because of pseudonym anonymity, the person on one
    end of the transaction does not actually know the identity of
    the person at the other end of the transaction. If they try to
    get a subpoena or they call the FBI to say, ``I was
    defrauded,'' they cannot even find out who was doing it.
        So the question is, what do we do about DeFi? That was not
    addressed in the bill that passed through the House.
        I am interested, Ms. Sanchez-Adams, do you have any
    particular views?
        Ms. Sanchez-Adams. Yes. As I mentioned in my testimony, I
    think that, regardless of the market regulation and structure
    of the bill, you have to protect consumers.
        So, if you update or clarify--the CFPB can do it through
    guidance, or you all can do it through legislation--that the
    EFTA applies to crypto transactions, then those platforms will
    be held responsible and liable when consumers are defrauded,
    especially if you also update it to include fraudulently
    induced transactions.
        Mr. Liccardo. If it is off a platform, what do you do then?
        Ms. Sanchez-Adams. I mean, you mean if it is, like, from an
    unhosted wallet?
        Mr. Liccardo. That is right.
        Ms. Sanchez-Adams. Right. So, I mean, you can--I think that
    there are problems with crypto and with the technology aside
    from that, which I am happy to talk about at another point in
    time, but I think you still hold them liable. They are the
    party or the entity that is receiving the fraudulent fund.
        If they are--unfortunately, it would be like I am acting in
    cash, and I am transacting in cash, right? So, if I have an
    unhosted wallet that is being used to pay somebody else who has
    an unhosted wallet, it is like I am giving them cash and so
    they cannot be regulated the same way as a bank could be
    regulated, but they are still subject to criminal fraud.
        Mr. Liccardo. Thank you.
        Ms. Griffin?
        Ms. Griffin. Thank you for question. The forthcoming report
    will have a number of recommendations related to this, one of
    which will include establishing parity of law enforcement
    powers across money movement, including the civil forfeiture of
    digital assets.
        So some things about treating digital assets as cash for
    purposes of the civil forfeiture of fungible property;
    clarifying U.S. Secret Service authorities regarding those
    asset transactions--essentially, how do we empower our law
    enforcement to be able to go after when crypto is involved in
    the transaction.
        I think the other element of this that has come up quite a
    bit in the task force deliberations is also related to the
    risks posed by crypto ATMs--ATMs that are placed in community
    stores, in nursing homes, in retirement homes, and where people
    are directed to put their hard-earned cash into those ATMs for
    the purposes of sending to criminals. That is an area where we
    think there is a greater need for you all to be investigating.
        Mr. Liccardo. Thank you.
        Mr. Bednowitz, you might have the last word.
        Mr. Bednowitz. Yes, so thank you for the question, and I
    will be very brief.
        I think, from our standpoint, I go back to what I said; I
    think awareness is very, very important. Consumers are not
    aware of the incredible risk that crypto poses. Crypto is at
    the heart of a lot of different scams, because people get
    excited about the potential returns, and they do not know when
    they send crypto to an individual, what risks they are opening
    themselves up to.
        So making people more aware of the risks of crypto and that
    they should be much more thoughtful of when they are putting
    cash into crypto and where they do that is very, very critical
    to combating this issue.
        Mr. Liccardo. At the very least, we should be making them
    aware if they are on a DeFi protocol as opposed to a
    centralized exchange with those kinds of----
        Mr. Bednowitz. A hundred percent.
        Mr. Liccardo. Thank you very much for your testimony.
        Thank you. I yield.
        Chairman Meuser. The gentleman yields.
        The gentleman from Arkansas, Chairman Hill, who is our
    chair of our full committee, is now recognized for 5 minutes.
        Chairman Hill. Thank you, Chairman.
        Again, thanks to the panel. Great panel, good discussion.
        I noted in my opening statement that our family was hit
    with washed checks from the Postal Service, and--really
    offensive. I want to credit my bank for finding it and
    recognizing the fraud and stopping it and helping work with the
    FBI and the local police to put the people in jail, which I was
    happy to do, but there are millions of people around the
    country that is not happening to. So this is such an important
    hearing.
        Mr. Benda, I want to start with you and thanks for the ABA
    taking a keen interest in this.
        All the comments I have heard are 100 percent true; there
    is just not a way to get at this. It is a whack-a-mole
    situation, and we do not have enough mole whackers working on
    it.
        One of the things noted was, you said maybe $100 billion of
    losses and one of my complaints is, we cannot measure or tackle
    things we cannot see. I have argued that the bank call report
    should break fraud losses out of other expenses and make it its
    own line item.
        Would you support that, Mr. Benda?
        Mr. Benda. I think it is important for us to track fraud
    and scam losses in a consolidated manner. That would be one
    thing we would be open to looking at doing.
        Chairman Hill. Good. Thank you.
        Also, this all-of-the-above law enforcement effort that it
    takes--and all of you have kind of touched on that in your
    different remarks in answer to questions.
        I went to Tyler, Texas, to look at the Tyler law
    enforcement center that the State of Texas has set up there to
    combat debit fraud--so, focused on debit skimming mostly at
    fuel pumps, operated by cartel-related gangs across Texas.
    Millions of dollars are lost per month. The card issuers are
    the eaters of those losses, not the merchants, generally.
        What should we ask merchants to do in terms of 24-hour, 7-
    day-a-week, microscopic telecommunications pump point-of-sale
    fraud? You mentioned ATMs, a similar issue to prevent skimming.
        Who wants to tackle that question?
        Ms. Griffin, do you want to tackle that?
        Ms. Griffin. I think the only thing I will say is, we have
    a number of members in the task force, I know, that have been
    working on this issue, both related to EBT cards, as Ms.
    Sanchez-Adams brought up, as well as other types of
    transactions.
        There are increasing and emerging technologies they can use
    at the point-of-sale devices to detect when a skimming device
    has been put there----
        Chairman Hill. Yes.
        Ms. Griffin [continuing]. and more investment in that is
    needed.
        Chairman Hill. The technology I saw is smaller than my
    little fingernail. It is inserted in the skimmer, both at
    point-of-sale at retail and at a gas pump and it is downloaded
    by Bluetooth to the criminal who just walks by the pumps on a
    regular retrieval basis.
        This is not your grandmother's fraud, like you are all
    making the comments. This is super-sophisticated.
        Attorney General Tim Griffin in my State has set up a
    Financial Fraud Task Force to bring all the forces together in
    Arkansas to combat this--text, phone, mail, check, the whole
    effort. So I really commend him for that.
        Ms. Griffin, I wonder what your view is of how those
    stakeholders should try to work together on a national basis to
    do best practices.
        In my example in Arkansas, tens of thousands of dollars are
    missing: $1.5 million out of my post office just in my little
    neighborhood was the publicly reported number. We have one
    postal inspector for the State of Arkansas, 3.4 million people.
        So can you comment on the role of the FBI, the U.S. Postal
    Service, and other law enforcement?
        Thank you, Ms. Griffin. Please.
        Ms. Griffin. Yes. Thank you.
        First of all, those agencies were all very active at our
    table. Lots of dedicated leaders focus on this and one thing
    that we heard quite often is that the collaboration around
    scams is a side-of-the-desk activity. There is not a directive
    from the top that anti-scam activity is a leading priority for
    law enforcement.
        One of the actions that we believe can be facilitated by
    naming scams as a national priority to mount a coordinated
    response is to direct law enforcement to create greater
    resources toward those kinds of collaborations, because, as you
    rightly mention, they will yield benefits.
        Chairman Hill. Yes.
        It is a cross-Congress problem. I mean, we do not control
    the FTC on this committee, and yet the FTC and the Federal
    Communications Commission (FCC) should be very involved here
    due to the transmission means that you have all addressed, like
    in telecommunication-based scams, which is the fastest-growing,
    the most accurate. You have all testified to that. So I think
    we have to link the financial services industry with the
    transmission capabilities, which is mail and telephone and text
    and internet.
        So I want to thank the panel.
        Mr. Meuser, thank you for a great hearing, and I yield
    back.
        Chairman Meuser. The chairman yields back.
        The gentleman from Texas, Mr. Green, who is the ranking
    member of Oversight and Investigations, is now recognized for 5
    minutes.
        Mr. Green. Thank you, Mr. Chairman.
        And, again, I thank the witnesses for appearing.
        Let me start with a basic premise, and this premise is that
    consumers need all of the help they can get from whatever
    agencies are available to them, including the Consumer
    Financial Protection Bureau, which is currently under assault.
        Currently, an effort is afoot to remove some 1,500 of the
    personnel from the CFPB. This would be tantamount to removing
    about 90 percent of the staff. Consumers need all the help they
    can get, at a time when this President is eviscerating the
    Consumer Financial Protection Bureau.
        Now, Ms. Sanchez, you made a comment earlier--Sanchez-
    Adams--about the CFPB. Some of what my colleagues, my friends,
    as witnesses, are calling to our attention are things that the
    CFPB could be associated with. If needed, we could expand what
    the CFPB can do. Someone said, we need a central point of
    contact for consumers. Well, that sounds like a Consumer
    Financial Protection Bureau, which is being eviscerated.
        This hearing is quite amazing to me. We want to help
    consumers, by some standards--not mine--by eviscerating the
    agency that helps consumers.
        Ms. Sanchez-Adams, would you kindly respond?
        Ms. Sanchez-Adams. Yes. I agree.
        The CFPB, in January 2025, entered a consent order against
    Block, which is the owner of Cash App, for fraud that was
    happening there. They were not investigating properly
    unauthorized-use claims under EFTA. That was one of the
    violations, as well as a lot of other promises about a system
    that was safe and was supposed to protect them.
