[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]
FRAUD IN FOCUS: EXPOSING FINANCIAL THREATS
TO AMERICAN FAMILIES
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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.]
APPENDIX
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