Fraud in Focus: Exposing Financial Threats to American Families

1[House Hearing, 119 Congress]2[From the U.S. Government Publishing Office]34            FRAUD IN FOCUS: EXPOSING FINANCIAL THREATS5                      TO AMERICAN FAMILIES6=======================================================================78                                HEARING910                               BEFORE THE1112              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS1314                                OF THE1516                    COMMITTEE ON FINANCIAL SERVICES17                     U.S. HOUSE OF REPRESENTATIVES1819                    ONE HUNDRED NINETEENTH CONGRESS2021                             FIRST SESSION2223                               __________2425                           SEPTEMBER 18, 20252627                               __________2829                           Serial No. 119-423031       Printed for the use of the Committee on Financial Services3233[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]3435                            www.govinfo.gov3637                              __________3839                        U.S. GOVERNMENT PUBLISHING OFFICE4063-431 PDF                     WASHINGTON : 202641=======================================================================4243                 HOUSE COMMITTEE ON FINANCIAL SERVICES4445                    FRENCH HILL, Arkansas, Chairman4647BILL HUIZENGA, Michigan, Vice        MAXINE WATERS, California, Ranking48    Chairman                             Member49FRANK D. LUCAS, Oklahoma             SYLVIA R. GARCIA, Texas, Vice50PETE SESSIONS, Texas                     Ranking Member51ANN WAGNER, Missouri                 NYDIA M. VELAZQUEZ, New York52ANDY BARR, Kentucky                  BRAD SHERMAN, California53ROGER WILLIAMS, Texas                GREGORY W. MEEKS, New York54TOM EMMER, Minnesota                 DAVID SCOTT, Georgia55BARRY LOUDERMILK, Georgia            STEPHEN F. LYNCH, Massachusetts56WARREN DAVIDSON, Ohio                AL GREEN, Texas57JOHN W. ROSE, Tennessee              EMANUEL CLEAVER, Missouri58BRYAN STEIL, Wisconsin               JAMES A. HIMES, Connecticut59WILLIAM R. TIMMONS, IV, South        BILL FOSTER, Illinois60    Carolina                         JOYCE BEATTY, Ohio61MARLIN STUTZMAN, Indiana             JUAN VARGAS, California62RALPH NORMAN, South Carolina         JOSH GOTTHEIMER, New Jersey63DANIEL MEUSER, Pennsylvania          VICENTE GONZALEZ, Texas64YOUNG KIM, California                SEAN CASTEN, Illinois65BYRON DONALDS, Florida               AYANNA PRESSLEY, Massachusetts66ANDREW R. GARBARINO, New York        RASHIDA TLAIB, Michigan67SCOTT FITZGERALD, Wisconsin          RITCHIE TORRES, New York68MIKE FLOOD, Nebraska                 NIKEMA WILLIAMS, Georgia69MICHAEL LAWLER, New York             BRITTANY PETTERSEN, Colorado70MONICA DE LA CRUZ, Texas             CLEO FIELDS, Louisiana71ANDREW OGLES, Tennessee              JANELLE BYNUM, Oregon72ZACHARY NUNN, Iowa                   SAM LICCARDO, California73LISA McCLAIN, Michigan74MARIA SALAZAR, Florida75TROY DOWNING, Montana76MIKE HARIDOPOLOS, Florida77TIM MOORE, North Carolina7879                      Ben Johnson, Staff Director8081                                 ------8283              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS8485                 DANIEL MEUSER, Pennsylvania, Chairman8687TIM MOORE, North Carolina, Vice      AL GREEN, Texas, Ranking Member88    Chairman                         RASHIDA TLAIB, Michigan89ANN WAGNER, Missouri                 NIKEMA WILLIAMS, Georgia90BARRY LOUDERMILK, Georgia            CLEO FIELDS, Louisiana91ANDREW R. GARBARINO, New York        SAM LICCARDO, California92ANDREW OGLES, Tennessee93MIKE HARIDOPOLOS, Florida9495                        C  O  N  T  E  N  T  S9697                              ----------9899                      Thursday, September 18, 2025100101                           OPENING STATMENTS102103                                                                   Page104Hon. Dan Meuser, Chairman of the Subcommittee on Oversight and105  Investigations, a U.S. Representative from Pennsylvania........     2106Hon. Al Green, Ranking Member of the Subcommittee on Oversight107  and Investigations, a U.S. Representative from Texas...........     3108109                               STATEMENTS110111Hon. French Hill, Chairman of the Committee on Financial112  Services, a U.S. Representative from Arkansas..................     4113114                               WITNESSES115116Mr. Paul Benda, Executive Vice President of Risk, Fraud, and117  Cybersecurity, American Bankers Association (ABA)..............     5118    Prepared Statement...........................................     