        Now, under that order, they are supposed to receive--
    consumers and victims who were impacted by unauthorized use,
    that should have already gotten their money back, are supposed
    to get $120 million in redress. However, they have not received
    a penny yet.
        I think part of that is, there is a reduced workforce that
    is not able to do the work that it is supposed to be doing for
    that reason. So I agree with you that we need to restore the
    strength of the CFPB.
        Mr. Green. Yes.
        You mentioned Zelle. Explain.
        Ms. Sanchez-Adams. Yes, so they had also--in I believe it
    was December 2024, they had filed a suit against Zelle for
    similar infractions. So they also were not responding to the
    EFTA unauthorized use claims properly, timely, reimbursing
    impacted victims.
        Also, they knew before it was time to launch the product
    that it was not yet safe and did not have all the guardrails
    that it may now have in place at the time, because they did not
    want to lose market share. So the claim in the petition is that
    they launched it before it was safe, as a violation of the
    Consumer Financial Protection Act (CFPA).
        Unfortunately, as I mentioned in my testimony, with the
    change of leadership at the Bureau, that suit was dismissed,
    though it was picked up by the New York Attorney General's
    Office.
        Mr. Green. Are you familiar with the Townstone Financial
    case?
        Ms. Sanchez-Adams. Yes.
        Mr. Green. Okay. This is invidious discrimination against
    Black people. Settlement was at hand. Tell us what happened,
    please.
        Ms. Sanchez-Adams. Yes, in that case, there was actually a
    court order, and they were ordered to pay back money. The
    Bureau decided it did not want to pay that money out or to
    enforce that order and they wanted to vacate that order, and
    the court did not allow them to do so.
        Mr. Green. What signal are we sending to consumers when we
    complain about the atrocities that they have to suffer and we
    eliminate the agency that is there to help them? What is the
    signal that we are sending, please?
        Ms. Sanchez-Adams. That we do not care about them.
        Mr. Green. If we cared about consumers, would we eviscerate
    the Consumer Financial Protection Bureau?
        Ms. Sanchez-Adams. Not in my opinion.
        Mr. Green. What could we do to strengthen it, in your
    opinion?
        Ms. Sanchez-Adams. We do need to restore the funding so
    that it is able to function the way that Congress designed it
    to function under the Dodd-Frank Act. We also should not
    eliminate the workforce that is there to do the job of
    protecting American consumers.
        Mr. Green. This is another example of how the President
    creates a problem and then decides that he will solve the
    problem with the solution that was already there. This is
    unbelievable that we would find ourselves now eviscerating the
    Consumer Financial Protection Bureau and saying that consumers
    need protection.
        I yield back.
        Chairman Meuser. The gentleman yields.
        The gentleman from Georgia, Mr. Loudermilk, is now
    recognized for 5 minutes.
        Mr. Loudermilk. Well, thank you, Mr. Chairman.
        Before I get on with my main line of questioning--Ms.
    Benda? No? Oh, Mr. Benda. I am sorry. Yes. My apologies. Ms.
    Sanchez-Adams suggested simply shifting losses from one party
    to another. What would this do in practice?
        Mr. Benda. I think we can see an example of that in the
    U.K. They have a reimbursement framework that she mentioned. If
    a consumer is fraudulently induced of transferring a payment,
    they are liable to reimburse, up to 85,000 pounds.
        So the hope was that this was going to greatly reduce the
    amount of scams and fraud out there, spur investment. What
    unfortunately has happened is that--banks had already heavily
    invested in anti-fraud and anti-scam protections; scam losses
    only went down by 1\1/2\ percent.
        The challenge that it would create for banks, though, here
    in the U.S. is, not only would it not necessarily reduce scam
    losses, but it would also put banks in the uncomfortable
    position of trying to tell American consumers how they can and
    cannot spend their money.
        We talk about sending--we do not want people to send money
    to someone they do not know and trust. By the time they are
    ready to make that payment, they believe they know and trust
    who they are talking to. We have countless stories where you
    can talk to a family member that could not convince someone not
    to send money and now you are going to have a bank teller that
    is going to be responsible for making that decision?
        We do not believe that Americans want banks telling them
    who they can and cannot send money to.
        Mr. Loudermilk. Okay.
        While I have you, Mr. Benda--I apologize--the Georgia
    Bankers Association brought something to our attention earlier
    this year. As the chairman of the full committee, Chairman
    Hill, brought up, we also in Georgia have had a big issue with
    check washing, especially through the post office--stealing of
    checks. I mean, hundreds of thousands of dollars have been
    fraudulently stolen that way.
        They brought up a scenario where the fraudster or the
    criminal would go to a nonlocal bank and, most likely using
    fraudulent identification, would open a bank account, and that
    would pass the know-your-customer standards. Then they would
    take these fraudulent checks and deposit those in that bank but
    instead of the Big Bank putting a hold on the check, they are
    paying those checks and clearing them.
        Is that a problem that you have been aware of? Is this
    something that would be an easy fix of requiring the banks to
    hold the checks?
        Mr. Benda. So check fraud is a very substantial problem
    that does not appear to be going away.
        We have a lot of challenges right now with fake IDs that
    are out there. If anyone has a college-age student, they know
    that it is relatively easy. AI is now allowing criminals to
    generate very realistic-looking statements from a utility
    company, from a telephone company.
        So banks are really struggling with, when the documents
    being used to open an account look completely legitimate and in
    many cases pass through certain verification procedures, they
    will open up those accounts. So what we train banks to do is
    look at the age of the account, look at the holistic nature of
    what is being done, what is the pattern of deposits.
        So banks would like more flexibility, quite frankly, on
    being able to hold those checks. Certain checks have certain
    timelines and when they have to release the funds, such as a
    Treasury check. So we would be very open to having a discussion
    of how we could increase those hold times appropriately when
    fraud is suspected and that is something our members would be
    very interested in.
        Mr. Loudermilk. Okay. Thank you for that.
        In your testimony, you mentioned that criminals effectively
    took advantage of the economic devastation during Coronavirus
    disease 2019 (COVID-19), especially the unprecedented
    government response to support small business and out-of-work
    Americans.
        How has the COVID-19 pandemic had a lasting effect on
    fraud?
        Mr. Benda. Well, and I think Mr. Bednowitz mentioned that
    the identity theft that is out there.
        Let me give you the example. We talked about that trust
    issue that the scammers built. If you get a phone call that
    comes in, it shows the number on the caller ID of your bank,
    and they say, ``Mr. Loudermilk, is this you? Do you live at
    this address? Is this the last four of your Social Security
    number? Can I talk to you about some potential suspicious
    transactions on your account?''
        The vast majority of Americans do not realize that all that
    information is out there, do not realize their phone number can
    be spoofed--that the bank phone number can be spoofed, and they
    are going to believe they are talking to their bank, and they
    are going to give up that information.
        That is the challenge that we face. We face a very
    sophisticated criminal adversary that is leveraging the loss of
    all that information and the technology available to them to
    steal from American consumers.
        Mr. Loudermilk. Has the pandemic actually helped create new
    criminal networks?
        Mr. Benda. I believe so. What we have seen is, the
    unemployment insurance fraud created that market for the
    personally identifiable information, but it also created a
    belief that this white-collar crime does not get enforced. So
    check fraud vastly increased after 2020; identity theft
    increased after 2020.
        These white-collar financial crimes have vastly gone up.
    Unfortunately, enforcement, due to lack of resources, simply
    has not kept up.
        Mr. Loudermilk. Okay.
        I see my time has expired, and I yield back.
        Chairman Meuser. The gentleman yields back.
        The gentlewoman from California, Ms. Waters, who is also
    the ranking member of the full committee, is now recognized for
    5 minutes.
        Ms. Waters. Thank you very much.
        Let me just start by saying, Donald Trump is the most
    profound--pro-fraud President in history. He dismantled the
    CFPB, rolled back protections, and dropped lawsuits against Big
    Banks and crypto scammers, making it easier to basically scam
    retirees, students, and working Americans.
        He is $7.7 billion richer and continues profiting off the
    Presidency at the expense of constituents. Under his watch,
    fraud targeting American consumers has soared, from meme-coin
    pump-and-dump schemes to insider trading linked to his own
    tariff announcements.
        Ms. Sanchez-Adams, earlier this year, Trump's CFPB, since
    he took it over, dropped a lawsuit that the agency previously
    filed against Zelle, Bank of America, JPMorganChase, and Wells
    Fargo, where they found hundreds of thousands of consumers lost
    nearly $1 billion through various payment fraud schemes.
        With enforcement cases like this being dropped by the Trump
    Administration, how will these harmed consumers get their money
    back?
        Ms. Sanchez-Adams. That is a great question. Thank you for
    that question.
        Unfortunately, right now, they are relying on their State
    regulators to pursue that enforcement. As I mentioned earlier,
    the New York AG filed suit against Zelle for the same actions,
    but that is only protecting New Yorkers, and the rest of the
    country also needs protection. You do not want to hear from
    your constituents, ``Why are not you doing anything? New York
    is doing something, but we are not doing anything.''
        So that would be one answer, is that we need more
    protection by the CFPB, more enforcement, instead of dropped
    suits.
        Ms. Waters. Well, let me just say that this hearing is a
    sham. Committee Republicans are defunding the very agencies
    designed to protect consumers and oversee the financial system.
        Just 2 months ago, Republicans voted to eliminate half of
    the CFPB's budget--you heard all that discussion this morning--
    all while rejecting every attempt by Democrats to rein in
    Trump's crypto fraud. Instead of protecting consumers,
    committee Republicans have chosen to enable scams and defend
    Trump's fraud-first agenda.
        What can we expect further from the CFPB that has now been
    reduced to practically nothing, with all of the layoffs and
    firings, et cetera, et cetera? What can we expect them to do?
    How much more harm can they rain on the American people?
        Ms. Sanchez-Adams. Thank you for that question.
        Unfortunately, taking steps to deregulate the industries
    that pose a threat and harm consumers is not the right step to
    take, and I hope that is not what continues. I hope that they
    do not bend to the pressures of industry to let them do what
    they want and continue to harm consumers.
        I hope that they do continue to enforce laws, and I hope
    that they continue to do supervision like they are supposed to
    do, instead of weakening their efforts to protect consumers.
        Ms. Waters. Would you agree that the way that they have
    defined this hearing, ``Fraud in Focus: Exposing Financial
    Threats to American Families,'' is misleading?
        Ms. Sanchez-Adams. I hope that we are taking steps to
    protect families against fraud and not just paying lip service.
        Ms. Waters. Having a hearing like this, where the opposite
    side of the aisle is talking about ``fraud in focus,'' again,
    ``exposing financial threats to American families,'' do you
    think that, based on some of the comments that I have made
    about the Consumer Financial Protection Bureau and others--I
    was one of the ones sitting on the conference committee of
    Dodd-Frank reform when we actually got some protection from
    consumers with the CFPB--do you think that I have at all
    missed, somehow, defining correctly what has happened to the
    CFPB?
        Ms. Sanchez-Adams. No. I think it is accurate that they are
    not doing the job that they were ordered by Congress to do;
    they are not currently protecting consumers against harm.
        Ms. Waters. Is there anything that you think they can say
    to deny anything that I have said?
        Ms. Sanchez-Adams. No. I just hope that Congress restores
    their funding and they hire their employees back so that they
    can get back to doing their job.
        Ms. Waters. Thank you very much.
        I yield back.
        Chairman Meuser. The gentlelady yields back.
        The gentleman from Tennessee, Mr. Ogles, is now recognized
    for 5 minutes.
        Mr. Ogles. Thank you, Mr. Chairman.
        Thank you to the witnesses for being here.
        Mr. Benda, the banking industry has reported that
    fraudulent ads purchased through Google and Meta are being used
    to impersonate legitimate financial institutions, tricking
    families into handing over sensitive credentials and wiring
    away their life savings, otherwise known as ``malvertising.''
        When banks flag these ads, what specific obstacles do you
    face enforcing Big Tech to remove them quickly and are these
    platforms effectively profiting while dragging their feet on
    takedowns?
        Mr. Benda. Thank you for the question.
        So I think that what we are seeing is significant levels of
    profiting from these ads. The best source we have is a Wall
    Street Journal article that said Meta earns $160 billion from
    ads. They estimated 70 percent of those ads were either illicit
    or poor goods or fraudulent ads.
        It can take 8 to 32 strikes to take down an ad and so you
    can imagine someone reporting something 25 times is not
    sufficient; it has to be 30.
        So, I would say, not all social media companies are the
    same. Google is an example, I think, of a company that is
    improving. They have a Priority Flagger program where they
    partner with financial institutions to report things. During
    the pilot, they took down ads with--they took down around 97
    percent of the ads that were reported within a very quick
    timeframe.
        We think that type of activity needs to be done across all
    social media platforms, whether voluntarily or mandated but we
    also think user-sponsored content, which the Google Priority
    platform does not account for, needs to have a way to be
    examined when they are portraying themselves as a financial
    services company and luring people into scams.
        Mr. Ogles. Just to clarify, you said Meta, $160 billion,
    roughly 70 percent was fraudulent?
        Mr. Benda. That is what The Wall Street Journal reported,
    sir.
        Mr. Ogles. Goodness.
        Ms. Griffin, the GAO has found that responsibility for
    countering scams is spread across 13 Federal agencies, with no
    real coordinated strategy.
        Given that malvertising on Google and Meta is now a common
    vector for fraud, should national anti-fraud strategy
    explicitly include requirements for these platforms to vet and
    verify financial advertisers before an ad ever goes live?
        Ms. Griffin. Thank you for that question.
        One of the things that was clear in the conversations we
    had among the task force members, which included the companies
    we are talking about today, is that there are very different
    business incentives and legal and regulatory requirements
    across these different sectors.
        We believe that there is an important step to take that
    outlines the private-sector expectations or responsibilities
    that companies have for scam prevention and combine that with
    Good Samaritan legal safe harbors when firms act in good faith
    to prevent scams.
        Doing so, I think, would go a long way toward creating a
    better playing field for all of these different sectors at the
    table.
        Mr. Ogles. Mr. Bednowitz, your company specializes in
    monitoring and protecting consumers against identity theft.
    From your vantage point, how often do victims first encounter
    fraud by clicking a fraudulent search and/or social media
    promotion?
        Given the sophistication of AI-generated scams, do you
    believe that Google and Meta's so-called consumer education
    efforts are keeping pace with the real threat, or are they
    leaving Americans to fend for themselves?
        Mr. Bednowitz. Yes. Thank you for the question, and it is a
    very good one.
        I am looking at data here. From our own protection, we see
    that 63 percent of scam-related threats were observed on
    Facebook, 22 percent on YouTube and criminals are using AI-
    generated personas and deepfakes to make these scams appear
    legitimate, like what we are talking about here.
        There is also another vector of threat from the social
    media companies by them encouraging people that it is in their
    best interest for people to have their information publicly and
    people do not realize that they hide privacy controls. The more
    information that is out there, the easier that criminals can
    take advantage of that and use that with AI to put together
    sophisticated profiles that allow them to target people in the
    most personalized ways possible.
        Mr. Ogles. Well, I want to caution, you know, when you are
    a hammer--i.e., the Federal Government--everything looks like a
    nail. The last thing I want is more government, which is why I
    supported gutting the CFPB. In fact, in a hearing, I said, ``To
    be or not to be,'' and I said the one agency that deserves to
    die the most painful death is, in fact, the CFPB because of the
    regulatory restraints they were putting on small banks.
        That being said, when you look at this issue, the crisis at
    hand, especially the seniors but in general the scams and the
    loss of funds, Mr. Benda, what can we do--and we have 28
    seconds--what can we do to fix this?
        Mr. Benda. I think one of the things that is critical is to
    have a takedown process. We recognize these ads are up there.
    When someone is being impersonated, say, your local banker, and
    it is scamming people into crypto schemes that need to be taken
    down and need to be taken down quickly. At a minimum----
        Mr. Ogles. Mr. Bednowitz, you will get the last word.
        Mr. Bednowitz. I agree with what Mr. Benda is saying. There
    needs to be vetting of the advertisers on the platform and then
    also pressure to make privacy controls more transparent to the
    consumer.
        Mr. Ogles. Thank you, Mr. Chairman.
        Thank you to the witnesses. You all have a great day.
        Chairman Meuser. The gentleman yields back.
        The gentleman from Louisiana, Mr. Fields, is now recognized
    for 5 minutes.
        Mr. Fields. Thank you, Mr. Chairman.
        Thank you, Acting Ranking Member.
        Let me thank all the guests who are here today as well.
        In Louisiana, we have been faced with a different type of
    fraud. We have had--and it is not just the elderly; it is all
    ages--where a person or group of people will send a text
    message. The most recent was a text message reportedly from the
    DMV saying you have to pay a fine, a ticket that happened
    whenever ago, or you will lose your driving privileges, and
    they give them a certain time.
        I have the email here. Actually, they sent it by text, but
    it is from an email and the attorney general, obviously, went
    to work to try to find out the origin of this bad email but
    there were just good people, young, old, all races of life, all
    walks of life, and many of them were responding.
        What can we do to figure out where the emails come from? Do
    we have a system in place to do that? That is for all of you.
        Because it is hitting our State hard, and it is just
    paining to hear constituents call and say, ``Should I pay this
    ticket? I do not remember it, but should I pay it?'' and then
    you say, ``It is a scam,'' you know?
        What can we do?
        Ms. Sanchez-Adams. I am happy to take that question,
    because I have gotten the same text message over and over
    again.
        So part of it is, as we put in our paper, in our written
    testimony, we have recommendations that tell communication
    companies what they should do to prevent those types of text
    messages from hitting consumers. They should do the same thing
    that banks do of knowing your customer. They should do the
    exact same thing.
        As I mentioned, they know when they are trafficking
    fraudulent activity; they just do not have the incentive to
    stop that, which is why we think the FCC and Congress should
    act to require higher and stiffer penalties. I know that is
    outside of this committee.
        I think we should not wait for them to act; this committee
    can also act. Part of that is my recommendation that consumers
    are also made whole and that they are reimbursed for
    fraudulently induced payments.
        We need to have everybody acting to protect consumers.
        Mr. Fields. Good.
        Ms. Griffin. I would like to add to that. Thank you for the
    question. Certainly, that particular text message is one we are
    all familiar with.
        We spend a lot of time in our task force really talking
    about the interface between the private sector and law
    enforcement and their ability to share information with one
    another about things like this that would create better
    information for law enforcement to act and better information
    across the private sector so that, for example, if someone
    acting on that text message directed their financial
    institution to send a payment, the financial institution might
    have information that helps to disrupt or stop that payment.
        There are not clear, easy protocols right now for law
    enforcement and the private sector to be sharing that data. It
    is a critical element that we will be talking about more in the
    forthcoming report. Often, in fact, those things are done
    manually. We heard tales of stacks and stacks of PDF files,
    with hundreds of pages of raw data and knowing what we know
    about the ways that we have technologically to be able to share
    that data, it is an issue that I think we can make some real
    progress on to be able to strengthen everyone's ability to act.