8119Mr. Ian Bednowitz, General Manager, Lifelock at Gen..............    28120    Prepared Statement...........................................    30121Ms. Kate Griffin, Director, National Task Force on Fraud and Scam122  Prevention, Aspen Institute Financial Security Program.........    38123    Prepared Statement...........................................    40124Ms. Carla Sanchez-Adams, Senior Attorney, National Consumer Law125  Center (NCLC)..................................................    53126    Prepared Statement...........................................    55127128                                APPENDIX129130                   MATERIALS SUBMITTED FOR THE RECORD131132Hon. Dan Meuser:.................................................133    Consumer Bankers Association (CBA)...........................   141134    Bank Policy Institute (BPI)..................................   143135    AARP.........................................................   165136    American Financial Services Association (AFSA)...............   177137    Securities Industry and Financial Markets Association (SIFMA)   179138Hon. Zachary Nunn, Hon. Hon. Josh Gottheimer, Hon. Scott139  Fitzgerald:....................................................140    Capital One..................................................   182141142                 RESPONSES TO QUESTIONS FOR THE RECORD143144Written responses to questions for the record from Representative145  Nikema Williams146    Mr. Paul Benda...............................................   185147    Mr. Ian Bednowitz............................................148    Ms. Kate Griffin.............................................   188149    Ms. Carla Sanchez-Adams......................................   190150Written responses to questions for the record from Representative151  Andrew R. Garbarino152    Ms. Kate Griffin.............................................   192153154    FRAUD IN FOCUS: EXPOSING FINANCIAL THREATS TO AMERICAN FAMILIES155156                              ----------157158                      Thursday, September 18, 2025159160             U.S. House of Representatives,161      Subcommittee on Oversight and Investigations,162                           Committee on Financial Services,163                                                    Washington, DC.164165    The subcommittee met, pursuant to notice, at 10:02 a.m., in166room 2128, Rayburn House Office Building, Hon. Dan Meuser167[chairman of the subcommittee] presiding.168    Present: Representatives Meuser, Wagner, Loudermilk, Ogles,169Haridopolos, Moore, Green, Tlaib, Williams of Georgia, Fields,170and Liccardo.171    Also present: Representatives Hill, Lucas, Davidson, Steil,172Nunn, Waters, and Foster.173    Chairman Meuser. Well, good morning, all.174    The Subcommittee on Oversight and Investigations will come175to order.176    Without objection, the chair is authorized to declare a177recess of the committee at any time.178    This hearing is entitled ``Fraud in Focus: Exposing179Financial Threats to American Families.'' The purpose of this180hearing is to better understand the various types of financial181fraud that exist, including the meteoric rise in check fraud182and senior scams.183    This hearing will highlight different types of fraud and184begin to identify opportunities for Federal agencies, both185independently and together, and in conjunction and186cooperatively with the private sector so we better use existing187authorities to combat the rise in financial fraud and engage in188consumer education.189    This hearing will be the first in a series of fraud-and190scam-related committee work. It is that important.191    Without objection, all members will have 5 legislative days192within which to submit extraneous materials to the chair for193inclusion in the record.194    Chairman Meuser. I now recognize myself for 4 minutes to195give an opening statement.196197     OPENING STATEMENT OF HON. DAN MEUSER, CHAIRMAN OF THE198     SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, A U.S.199                REPRESENTATIVE FROM PENNSYLVANIA200201    I would like to thank the witnesses for being here today to202discuss the fraud and scams in the financial sector and the203threat they pose to consumers.204    In 2024, the Federal Trade Commission (FTC) reported205receiving 2.6 million reports of fraud and scams, with206consumers losing over $12 billion, a 25-percent increase from207just 2023.208    While that figure alone is staggering, it is likely only209the tip of the iceberg, given that many victims do not report210their experiences. In fact, the Department of Justice estimates211that only 15 percent of victims report fraud to law212enforcement.213    Check fraud alone has more than doubled since 2021.214    