        Mr. Fields. Thank you.
        Mr. Bednowitz. Thank you for the question.
        I would say, there are two ways that we can address this,
    and I look at this from the consumer angle.
        One is awareness, and I come back to this a lot. If people
    have vigilance--we have to tell people that they can no longer
    trust communications coming from SMS, email, or phone. Anything
    that comes, they need to go and verify that. They need to stop,
    breathe, verify.
        The other thing that I would say is, there are solutions in
    the private sector that can help, that can scan people's
    emails, texts, and block their phone calls so that these
    things--they get warnings or they get blocked before it ever
    reaches them.
        There are interfaces that have AI to be able to battle AI,
    that they can take these communications, put them in, that are
    trained on millions and millions of scam emails, to say, hey,
    is this a scam or not? So they also need that level of
    protection. In a world where the scammers have AI, we need
    consumers to have AI to defend them as well.
        Mr. Fields. I am out of time, but I would love to hear your
    response.
        Thank you, I will yield back the balance.
        Chairman Meuser. The gentleman yields back.
        The gentleman from Florida, Mr. Haridopolos, is now
    recognized for 5 minutes.
        Mr. Haridopolos. Thank you, Mr. Chairman.
        I first want to express my gratitude to our sheriff back at
    home, Sheriff Wayne Ivey. He has been very aggressive in
    getting out the information. As I think everyone in the room
    knows, this is all about prevention, because the odds of
    catching these characters are very, very low. It is great to
    see law enforcement leaders like my sheriff, Sheriff Ivey,
    getting out there, using social media for a positive, and
    making sure that people recognize these scams, as each of you
    are talking about, so that we do not even have these problems
    to deal with in the first place, because people are aware and I
    think they are making smarter decisions.
        I actually talked to one of my friends today, talking about
    a financial issue. He said, ``Can you please give me a call? I
    want to make sure it is you asking me this question.'' I think
    that this is a lot of the things that we are going through in
    this real-life world. So I really applaud the locals getting
    into that.
        Ms. Griffin, I would like to ask you first question. I
    would like to focus on your work with the National Task Force
    on Fraud and Scam Prevention, which I understand is a working
    group with law enforcement.
        How do Federal, State, and local groups work together so we
    do not have these different silos, but they actually work in
    concert, so we are not wasting resources and getting this broad
    message across?
        Ms. Griffin. Absolutely. Thank you very much for the
    question. I just have nothing but praise for the dedication and
    passion of law enforcement agents working on this issue across
    local, State, and Federal agencies.
        We heard multiple instances of local task forces where
    that, sort of, multiplicity of agencies were working together
    in a local community both to try to deconflict cases and to try
    to raise awareness in those communities but I cannot stress
    enough how often we also heard that this was a side-of-the-desk
    activity, that this was happening in off-hours through the
    passion and dedication of those agents and not because anti-
    scam efforts were a dedicated priority of the agencies in
    question.
        We also heard that there is a greater need for more
    training of local law enforcement agents on how to work with
    scam victims, so that when a victim does come forward to local
    law enforcement, which is rare, they are treating that victim
    in a way that, A, shows compassion, but, B, is able to elicit
    the information that we need in order to go after those
    criminals.
        Mr. Haridopolos. Well, thank you.
        I will build on the question. I know--just recently, I
    spoke about it with my other sheriff down in Indian River
    County, Sheriff Flowers. Almost daily, he has people coming in
    saying, ``I thought this person was this person versus that
    person,'' and tens of thousands of dollars. This is not a small
    scam. This is a serious number, at least in the communities
    that we are living in.
        So how do those local sheriffs share information, Ms.
    Griffin, across the jurisdiction so that one can quickly get
    the scam out there?
        I know, whenever I get the oddball text, I will often go to
    one of my search engines and say, is this number real, is this
    real?
        How do we make sure that, once we see a small activity--
    maybe others can chime in on this as well--that we quickly get
    the information, so we stop that scam in its tracks and people
    are alert enough to say, is this real or not?
        Ms. Griffin. Yes. No, it is a great question. There are
    multiple resources available for consumers, but the fact that
    there are multiple resources available for consumers then makes
    it also sort of a noisy environment. Where do consumers turn to
    is a real question, I think, that we need to solve for.
        There are also not always easy ways for law enforcement to
    know what to do in that scenario. We talked earlier today about
    how the criminals who are perpetrating these crimes are often
    representatives of foreign criminal enterprises, and so the
    jurisdiction of local law enforcement is quite limited in that
    case. So their ability to then liaise effectively with Federal
    agents who can take action is something that we need to create
    more strategic and streamlined pathways for them to do so.
        Mr. Haridopolos. Well, thanks, Ms. Griffin.
        I will just close with this, Mr. Chairman. I really applaud
    my local sheriffs, Sheriff Ivey and Sheriff Flowers. They are
    really aggressive getting out there in their local community,
    and I am glad that we are raising this awareness. That is
    probably the biggest weapon we have.
        As you mentioned, Ms. Griffin, so many of these criminal
    syndicates are not within the borders of the United States, and
    the likelihood of recovering these dollars is very, very slim,
    given the realities of these crimes.
        I think--I know that some folks have talked about the CFPB
    getting involved in this issue. This is a front-end issue. This
    is not a back-end issue. The likelihood of us, kind of, coming
    through with some government agency to recover these are
    probably pretty slim but I hope that we can use the coordinated
    efforts for the future so that, when one scam happens, we can
    use the power of the internet in positive ways so that people
    realize, if you see this number, beware.
        These are just the challenges of the day. It is
    frustrating. We have so many great innovations coming with
    social media, but these are clearly one of the detractions from
    it.
        So, with that, Mr. Chairman, thank you for highlighting
    this issue. It is a huge issue, unfortunately, in our district
    and the fact that you are bringing this to people's attention
    will probably save a lot of folks a lot of money.
        Thank you.
        Chairman Meuser. The gentleman's remarks are appreciated.
    The gentleman yields.
        The gentlewoman from Georgia, Ms. Williams, is now
    recognized for 5 minutes.
        Ms. Williams of Georgia. Thank you, Mr. Chairman.
        Thank you to all of our witnesses today for your testimony
    and being here.
        I appreciate my Republican colleagues for focusing on this
    hearing and exposing financial threats and potential solutions
    to fight off fraudsters in this space. Y'all, I do need to
    point out that we had an independent watchdog that helped to
    protect consumers and deliver dollars back to constituents, and
    it was the Consumer Financial Protection Bureau, but my
    Republican colleagues decided in the billionaire bailout bill
    to reduce funding for the CFPB, leaving opportunities for
    fraudsters to flourish.
        Since Acting Director Vought's takeover of the CFPB,
    ongoing cases to hold financial institutions accountable for
    deceptive practices have been dropped. Many of the rules that
    were either proposed or implemented by former Director Chopra
    have been dropped as well, all of which were aimed at helping
    consumers find relief and the most baffling: It is mid-
    September, y'all, and we still have no clue when the Acting
    Director is going to testify in front of the full committee.
    Perhaps I missed the memo, but what we are focused on today
    is--or, my focus today is on the consumer. The billionaire
    bailout budget opened the door for scammers, a poisoned CFPB,
    and pivoting from the previous administration's rulemakings
    that put consumers over schemers.
        Y'all, the schemers are real. I just heard this week a news
    report down in Columbus, Georgia, where the local sheriff's
    office, working with the FBI, was at point-of-sale transactions
    at Target, Walmart, gas stations, pulling the skimmers from the
    machines, because people's cards were being cloned and
    purchases being made all over the country.
        Then, of course, we are all too familiar with, like my
    colleague from Louisiana stated, those text messages, where
    even my 10-year-old son, Carter, is like, ``Mommy, I do not
    drive a car. What do they mean, they are going to take my
    driver's license if I do not pay?'' This is rampant across the
    board but because of these reductions at the CFPB and all of
    the changes, I am going to use this time to remind the American
    people how this administration is prioritizing scammers and
    fraudsters and hurting our constituents.
        Ms. Carla Sanchez-Adams, last December, the CFPB announced
    at the time that they were distributing $1.8 billion--with a
    ``B,'' billion dollars--to 4.3 million consumers, including
    $103 million delivered to Georgia, for consumers that were
    harmed by a group of predatory credit-repair companies. That is
    real money. This was the largest-ever distribution from the
    Bureau's victim relief fund in history, and I applaud the
    Bureau for acting against these scams, but I think we know that
    there are still widespread financial scams like this that are
    still ripping off American consumers.
        Ms. Sanchez-Adams, have you heard of this type of financial
    scheme and is this the type of scam impacting customers that
    you work with?
        Ms. Sanchez-Adams. Yes. So ``credit-repair'' organizations,
    quote/unquote, do charge consumers to help them fix their
    credit. Often, they actually charge and collect that money
    before actually doing anything to help address some of the
    credit issues, or they make false promises that they can do
    something that they cannot actually do. It is indeed a big
    problem, and I agree with that.
        I also just want to take this moment to respond to
    something that was said, that, like, fraud and scams is a
    front-end issue and not a back-end issue. I take issue with
    that, because fraud encompasses both scams and also
    unauthorized use. I hear so many cases where consumers are
    being impacted by unauthorized use, meaning someone takes over
    their account, someone initiates a transaction without them
    knowing about it, and yet their banks are not making them
    whole, even though under the law they are supposed to not just
    banks, but P2P apps, which is what the Zelle lawsuit and the
    Cash App lawsuit were about.
        That is supervision. That is the Bureau stepping in and
    saying, ``Hey, you guys are not complying with the law. You are
    supposed to be protecting consumers.''
        So I just wanted to clear that up.
        Ms. Williams of Georgia. Thank you for that.
        Building upon that and the conversation around the
    predatory practices around cleaning up your credit reports, do
    you think there is an opportunity for Congress to crack down on
    these scams and better protect consumers who are trying to get
    their financial lives back on track and just trying to live in
    this economy?
        Ms. Sanchez-Adams. Yes.
        Ms. Williams of Georgia. Ms. Sanchez, I ask because, as
    someone who spent years paying off my student loans--they are
    done, y'all. I owe zero student loans.
        My husband, that is another story, Chairman Meuser. We are
    still working on his, but I spent years paying off my student
    loans. I understand how important it is to understand debt and
    building creditworthiness. It is still an important issue, to
    fight off predatory actors in the credit repair space.
        I remember, during my first term in Congress, when we were
    in the majority, then-Chairwoman Waters would hold hearings and
    testimony from the CEOs of the largest banks. We have not had
    that in a while, so I hope that is coming.
        I see that I am coming up on time, so, Mr. Chairman, I want
    to leave this last question on the record to get a written
    response.
        What do you say to consumers who the banking industry has
    failed and who have relied on the CFPB as the final course of
    action when all else has failed them?
        I would love to get that on the record in writing.

        [The information referred to can be found in the appendix
    on page 190.]

        Ms. Williams of Georgia. Thank you, and I yield back.
        Chairman Meuser. Okay. The gentlelady yields.
        The gentleman from North Carolina, Mr. Moore, is now
    recognized for 5 minutes.
        Mr. Moore. Thank you, Mr. Chairman.
        Financial fraud is touching every corner of our society,
    and no demographic is immune. This is not a Republican issue, a
    Democratic issue. This is an issue that impacts everyone.
        From sophisticated AI-driven scams to check washing, you
    name it, criminals are stealing billions from seniors,
    veterans, working families, really anybody. I know of stories
    where these crimes have drained retirement accounts, wiped out
    savings, and really, if not put in check in some way, erode our
    financial system.
        Ms. Griffin, what I would just ask you is: From your
    experience, who would you say, who is most at risk of fraud
    today: seniors, young people, small business, and then, are you
    seeing any particular types of scams being targeted at any of
    these groups?
        Ms. Griffin. Yes. No. It is such an important question,
    because, really interestingly, in the survey data that we have
    been analyzing, there are no discernable demographic
    differences among the victims.
        Mr. Moore. Huh.
        Ms. Griffin. It is perhaps one of the only social problems
    we have in America with that characteristic. Young and old,
    urban and rural, different geographies, different races,
    different incomes--everyone is at equal risk of being impacted
    by this issue.
        I would say, the only other discernable difference is that
    older Americans lose more money, and I think that is largely a
    result of them having had more time in their lives to
    accumulate more money to steal.
        Mr. Moore. The scope of this problem is really staggering.
    In 2024 alone, the FTC reported that 2.6 million consumers
    reported being victims of fraud, with a combined loss of a
    staggering $12.5 billion. As our witnesses have testified
    before, we expect the true monetary impact of fraud to be much
    higher because of non-reporting, et cetera.
        Mr. Benda, community banks and credit unions, I know, are
    devoting enormous resources in fighting fraud, but the threat
    is larger than any single industry can possibly tackle on its
    own. Can you describe the scale of fraud that your members are
    seeing?
        Mr. Benda. Thank you for the question.
        It is really hard to describe because, as you said, we do
    not have accurate numbers. We have numbers that are all over
    the place.
        The one thing we can look at is the trend lines. So both
    the FBI claimed a 33-percent increase in fraud from 2023 to
    2024, and FTC showed a 25-percent increase from 2023 to 2024.
    So fraud is going up 25 to 30 percent every year, in terms of
    what we are seeing.
        From our members' perspective, we have spent an inordinate
    amount of time on check fraud, and we have seen that the
    suspicious activity reports (SARs) being reported on check
    fraud have tripled, frankly, in the past 4 or 5 years, and that
    number is not going down.
        Then we continue to see the rise of scams trying to
    convince consumers to send money out and that is simply going
    to continue to increase.
        Mr. Moore. Right.
        Well, let me ask you this. How have the banking regulators
    been engaged in helping financial institutions fight scams and
    fraud? As a secondary, have there been any regulatory or
    interagency fragmentation that has made it harder to respond?
        Mr. Benda. The regulators have not--I will focus on the
    scam issue. The regulators have not really focused on the scam
    issue, because it is--I think it is more focused on the front-
    end thing, which is a consumer being induced to commit some
    type of act.
        So what we would like to see them focus on is ways that we
    can better share information. We really want to focus on
    preventing the fraud from happening in the first place and that
    requires sharing information that we receive from suspicious
    activity reports, sharing information from law enforcement, and
    allowing banks and other financial institutions to share
    information about bad accounts being used in real-time so those
    accounts cannot be used to commit fraud.
        Mr. Moore. With respect to this, I mean, would you say that
    the scams are just--I mean, this is probably a rhetorical
    question. They are becoming more sophisticated, though, these
    scams are.
        Mr. Benda. They are. They are. They are using the data that
    they have stolen. They are using AI to fabricate documents.
    They are using AI to deepfake voices. They are using AI to
    commit fraud at scale. It is no longer a simple thing, to spot
    a phishing email; it is very challenging.
        Mr. Moore. You mentioned AI. That brings me to Mr.
    Bednowitz.
        I will ask you a question. We know AI is a double-edged
    sword. Criminals are using it, of course, to create more
    convincing scams, but my understanding is that companies are
    also deploying it to detect fraud.
        How effectively is AI being used in protecting consumers
    today, and what gaps still remain?
        Mr. Bednowitz. Yes. Thank you for the question.
        AI is definitely a double-edged sword, and we utilize it in
    our tools to scan millions of data points to detect fraud in
    real-time, to detect deepfakes, prevent scams from ever
    reaching consumers via their email, phone, or text. We are not
    alone. The private sector is innovating very heavily with AI to
    combat these scams and these fraudsters.
        The gaps that I keep coming back to are just awareness on
    the side of consumers to be able to adopt these types of
    protections and to also be aware to breathe and stop, to know
    that they need to check, that they should not just respond to
    any email, phone, or text, that they cannot--they have to be
    vigilant, they unfortunately cannot trust their communications
    today.
        Mr. Moore. Right.
        I know I am out of time, Mr. Chairman. I just will point
    out, now criminals can actually use artificial intelligence to
    mimic a loved one's voice. I mean, someone gets a call, and
    they think they are actually getting a call from a family
    member or whatnot, saying that they need this or need that.
        It is scary, how it is out there and so I appreciate the
    effort that the industry is making on this.
        With that, Mr. Chairman, I yield back.
        Chairman Meuser. The gentleman yields back.
        The gentlewoman from Michigan, Ms. Tlaib, is now recognized
    for 5 minutes.
        Ms. Tlaib. Thank you so much, Chairman.
        We are talking about all of this, and all I keep thinking
    about is how paralyzed the CFPB is right now. I mean, this is
    where the 911 for consumer fraud is.
        I mean, romance fraud is up. I have this huge fraud right
    now--you have to check this out, Chairman--where they say,
    ``Oh, you did not respond to the jury response''--did you hear
    about this one?--``to jury duty, and a warrant is out for your
    arrest.'' They get these calls, and I had one constituent lose
    $11,000 on that one. They are getting so sophisticated,
    because, you are right, they even have a website with dot-org,
    like, so--not dot-gov, but dot-org, like, so it looks real. It
    almost looks exactly like--and the number that they call them
    from is the same county number.
        All of that to say, CFPB was doing an incredible job, and
    it is being paralyzed right now. Why? Because it goes after
    banks that cover up the scams, let us be honest. Let us be
    frank here. Everybody keeps thinking about that, but think
    about it. I do not know why they do not want to, like, help and
    aid in regard to this.
        I mean, to see them in March, CFPB, under the current
    administration, dropped the case against digital payment app--
    what was it--Zelle, a joint venture between Wells Fargo, Chase,
    Bank of America, delivering a de facto pardon to the company
    for failing to protect its users from fraud. We are almost
    giving them, like, ``Hey, well, that is not our fault. We
    cannot--oh well.''
        I mean, that does not make any--there should be a sense of
    responsibility on the consumer to be protected if these Big
    Banks are, again, having their consumers, use their service. It
    does not make any sense to me.
        One of the things--and this is to all the witnesses. If
    banks fail to fulfill their obligations under the Electronic
    Funds Transfer Act--some protections in there requiring them to
    investigate customer complaints of fraud. If those banks
    willfully ignore hundreds of millions of dollars in consumer
    losses, would you agree that at that moment, they are not going
    to be held accountable and they are not going to even actually
    proceed unless we force them to?
        I feel like people think they are just going to do the
    right thing and I am like, ``No. CFPB made them do it.''
        What I continue to see--I do not care if it is the loan
    services for the student loans; I do not care if it was the
    folks targeting the veterans--and some of this stuff never gets
    headlines. It never gets in the headlines.
        I would love to hear from all of you. I mean, you saw this
    case get dropped and be honest, I think my time--be honest. Do
    you think them dropping that case exposed a lot of our
    consumers right now?
        Ms. Sanchez-Adams. So I will jump in really quick.
        Ms. Tlaib. Yes.
        Ms. Sanchez-Adams. So the EFTA--one of the brilliant things
    about that statute is that it actually has a private
    enforcement----
        Ms. Tlaib. She is talking about, for my residents,
    Electronic Funds Transfer Act.
        Ms. Sanchez-Adams. Sorry.
        Ms. Tlaib. I just want them to know. When they see that,
    they do not know that there are protections in there.