Criminals behind fraud and scams are sophisticated. They215use a wide variety of schemes--check fraud, romance scams, bank216transfer fraud, identity theft, payment scams, and more--and217they target all segments of the population. Individuals of all218ages are falling victim.219    The only way to defeat criminals and defend consumers is220truly a whole-society approach. Young adults are vulnerable,221with so much of their personal information readily available222online. Seniors, meanwhile, are often hit with the most223devastating financial losses when exploited by scammers. All224ages are at risk.225    That is why today's hearing is not only about exposing the226problem but also about discussing how we can best strengthen227consumer education, highlight best practices for both consumers228and companies, promote proven systems and models, and improve229how we track and stop scammers before they strike.230    I commend the Trump Administration for initiating efforts231to counter fraud and scams in the U.S., including its recent232sanctions on cyber scam centers based in Southeast Asia.233President Trump also signed an executive order to move away234from using checks for government-related payments.235    The Treasury Department, the Federal Reserve, and the236Securities and Exchange Commission have all recently initiated237efforts to gain information pertaining to check fraud, payment238fraud, and cross-border fraud.239    To aid this effort, I sent a letter, along with Chairman240Hill and Andy Barr, yesterday to Federal Reserve Chairman241Jerome Powell seeking more information as to the Federal242Reserve's (Fed's) work on fraud, including how it is243collaborating with the Office of the Comptroller of the244Currency (OCC), FDIC, and other stakeholders to address check245and payment fraud.246    We also requested a briefing on the comments received to247the Fed's June 2025 request for information as well as the248Fed's plans to educate consumers moving forward but no single249actor can stop fraud on their own. To truly protect families,250we must foster collaboration across all stakeholders. That251includes working across Federal, State, and local governments,252within the financial sector, including lending/payment253companies and fraud protection companies, technology platforms,254and telecom companies.255    We are already seeing companies step up. Apple's recent iOS25626 update, for instance, expanded spam text and call screening257to help consumers block fraud at the source.258    Much more needs to be done, however. Conversations with all259these stakeholders, including with consumers themselves, will260be critical as we pursue a whole-of-society approach to combat261fraud and scams.262    Finally, I want to highlight that my office has just263recently launched a new online resource at meuser.house.gov/264scams, where consumers can learn red flags to spot scams,265useful links to prevent fraud, and guidance on what to do if266they fall victim.267    So this is just the beginning of the committee's work and268Congress's work on fraud and on scams. So I look forward to269working on a bipartisan basis to find real solutions to a270problem that continues to be the number one financial services271issue I hear from my constituents, community banks, and law272enforcement.273    I yield back.274    The chair now recognizes the ranking member of the275subcommittee, the gentleman from Texas, Mr. Green, for 4276minutes for an opening statement.277278   OPENING STATEMENT OF HON. AL GREEN, RANKING MEMBER OF THE279     SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, A U.S.280                   REPRESENTATIVE FROM TEXAS281282    Mr. Green. I thank the chairman, someone whom I have great283respect for, and I thank the witnesses for being here as well,284as well as some other persons who are here at my request to285show support. We greatly appreciate your attendance.286    The title of this hearing is ``Fraud in Focus: Exposing287Financial Threats to American Families.'' However, a better288title for this hearing would be ``Fraud Enabled: How President289Trump Is Exposing American Families to Financial Threats With290His Tariff Taxes and His Evisceration of the Consumer Financial291Protection Bureau,'' the CFPB.292    When President Trump campaigned on imposing steep tariffs293on both our allies and adversaries, he assured the American294people that the cost of these tariffs would be paid by foreign295sellers, not Americans.296    This prevarication has become one of the biggest frauds in297an administration rife with fraud. Instead of foreign sellers298paying the price for Trump's tariffs, it is the buying U.S.299businesses, in tandem with their clienteles, who are suffering300the cost that foreign sellers will