        Ms. Sanchez-Adams. Right.
        Ms. Tlaib. They just think it is something to do with
    transfer of money.
        Ms. Sanchez-Adams. So it does have private enforcement with
    really strong remedies if it is violated, including punitive
    damages and treble damages.
        However, not everybody can afford a lawyer.
        Ms. Tlaib. That is right.
        Ms. Sanchez-Adams. One of the brilliant things about the
    CFPB is it acted on behalf of all of those who cannot afford--
    --
        Ms. Tlaib. I have said that to people.
        Ms. Sanchez-Adams.--a lawyer.
        Ms. Tlaib. ``Oh, the elder law clinic cannot take the
    case''--I am serious, Chairman. ``They did not take the case;
    they cannot do any-''--I send them to CFPB and sometimes CFPB
    just calls or sends the letter, an inquiry; gets it fixed like
    that.
        Ms. Sanchez-Adams. Yes. I----
        Ms. Tlaib. I have seen it happen.
        Ms. Sanchez-Adams. I also just want to respond to something
    that one of the witnesses talked about, which is about private
    entities that are able to help protect consumers.
        Ms. Tlaib. Yes.
        Ms. Sanchez-Adams. Now, that is all well and good, and I
    love that but there are low-income consumers who cannot afford
    those services.
        Ms. Tlaib. Right.
        Ms. Sanchez-Adams. That is the importance of government
    agencies----
        Ms. Tlaib. I mean, what do you all think, other than, I
    mean, Ms. Carla here, what do you all think about them dropping
    the case? You think that was a great idea?
        We are talking about $870 million in losses to the public.
    This is 1 of 22 enforcement actions, by the way.
        Do not be afraid. Was this a good action on behalf of CFPB,
    to drop that case?
        Paul?
        Mr. Benda. I am sorry, Congresswoman. I am not familiar
    with the case. I cannot speak to that.
        Ms. Tlaib. Okay.
        How about you, Ian?
        So it is okay; they are just not going to enforce the
    Electronic Funds Transfer Act.
        Go ahead, Ian.
        Mr. Bednowitz. No, I appreciate the question. I am also----
        Ms. Tlaib. Okay.
        Mr. Bednowitz [continuing]. unfamiliar with----
        Ms. Tlaib. All right.
        Mr. Bednowitz [continuing]. the case.
        Ms. Tlaib. Kate, you are familiar. You know that CFPB just
    dropped an $870 million case against these folks. I mean, Zelle
    is participating with these banks, and they are letting it
    happen and pretty much, they are like, ``Sorry. You lost that
    money. We cannot do anything about it.''
        Ms. Griffin. Thank you for the question.
        One of the things that we talked about a lot in the task
    force that we have been organizing is the ability, in this
    example of the text messages, for the banks to get information
    from the telecommunications companies about that interaction--
    --
        Ms. Tlaib. That is right.
        Ms. Griffin [continuing]. so that they know whether that
    case is fraudulent.
        Ms. Tlaib. Why do they not just want to----
        Ms. Griffin. There are a lot of actions----
        Ms. Tlaib. I do not understand why they do not want to
    help.
        Ms. Griffin. Well, I think the issue we will come out with
    in this report is how we can help all of those institutions to
    better share information so that they can take more
    preventative action.
        Ms. Tlaib. Yes. Thank you.
        I yield.
        Chairman Meuser. The gentlelady yields.
        The gentleman from Oklahoma, Mr. Lucas, is now recognized
    for 5 minutes.
        Mr. Lucas. Thank you, Mr. Chairman.
        Thank you to our witnesses for being here today.
        Of course, it goes almost without saying, this hearing
    could not be more relevant to our world today. One of the most
    pressing topics I hear from credit providers in my district is
    the growing prevalence of fraud and financial threats to our
    families and institutions.
        According to CFTC, in my home State of Oklahoma, over $75
    million was lost last year in fraud attacks but we know these
    crimes are severely under-reported and the actual number is
    most likely dramatically higher.
        So let us focus, again, on the core stuff here. All of our
    Federal agencies must prioritize the effective prevention tools
    and work together to find and punish bad actors.
        So, Mr. Bednowitz, how has your company had success--let us
    talk about some success here--in fighting bad actors and what
    are the lessons the Federal agencies could learn from private-
    sector experiences?
        Mr. Bednowitz. Yes, absolutely and thank you----
        Mr. Lucas. You have been in the trenches. Tell us about it.
        Mr. Bednowitz. Yes. Thank you for the question.
        We protect over 500 million consumers globally from these
    types of threats, and we do it through a variety of technology
    solutions that the private sector offers.
        I want to say a few things to address the comment earlier.
    Just because it is private sector does not mean that it has to
    be something that people cannot afford. There are partnerships,
    from peers in the industry, between banks and those credit
    bureaus, that offer free solutions for people to be able to
    protect themselves. There is the Identity Theft Resource Center
    that helps people when they have problems, in addition to the
    paid solutions that are out there but the success is really
    based on having comprehensive protection of your devices
    through security, having identity-theft protection. Scam
    protection is coming out and then there is restoration and
    remediation and some of these providers, including us, provide
    support every step of the way when someone falls victim, as
    well as the insurance to help reimburse them for those losses
    that they have.
        So there are solutions out there.
        We have many stories of people--one story comes to mind of
    an elder gentleman who, as we talk about these bitcoin ATMs, he
    was tricked into--that money, $9,000 had come into his
    account--into giving $9,000 into one of those ATMs, but because
    he was covered by our insurance, we were able to reimburse him
    for that loss.
        Mr. Lucas. Mr. Benda, could you comment on this as well?
        Mr. Benda. Absolutely, Congressman.
        So I think what we are seeing is, banks are making some
    success at trying to combat these scams and fraud, sharing
    information where they can, but I think the focus really needs
    to be here on the prevention side of things.
        I think we need better sharing from the telecoms in terms
    of the text messages that are being out there. I think we need
    better enforcement from the FCC to shut down those telecoms
    that are sending those bad text messages, but I think there has
    to just be better information-sharing across the ecosystem. You
    can share across financial institutions without fear of
    liability, but social media, telecoms, and others cannot
    necessarily share that same level of information.
        We know that banks file 6,000 SARs a day--suspicious
    activity reports--a day focused on fraud, but that information
    never comes back to financial institutions in a manner they can
    use to prevent that fraud from occurring.
        Mr. Lucas. Continuing with that, Mr. Benda, we have heard a
    lot about those gaps in the data collection from Federal
    agencies on the financial fraud.
        Can you talk about the need for and expand more on this
    cross-agency collaboration and whole-of-government approach? I
    mean, why are the information silos ineffective? You touched on
    that. Just in a moment, would you----
        Mr. Benda. I did.
        Mr. Lucas [continuing]. expand on that?
        Mr. Benda. Thank you.
        I think that is the critical need.
        The question you have to ask yourself is--we hear many
    times, let us say a small bank gets--their local area gets
    blanketed with these fake fraud alerts. You hear about this.
    They send these thousands of messages out, and then they
    overwhelm--one of our small banks got 600 calls a day. We know
    crimes are being committed at that exact moment. There is no
    911. There is nowhere to call to say, how do I stop these text
    messages, how do I stop this crime from occurring?
        We need to have a centralized strategy. Other countries--
    like, Australia has developed a national anti-scam center, has
    a national strategy in place. They have seen a reduction in
    scam losses of 25 percent. We need that type of centralized
    approach to build capabilities.
        Mr. Lucas. In the few seconds I have left, Ms. Griffin, how
    can we make sure the Federal Government and its private
    industry partners stay competitive against bad actors? How do
    we adapt to emerging threats? This is moving quickly every
    moment, it sounds like.
        Ms. Griffin. Yes. Thank you for the question.
        I just want to underscore what Paul is talking about here
    in terms of the importance and the urgency of a coordinated
    national strategy that leverages the best of what America has
    to offer. The innovation, the ability to coordinate are all
    paramount. We need to create better clarity of expectations of
    the private sector for their role in helping to prevent scams.
        Mr. Lucas. Thank you very much.
        I yield back, Mr. Chairman.
        Chairman Meuser. The gentleman yields back.
        The gentleman from Illinois, Mr. Foster, is now recognized
    for 5 minutes.
        Mr. Foster. Thank you, Mr. Chairman, and to our witnesses.
        I probably stayed up later than I should have last night
    reading Mr. Benda's excellent testimony. The thing that struck
    me over and over, reading that, is that identity fraud was at
    the core of every single one of the frauds, the long list of
    frauds, whether it is the text message that starts a long
    romance scam or whatever it is.
        The point to stop this is at the beginning, and the tool at
    hand is to provide people with a means of proving they are who
    they say they are in an online environment.
        Because of inaction by the Federal Government, States are
    doing this. They are standing up for what is called the Mobile
    ID, the digital driver's license. This is simply connecting
    your Real ID-compliant driver's license issued by the State,
    which is a pretty unique identity that cannot be--it is very
    difficult to get many fraudulent copies of the Real ID. We have
    done a pretty good job, federally, on that but then what you do
    is, you associate that with your cell phone, take advantage of
    the fact that a modern cell phone is like a security dongle; it
    has a unique, secret ID in there. It is a unique device in the
    world and when it gets associated with a Real ID, that allows
    you to prove you are who you say you are in a legally traceable
    method online.
        Certainly, every time you open a bank account, that has to
    be an option to people. Because if you talk about the check
    washing fraud that we are talking about, they say, Okay, you
    transfer that to a fraudulently opened bank account. Well,
    guess what. If you are in other countries--just pick your
    country--say, Korea, if you want to open a bank account, you
    get out your cell phone and you prove you are who you say you
    are, and you can open the account like that, because that has
    been compared against a list of bad actors. You are a single
    legally traceable person with responsibility for that account.
        It does not happen in countries that have done this and the
    U.S. is falling behind on this. Countries around the world
    understand that you need to be able to prove you are who you
    say you are.
        We can do everything that we want with trying to identify
    patterns of fraud and all of the deepfake impersonations, but
    the bad guys are getting sophisticated too fast for that. The
    other side of the coin that they will never be able to beat is
    when you have a cryptographic assurance of being able to prove
    you are who you say you are.
        The tool at hand is the Mobile ID that is being rolled out
    by many--digital driver's license--rolled out by many States
    and this is the real answer to this.
        I think that we have to use this for Federal Government
    purposes. We have gotten very close, for Federal Government
    purposes, to having motion in both the House and the Senate,
    never in the same session but the time has passed for that.
        I think that if industry had access to a simple, efficient
    way for people to prove they are who they say they are, there
    would be a huge adoption immediately and a dramatic drop in
    fraud.
        So does anyone--that whole little spiel I just gave, are
    there any details you think need to be corrected on that? Or do
    you all agree that is a----
        Mr. Benda. Congressman, if I could jump in there, I would
    like to thank you for your leadership in this mobile identity
    space. You have done a great job of pushing that issue forward,
    so I want to personally thank you for that.
        We partner with the Better Identity Coalition. We recognize
    the value of mobile digital driver's license. We partnered with
    them to send a letter to the FDIC asking them to make sure that
    their examiners are aware that we can use those.
        We think it is a critical need, to have a reservoir of
    truth, to be able to go back to those DMVs. Not every State
    participates in the DMV validation piece. Having mobile
    driver's license, digital authentication, we think it is
    critical. We are happy to partner with you going forward on
    that effort to do anything we can to spur adoption of that.
        Mr. Foster. Yes. It will be just a tremendous
    simplification.
        One of the big things we were struggling with during COVID,
    it was costing, like, $400 to onboard an unbanked person for a
    bank and that was a huge barrier to getting COVID relief to
    people that needed it the most.
        It did not happen in countries where you say, ``Okay, you
    want your COVID relief check? Get out your cell phone, smile at
    it, do your biometric login, have that cell phone prove you are
    who you say you are and authenticate to a bank account,'' and,
    boom, there is your COVID relief check.
        It is just--it was heartbreaking to see the delays there
    and the amount of fraud. Hundreds of billions of dollars of
    taxpayer money stolen by fraudsters because we do not have a
    decent way to prove you are who you say you are.
        Anyway. So I sense there is some motion, some bipartisan
    motion, to get this to happen, because the level of fraud is
    just out of control.
        Ms. Sanchez-Adams. I just want to say, until legislation
    like that is passed, that is why we need to enforce Bank
    Secrecy Act regulations and do supervision to ensure that
    fraudulent accounts are not being opened and money is not being
    laundered that way.
        Mr. Foster. Yes.
        I echo everything that was said by my colleagues about the
    tragedy of what has been done to the CFPB and the anti-fraud
    mission of the CFPB is a small part of what--the damage that
    was done there.
        So I just want to thank you all and look forward to
    actually building some momentum on this.
        I yield back.
        Mr. Steil [presiding]. The gentleman yields back.
        I now recognize myself for 5 minutes to ask questions.
        I appreciate you all being here on a really important
    topic. I cannot tell you how many constituents I talk to that
    have been victims of financial scams, problems--in particular,
    pig butchering, where people are integrating romantic
    relationships online--purported romantic relationships online
    and then delving into a financial side.
        Later today, I am holding a hearing in particular as it
    relates to artificial intelligence and AI. There are a lot of
    positive things that can be done by AI. There are also a lot of
    challenges.
        I just want to touch on how some of the challenges affect
    this area, about financial challenges.
        Mr. Benda, if I can ask you, in particular, how bad actors
    are utilizing AI in this way and then I want to get into
    questions, following that, about the ways that we can utilize
    technology or AI itself to prevent those.
        Mr. Benda. Sure. Sure. There have been a couple things here
    today, and I will just reiterate some of those.
        I think it is the ability to create very realistic and
    legitimate-looking phishing emails, phishing texts. We are
    worried about agentic AI that is going to be able to act on its
    own, can access personally identifiable information, can
    deepfake voices to make it sound like someone else, and then
    interact with either banks or other companies who are trying to
    fraud them.
        I think that the scams part of things is really the tragic
    piece, in that we are now seeing romance scams being committed,
    because they can change their visage, they can change their
    voice. It can be someone from overseas of a completely
    different race, and pretend to be someone else, and interact
    and try and build that romance scam, build that trust over
    time, so that someone loses their life savings.
        Mr. Steil. How are financial services firms navigating
    these new, choppy waters?
        Mr. Benda. Well, I think there are lot of challenges that
    we have in terms of the phishing. We have one thing in place;
    there is a thing called dot-bank where you can actually
    register your bank's internet domain. It is less resistant to
    phishing, simply because no one else--you have to be a
    financial services company to put your website on there.
        We have activities, anti-phishing advertising campaigns,
    such as our ``Banks Never Ask That'' that is out there trying
    to inform consumers. So I think a lot of it is really on
    consumer education to try to make people aware of the problem.
        Mr. Steil. So the consumer education, what the companies
    are doing. Should our regulators be reviewing whether or not
    companies are utilizing some of these anti-fraud projection
    tools?
        Mr. Benda. We would love to partner with the regulators on
    a consumer education campaign.
        Mr. Steil. Let me build on some of the AI with you, Mr.
    Bednowitz, if I can. Mr. Benda just referenced AI being used to
    duplicate voice, to duplicate images. I think that is one of
    the things that is uniquely challenging.
        You can think of fraud against calling maybe a grandma or a
    grandpa, imitating the voice of a grandson or granddaughter
    saying that they need assistance, taking that grandparent fraud
    to the next step. It is uniquely challenging, especially if
    that sure sounds like your grandson or granddaughter who needs
    quick help, and, of course, it is a criminal on the other end
    saying, send $100 to this location.
        How should we be thinking about that or navigating against
    that?
        Mr. Bednowitz. Sure. There are two ways.
        There is a low-tech way, which is teaching people to be
    vigilant and just using safe words. So, across families, if you
    have a safe word, which is a unique, nonsensical word that no
    one is writing down, then if someone is actually having a
    threat, then they can use that safe word, and you know that is
    actually that person on the other end or not.
        Now, on the more high-tech solutions, my company, others in
    the private sector are building using AI, like you talked
    about, to help defend against that type of AI, to detect
    deepfakes, to detect scams and fraud, whether it is coming
    through video, through voice, through email. So that is
    absolutely a front in a battle that we are tackling.
        AI is also, though, in the background--what Mr. Benda did
    not talk about--it is less flashy, but AI allows criminals to
    take information that is out there in the dark web, that is out
    there in social media sites, data brokers, and create profiles
    of you to either steal your identity or to target you with very
    personalized scams.
        Mr. Steil. And to do it with incredible volume----
        Mr. Bednowitz. Yes.
        Mr. Steil [continuing]. in a way that was not possible
    previously.
        I will come to you to close this out, Ms. Griffin. How do
    you think we should be navigating the downside risk of the AI?
        Ms. Griffin. Thank you very much for the question.
        One of the first things that comes to mind to me is to make
    sure that our law enforcement is able to use the same tools.
    When we think about the kinds of data that are available, both
    in terms of what the private sector has due to consumers
    reporting to them as well as the kind of data Paul mentioned,
    the SARs data base, the ability for our law enforcement to
    deploy AI, as well, to query those data bases and construct
    cases and go after criminals at scale is a critical element.
        Mr. Steil. I think what you are saying, to bring us home,
    is, there is downside risk of AI for sure, but there is also
    massive upside potential to address these frauds and making
    sure that we do not throw the baby out with the bathwater is
    going to be incredibly essential as we dive into AI.
        We will be having a hearing looking at that later today.
        I appreciate you being here.
        I yield back and now recognize the gentleman from Ohio, Mr.
    Davidson, who is the chair of the Subcommittee on National
    Security, who is now recognized for 5 minutes.
        Mr. Davidson. Thank you, Chairman. I appreciate this and
    really appreciate the work of the committee staff, Chairman
    Meuser, and others to get focused on fraud.
        As chairman for National Security and Illicit Finance, we
    opened the year up talking about scam centers and consumer
    fraud. We had a great panel of witnesses, and I think, once
    again, we have a great panel of witnesses, albeit different
    witnesses.
        So thank you for your work to protect people from these
    kinds of scams.
        It is clear that financial fraud remains one of the most
    pressing threats to economic security for American families,
    and there is certainly a lot to cover.
        Today, I want to focus my time on elder fraud. These are
    some of the most evil, contrived schemes that take advantage of
    our seniors. They have accumulated money; they are just trying
    to live out their years. These wicked elder schemes have turned
    into a global enterprise at this point. It is not like a local
    crime, generally.
        So the good news is, fighting elder fraud is an issue that
    does unite Democrats and Republicans, should unite all
    Americans. It is time to cut the party-line pushback and make
    laws to protect our seniors more effective.
        One example here is the Guarding Unprotected Aging Retirees
    from Deception (GUARD) Act. It is a bipartisan legislation put
    forth by my colleagues Congressmen Nunn, Gottheimer, and
    Fitzgerald. While the FBI, FTC, and the Financial Crimes
    Enforcement Network (FinCEN) are tracking the elder-abuse fraud
    schemes, the missing piece here is amping up coordination
    between Federal, State, and local law enforcement. A lot of
    times when I talk to my prosecutors, they can detect the fraud,
    but they have a hard time getting the resources. We are working
    with FinCEN to try to get more of this.