not pay.301    Among the U.S. businesses suffering, small businesses have302been especially vulnerable to the volatility of Trump's erratic303economic policies. In July 2025, 67 percent of small businesses304reported higher expenses over the quarter prior to that time.305With 60 percent attributing higher costs to Trump's recent306tariff increases, millions of mom-and-pop businesses are307closing or are facing the prospect of closing.308    Republicans desiring to combat fraud or financial threats309to American families should focus on Trump's tariffs that are310devastating American businesses, especially small businesses,311as well as how Trump has systematically gutted the principal312financial protection agency, the CFPB, and how the Consumer313Financial Protection Bureau is being made ineffective.314    The CFPB was established after the Great Recession to315protect consumers from financial abuse, including fraud. Since316its creation, the CFPB has actively protected consumers by317investigating and punishing financial institutions for their318abusive and deceptive practices. Since 2011, the CFPB has319returned more than $20 billion to consumers defrauded by Big320Banks, debt collectors, and payday lenders.321    Sadly and shamefully, Trump's CFPB has stopped initiating322new investigations into abuses in the financial industry and323has discontinued ongoing examinations, dismissed enforcement324actions, and even rescinded finalized settlements, denying325consumers agreed-to benefits.326    To add insult to consumer injuries, Republicans cut the327CFPB's funding, cut it in half, crippling the agency's ability328to police the payment processors Big Tech platforms and banks329are using to take advantage of consumers.330    The Republican record is clear: They have defrauded and331dismantled the CFPB fraud police at the expense of the American332consumers and have perpetrated a tax fraud on American333families. Regrettably, this is not oversight; this is334complicity, coupled with aiding and abetting Trump's fraud.335    I yield back.336337  STATEMENT OF HON. FRENCH HILL, CHAIRMAN OF THE COMMITTEE ON338    FINANCIAL SERVICES, A U.S. REPRESENTATIVE FROM ARKANSAS339340    Chairman Meuser. The gentleman yields back.341    The chair now recognizes the chairman of the full342committee, Chairman Hill, for 1 minute.343    Chairman Hill. Thank you, Chairman Meuser.344    Today's hearing is another step in the committee's efforts345to better understand the various types of financial fraud so346that we can better help protect American families from these347financial threats.348    Over the past 3 years, at one State bank trade association349that I have gone to after another--Georgia, Mississippi,350Arkansas, Louisiana, Texas, Ohio, among others--this has been351the top topic.352    Our State attorney generals are witnessing accelerated353check fraud, debit fraud, and text phishing that are all354targeting Americans and generating unprecedented losses to both355consumers and the financial system. Personally, our family was356a victim of check fraud, thanks to the U.S. post office, in3572022.358    We will begin today by exploring a proactive set of359measures that Federal agencies might take and implement to360counter these threats and better protect all Americans from361financial fraud.362    We look forward to hearing about emerging technologies like363AI and blockchain technologies that can help achieve that364protection.365    I thank our witnesses, and I yield back.366    Chairman Meuser. I thank Chairman Hill.367    We will now move to witness testimony, seeing that the368ranking member of the full committee is not here.369    I really appreciate--we all appreciate your attendance and370your, what we expect to be expert testimony.371    We will start off by welcoming Mr. Paul Benda. Mr. Benda is372the executive vice president of risk, fraud, and cybersecurity373at the American Bankers Association, where he leads the374American Bankers Association's (ABA's) initiative on fraud,375cybersecurity, physical security, and information security and376chairs the ABA Fraud Coordination Group. Mr. Benda also serves377as the chair of the International Banking Federation's Scams378and Fraud Task Force. Mr. Benda's career spanned both public379and private sectors, having served as an Active Duty U.S. Air380Force officer and as an official with both the Department of381Defense and Department of Homeland Security. Mr. Benda received382a bachelor's and master's degree in mechanical engineering from383Purdue University.384    Welcome and thank you.385    Mr. Ian Bednowitz: Mr. Bednowitz is the general manager of386LifeLock at Gen, a leading U.S. identity-theft protection387service. Prior to joining LifeLock, Mr. Bednowitz was