        So, Mr. Benda, scams targeting seniors are on the rise.
    According to the FBI, from 2023 to 2024, there was a 46-percent
    increase in complaints and a 43-percent increase in revenue
    losses. How have scams targeting seniors evolved over the
    years?
        Mr. Benda. Thank you for the question, Congressman.
        So I think they have evolved fairly significantly in terms
    of, we talked about the use of AI in targeting the elderly
    folks. One of the things that was really interesting was the
    use of bitcoin ATMs to cash out on these scams.
        We mentioned earlier, DC originally has just brought suit
    against Athena, which is a bitcoin operator that operated for 5
    months here in the District. It turns out that--they analyzed
    the transactions of the bitcoin ATM--93 percent of the
    transactions of the ATM were fraudulent, 93 percent. The
    average age of the victim? 71. The average loss? $8,000. So the
    question is, is a 71-year-old really going to buy bitcoin at an
    ATM inside a convenience store? They are not.
        So really the challenge is, they are targeting these
    elderly folks, and they are trying to convince them, whether
    threaten or cajole them, and they are cashing out through these
    bitcoin ATMs.
        Mr. Davidson. Yes. Thank you for that.
        I think, a couple things there that you highlight. The
    techniques are used--bitcoin ATMs did not exist a long time
    ago. AI was not around but the other things is these data
    centers that are making all this possible are on the back end.
        So, as a member of the Foreign Affairs Committee, we are
    seeing, even nation-state-level structuring of data centers to
    be able to create income for poor countries. They make some of
    their--a significant portion of their GDP off of helping scam
    seniors. So this is becoming way beyond the scope of what State
    and local law enforcement can do.
        You highlight one of the ways that they can do it, and
    certainly bitcoin ATM has been used for fraudulent activity,
    but I would also highlight that blockchain tracing tools have
    made it so it is easier to follow the money, in some cases.
        So let me turn to Mr. Bednowitz.
        How might consumer education, specifically efforts geared
    toward seniors, help decrease barriers in reporting?
        Mr. Bednowitz. Yes. This is a great question and thank you
    for that question.
        Our data shows that, despite elderly consumers reporting in
    total $5 billion of fraud, a staggering amount, 67 percent of
    them think that they are invulnerable, that they are safe from
    scams and frauds. So there is a huge gap in expectations and
    reality.
        So it is very important to partner with organizations to
    raise that level of awareness. We have a partnership with the
    AARP to help any way that we can reach out to these seniors and
    let them know that they are vulnerable.
        Because seniors think, ``Hey, it happens to seniors in
    general, but it does not happen to me. I am smarter than
    everyone else'' and that is the problem; That overconfidence
    leads them to be able to fall victim more easily.
        Mr. Davidson. Yes, I was particularly impressed with the
    AARP witness earlier in the year in highlighting the nonprofit
    center that they are working with in Pittsburgh.
        I think the complement to that might be a customer-oriented
    function for FinCEN that works not only with citizens and
    consumers but with our State and local law enforcement. We will
    see if we can do that. I think it is a bipartisan answer. The
    GUARD Act is a good start, but I appreciate your time today.
        Chairman Meuser [presiding]. The gentleman yields back.
        We now will have--excuse me. The gentleman from Iowa, Mr.
    Nunn, is now recognized for 5 minutes.
        Mr. Nunn. Well, thank you very much, Mr. Chair and I want
    to thank the witnesses for being here.
        You have all echoed what all of our seniors, what too many
    Americans already know: This country and the individuals in it
    are losing billions of dollars each year to sophisticated
    scams.
        In 2024, there were a reported 2.6 million fraud cases in
    the United States. It resulted in $12.5 billion being scammed
    from individuals, many of those dollars going overseas.
        These are not just national statistics. They are real,
    everyday Americans. They are families, friends, communities,
    veterans, seniors, not just in my district but across the
    country.
        In Iowa, my home State, last year, the attorney general
    reported receiving more than 13,000 fraud cases and this is a
    small farm State by comparison to some. It resulted in the loss
    of $42 billion.
        My office just worked with a 68-year-old veteran who lost
    $100,000 to someone he thought he was helping, only to be
    scammed out of his military pension.
        This is why I am grateful to be working with this committee
    on a bill that we have introduced called the GUARD Act that
    provides State and local law enforcement better tools to track
    fraud, as well as the bill we are leading in a bipartisan way,
    the Task Force for Recognizing and Averting Payment Scams
    (TRAPS) Act, to really stop fraudulent payment schemes
    targeting seniors at a national level, working both locally and
    strategically to be able to address these issues.
        I am also proud to be co-chairing a new-formed caucus
    called STOP Scams. This is a bipartisan effort on best
    practices that we should be sharing, and it is one of the
    reasons I am so grateful this committee is speaking about our
    scam attacks today.
        Mr. Benda, I would like to begin with you. As you know,
    banks are on the front line. Too often, fraud occurs there, and
    coordination with regulators and law enforcement happens after
    the damage has already been done.
        Would not a coordinated task force, like what is created
    under the TRAPS Act, help to address and disseminate best
    practices before these events occur?
        Mr. Benda. Thank you for the question, Congressman. Thank
    you for your leadership and thank you for establishing the STOP
    Scams Caucus. We think more effort; more focus on this can only
    help.
        So we think the TRAPS Act is a good effort to try and
    coordinate the activities across the Federal Government. We
    applaud your efforts in that space, and we hope that you will
    be able to gather information and come up with a consolidated
    plan moving forward.
        Mr. Nunn. Ms. Griffin, I would also like to ask for your
    input on this.
        Look, the task force has called for a national fraud
    prevention strategy, specifically with the TRAPS Act. Would
    this help address a nationwide strategy to oppose the type of
    scams that we are seeing?
        Ms. Griffin. Yes. Thank you for the question and thank you
    for your leadership with your fellow co-chairs in creating the
    STOP Scams Caucus.
        Your question and the efforts of the caucus really
    represent what is needed here. We talked about this as a whole-
    of-society or a whole-of-ecosystem approach. There are a lot of
    jobs to be done. There are jobs to be done by this committee,
    by other committees here in this building. The efforts of
    things like the TRAPS Act that really recognize that and name
    for leadership within the executive branch of government as
    well to create a national strategy are critically important at
    this moment.
        Mr. Nunn. I think we all want to go one step further here.
    It cannot just be the role of the Federal Government, trying to
    solve this. As you note, this is not just a whole-of-government
    approach; this needs to be a whole-of-Nation approach and that
    includes our guys on the front line, whether it is a mainstream
    bank or whether it is the county sheriff.
        One of the things we are trying to do is put more resources
    in the hands of our frontline defenders. We are leading an
    effort called the GUARD Act. The GUARD Act looks at empowering
    local law enforcement to give muscle to the strategy that the
    TRAPS Act would come up with.
        Local law enforcement, as we all know, they are at the
    front lines. They hear the calls. They talk to the senior
    citizens. They heard from our veteran and, often, they feel
    powerless in their ability to help and by the time the Federal
    Government shows up, as we noted, it is too little, too late.
        The GUARD Act provides local law enforcement with tools to
    act, while the TRAPS Act would establish a Federal coordinating
    hub.
        Would you say the two bills together create both a top-down
    and a holistic approach and a strategy that right now is not
    available to too many?
        Ms. Griffin. Yes. Thank you very much for that.
        I will say that what we have heard from victims are both
    stories of times when local law enforcement has been enormously
    helpful and times when local law enforcement has not known what
    to do and they have turned away in shame.
        So the ability to create more resources so that local law
    enforcement has training and the incentives to be working with
    victims and elevating this issue is critically important. Thank
    you for that leadership.
        Ms. Sanchez-Adams. Representative, if I may?
        Mr. Nunn. Yes.
        Ms. Sanchez-Adams. I appreciate the TRAPS Act. The one
    thing that I ask is that it be expanded to not just cover
    electronic payments but all types of payments.
        Mr. Nunn. That is very good. I appreciate that feedback.
        Together, I think we need to be able to come up with a
    strategy, first of all, to be able to implement and help our
    folks at the local level.
        With that, I yield back my time.
        Chairman Meuser. The gentleman yields. The chair thanks the
    gentleman for his remarks.
        Before we adjourn, I ask unanimous consent to enter two
    documents into the record: one letter from the Consumer Bankers
    Association discussing the need for cross-industry
    collaboration, and the other from the Bank Policy Institute
    discussing how banks, government, and telecoms need to work
    together to solve this issue.
        Without objection, so ordered.

        [The information referred to can be found in the appendix
    on pages 141-164.]

        Chairman Meuser. I would like to thank our witnesses for
    their testimony today.
        I do want to apologize for the earlier remark made by the
    ranking member that characterized this hearing as a sham. This
    is the furthest thing from a sham. We are all here collectively
    to try to work together to correct the escalating fraud that
    has occurred over the last 3 to 4 years.
        I am sure that the results of our work will be preventing
    such fraud being caused and forced upon thousands and thousands
    of innocent Americans. So that is our goal, and I look forward
    to working with you all on it over the next several months and
    years or whatever it takes.
        Without objection, all members will have 5 legislative days
    within which to submit additional written questions for the
    witnesses to the chair.
        The questions will be forwarded to the witnesses for their
    response. I ask our witnesses to please respond no later than
    October 23, 2025.

        [The information referred to can be found in the appendix.]

        Chairman Meuser. This hearing is adjourned.

        [Whereupon, at 12:07 p.m., the subcommittee was adjourned.]

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