the388global head of protections at eBay, where he was responsible389for managing and improving programs to build customers' trust390for transacting on eBay. Mr. Bednowitz graduated summa cum391laude with a B.A. in economics from Cornell University and392holds an MBA from the Kellogg School of Management.393    Thank you very much, and welcome.394    Ms. Kate Griffin: Ms. Griffin is the director of the Aspen395Institute's Financial Security Program. She also serves as the396director of the National Task Force on Fraud and Scam397Prevention, where she leads a multisector collaborative effort398aimed at creating a national strategy to prevent scammers from399stealing wealth from everyday Americans. She holds a master's400from American University and a bachelor's degree from Kenyon401College.402    So thank you very much.403    Ms. Carla Sanchez-Adams, welcome.404    Ms. Sanchez-Adams is a senior attorney at the National405Consumer Law Center. She also serves as a board member for the406National Association of Consumer Advocates and is a fellow with407the American Bar Association. Prior to joining National408Consumer Law Center (NCLC), Ms. Sanchez-Adams was a managing409attorney with Texas RioGrande Legal Aid. Ms. Sanchez-Adams410graduated with a bachelor's degree from NYU and received her411Juris Doctor from the University of Texas.412    So thank you very much as well.413    So each of you will be recognized for 5 minutes to give an414oral presentation of your testimony. Without objection, your415written statements will be made part of the record.416    So, Mr. Benda, you are now recognized for 5 minutes for417your oral remarks.418419  STATEMENT OF PAUL BENDA, EXECUTIVE VICE PRESIDENT OF RISK,420     FRAUD, AND CYBERSECURITY, AMERICAN BANKERS ASSOCIATION421422    Mr. Benda. Thank you, Mr. Chairman.423    Chairman Meuser, Ranking Member Green, and members of the424subcommittee, thank you for focusing on this critical issue425today and the opportunity to testify.426    My name is Paul Benda, and I serve as executive vice427president of risk, fraud, and cybersecurity at the American428Bankers Association.429    Banks have long been on the front lines of protecting430consumers from fraud. From chip-enabled cards to multifactor431authentication, from AI-driven fraud detection to real-time432alerts, the banking industry has invested billions to make our433financial system one of the most secure in the world.434    Americans recognize that effort. Surveys show that 9 in 10435customers say their bank is taking proactive steps to protect436them from fraud, but criminals are innovating too. They have437reinvested the $300 billion stolen during the pandemic to build438highly organized networks that now use deepfakes, spoofed439caller IDs, stolen checks, and fake social media accounts to440target Americans.441    This is where banks face a critical limitation. By the time442a victim is ready to send a payment, they often believe they443know and trust the scammer. Caller ID might display the bank's444name. A text message might look identical to a legitimate fraud445alert. A social media ad might appear to come from a trusted446company.447    These are tools banks do not control. That is why banks448cannot fight this battle alone. Other stakeholders must step449up.450    Telecommunication companies must stop criminals from451impersonating banks through spoofed phone calls and fraudulent452texts. Today, a criminal overseas can make a call appear as if453it is coming from a 1-800 number on the back of your debit454card. If the phone says it is your bank, most people will455believe it.456    Social media platforms must remove fake accounts and457fraudulent ads more quickly. The Wall Street Journal recently458documented how fake investment promotions on Instagram and459Facebook have cost consumers their life savings. Banks460regularly flag these scams, but takedowns are slow and461inconsistent.462    The Postal Service must strengthen protections against463check theft, which remains one of the fastest growing forms of464fraud and law enforcement needs more resources to investigate465and prosecute cases, because no amount of bank investment can466replace the deterrence of putting criminals behind bars.467    We urge Congress, the administration, regulatory agencies,468and others in the private sector to help close these gaps.469    First, the administration should create a White House470Office of Fraud and Scam Prevention to coordinate Federal471efforts, unify consumer reporting, and drive a national472strategy.473    Second, we should require telecom accountability by closing474loopholes that allow spoofed calls and texts, ban subscriber475identity module (SIM) boxes that send thousands of scam texts,476and ensure caller ID cannot be faked.477    Third, we need to hold social media companies responsible478by mandating quick, free takedown of impersonation accounts and479impose liability if platforms knowingly allow them to remain.480    Fourth, we must support law enforcement by providing for481State-level financial crimes units modeled on Texas's Financial482Crimes Intelligence Center, which has proven effective.483    Fifth, we need to improve information-sharing by creating484safe harbors for banks and regulators to exchange fraud data485and require the Federal Communications Commission (finacial )486to establish a searchable spam text and messaging database.487    Finally, we need to continue to combat check fraud by488supporting the development of a national check verification489system to authenticate checks at deposit.490    Banks are proud of the role we play in protecting491consumers. We continue to invest, to innovate, and to educate.492ABA has launched several national anti-fraud campaigns,493including ``Banks Never Ask That'' and ``Practice Safe Checks''494to help people recognize scams, as well as ``Safe Banking for495Seniors'' to help combat the ever-growing problem of senior496fraud but unless every player in the fraud ecosystem accepts497their responsibility, criminals will continue to victimize498Americans at an unprecedented scale. Fraud is not just a499banking problem; it is an ecosystem problem and until all parts500of that ecosystem are equally committed to protecting501consumers, the American public will remain at risk.502    Thank you, and I look forward to your questions.503504    [The prepared statement of Mr. Benda follows:]505    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]506507    Chairman Meuser. Thank you as well.508    Mr. Bednowitz, you are now recognized for 5 minutes for509your opening remarks.510511  STATEMENT OF IAN BEDNOWITZ, GENERAL MANAGER, LIFELOCK AT GEN512513    Mr. Bednowitz. Thank you.514    Chairman Meuser, Ranking Member Green, and members of the515committee, good morning, and thank you for this opportunity to516testify on this critical topic of fraud affecting American517families.518    My name is Ian Bednowitz, and I am the general manager of519LifeLock. LifeLock is the leading identity-theft protection520service in the U.S. and LifeLock is part of a larger company,521Gen, a global S&P 500 company that has over 500 million522consumers that we protect through our brands NortonLifeLock and523Avast.524    Fraud today is not just growing; it is accelerating at an525unprecedented rate. You know, multiple people have highlighted526statistics. The statistics we have is that the American527consumer lost $16.6 billion in reported losses last year. That528is a 33-percent increase year on year, and that translates into529$51 for every person in this country.530    At LifeLock, we have sent over 81 million identity theft531alerts, and the number of Social Security numbers that are on532the dark web that are being exposed to breaches increased from5338 million to 300 million in just 1 year.534    These are not just statistics. Behind these facts are535seniors that are losing their life savings, are young people536whose financial futures are ruined before they even start their537careers, and families who are blindsided by fraud.538    Fraud, unfortunately, does not discriminate. Young people539get victimized more frequently because they are online more540often, whereas seniors experience much larger fraud when it541happens--or much larger losses. The average senior lost $35,000542in reported fraud, and, in total, seniors lost a staggering $5543billion.544    Yet, despite these statistics, over two-thirds of seniors545say that they feel invincible, that they feel safe from the546risks of fraud and scams. This represents a huge disconnect547between perception and reality and artificial intelligence is548only increasing this gap. In the hands of criminal549organizations, artificial intelligence is allowing them to550industrialize fraud, allowing them to make phishing emails that551are perfect, voice clones that are compelling, deepfakes that552can fool even the most sophisticated American citizen.553    AI, on the other hand, is also our best defense against554these criminal organizations. At Gen, we use AI to go through555millions and millions of data points to detect fraud in real-556time. We use it to detect deepfakes and to protect consumers,557to prevent scams from ever getting to consumers in the first558place but technology is not enough. We also invest in559education, in partnerships, and sharing intelligence with law560enforcement.561    Congress has a critical role to play in this fight. Based562on our experience, we urge three primary priorities.563    We have to stop fraud before it happens; raise awareness of564the threats through national education campaigns that focus on565scams, fraud, identity theft; modernize breach notifications;566and invest in public-private partnerships that raise digital567literacy.568    Two, we have to disrupt the scam supply chain. So the569social media networks, the companies, the data brokers that570trade in personal information that are fueling the rise of571scams, we need to better regulate them and we need to empower572our law enforcement to be able to go after international573organizations across borders, give them the tools to be able to574take down the infrastructure and to be able to collaborate575across countries.576    Then, third, we need to empower victims and support local577law enforcement. Local law enforcement needs the education and578the tools to be able to deal with these types of scams and579fraud and victims need to be able to have a centralized580repository of breaches and actions that they can take to581remediate and address when they are victimized.582    Fraud now represents a systemic threat to our digital583economy and to the trust that consumers have in their digital584lives. Together, government, industry, and civil society must585work together and collaborate to protect American families,586restore confidence, and secure the digital economy for every587American.588    Thank you, and I look forward to your questions.589590    [The prepared statement of Mr. Bednowitz follows:]591    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]592593    Chairman Meuser. Thank you very, very much.594    Ms. Griffin, you are now recognized for 5 minutes.595596  STATEMENT OF KATE GRIFFIN, DIRECTOR, NATIONAL TASK FORCE ON597 FRAUD AND SCAM PREVENTION, ASPEN INSTITUTE FINANCIAL SECURITY598                            PROGRAM599600    Ms. Griffin. Chairman Meuser, Ranking Member Green,601distinguished members of the subcommittee, thank you for602inviting me.603    My name is Kate Griffin, and I am director of the National604Task Force on Fraud and Scam Prevention at the Aspen Institute605Financial Security Program.606    Over the last year, hundreds of experts from more than 80607institutions, public and private, have spent thousands of hours608together to mount a coordinated defense against scams--the609ability for criminals to deploy sophisticated social-610engineering techniques that lure victims to send their hard-611earned money.612    As my colleagues have outlined, scams are a growing threat613to all of society. Every day, roughly 50,000 Americans become614victims. We believe one in five Americans have been affected to615date and these people are young and old, urban and rural, rich616and poor. Everyone is at potential risk.617    Because of this, every week, more than $2 billion is618flowing out of American pocketbooks and into the hands of619foreign criminal enterprises, who use those funds to fuel other620illicit crimes, including drug and human trafficking. Research621suggests that this scams industry now rivals the size of the622illicit drug trade, and scam losses reported to law enforcement623have more than tripled since 2019.624    Those reports, though, are only a fraction of what is625really happening. In fact, the FTC has estimated that actual626fraud-related losses, accounting for this under-reporting,627exceed $158 billion per year.628    The vectors of attack are varied, which is why we will talk629about this as an ecosystem or whole-of-society problem.630Scammers target victims on all of the core systems of American631commerce and communication: telecoms, messaging, digital632platforms such as social media or paid advertising, retail, and633financial services spanning banking, payments, fintech, crypto,634and investments.635    Most U.S. adults report receiving scam messages through636those means daily or weekly and those consumers are asking for637your help. They do not know where to turn.638    Being tricked by a scammer to send money or provide access639to a financial account is the second-largest crime concern in640the U.S., second only to identity theft. People are worried641more about scams than they are about violent crime or burglary642and they rarely report when it happens to law enforcement. In643fact, most victims, 7 in 10, will report directly to their644financial institution, while only a small fraction of that will645report to local law enforcement or a Federal agency.646    That is why preventing scams requires this whole-of-647ecosystem response. Leaders in our task force are very648sophisticated fraud fighters, but they are asking for help with649scams. They have underscored the need for collaboration across650all those sectors and the desire for strong leadership from the651Federal Government in doing so. No single entity in the scam's652lifecycle can do this alone.653    We will have a detailed set of recommendations in a654forthcoming report from the task force in a few weeks which655will provide a blueprint for a national strategy to prevent656scams.657    A few highlights from that report include a call for bold658government leadership, which includes naming scams as a659national priority, asking congressional leadership to mount a660coordinated response, and empowering leaders within government661to marshal our resources toward a coordinated response.662    It will also require driving better law enforcement and663intelligence outcomes by providing top officials with clear664anti-scam goals and sufficient funding. We must enhance their665powers to prosecute while upgrading their capabilities.666Criminals are using the most sophisticated technologies, and so667must we.668    Of course, the private sector has a role to play as well.669Specific actions related to the private sector in the report670will include things like enacting robust anti-scam policies,671strengthening system defenses around the better vetting of672platform users, investing in cross-sector information673exchanges, and improving the effectiveness of just-in-time674warnings and interventions.675    In closing, I want to tell you how inspired I have been676over the last year by leaders in government and the private677sector who are committed to taking serious action.678    The American public is asking all of us to take this679seriously. Bipartisan majorities of U.S. adults say the Federal680Government is doing a bad job of handling online scam attacks681and there is lots of upside to working on this, not the least682of which is returning $158 billion a year to our economy.683    Thank you.684685    [The prepared statement of Ms. Griffin follows:]686    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]687688    Chairman Meuser. Thank you very, very much. We look forward689to your report.690    Ms. Sanchez-Adams, you are now recognized for 5 minutes.691692  STATEMENT OF CARLA SANCHEZ-ADAMS, SENIOR ATTORNEY, NATIONAL693                      CONSUMER LAW CENTER694695    Ms. Sanchez-Adams. Chairman Meuser, Ranking Member Green,696members of the committee, thank you for the opportunity to697testify on behalf of the National Consumer Law Center's low-698income clients.699    Payment fraud is a national crisis demanding a national,700holistic response from our government. Payment fraud impacts701all Americans regardless of age, race, education, income, or702political affiliation.703    Now, technology has enabled criminal fraudsters to use704older forms of payment--like bank-to-bank wire transfers and705checks--to steal money, and these lack sufficient protections.706Newer forms of payment, such as peer-to-peer transactions and707crypto transfers, also enable criminals to steal and launder708money in an easier form.709    Payment fraud can be sorted into two buckets: unauthorized710and fraudulently induced.711    Unauthorized transactions occur when a criminal fraudster712initiates a transaction on behalf of the victim but without713their knowledge or permission.714    On the other hand, fraudulently induced transactions occur715when the consumer or the victim themselves initiates the716transaction but only as a result of a fraud scheme using717deception or manipulation.718    Now, as you have heard, criminal fraudsters, they spoof719real numbers of financial institutions via text message or720phone call. They use deepfakes, take over accounts through721malware or breaches, resort to manipulative psychological722practices, and even use violence to get victims to initiate723payments.724    Americans are plagued by both types of fraud, and we need725to address both if we are going to combat fraud and instill726confidence in our banking and payment systems but the responses727that fraud victims get vary greatly depending on the payment728method used. A victim's best chance at getting their money back729is if there was an unauthorized breach of their accounts730because of the strong protections of the Electronic Fund731Transfer Act, or EFTA.732    But EFTA's Regulation E exempts certain wire transfers,733leaving victims with weak State laws, while electronic benefit734transfer (EBT) cards are unprotected entirely and if the735transaction was fraudulently induced, which you all call a736scam, then usually the victim is going to hear, ``Sorry, there737is nothing we can do,'' because there are no clear protections738under the law.739    We therefore need to update antiquated laws that offer740little to no protection to victims impacted by fraud. In this741day and age, where the vast majority of transactions occur742online or through a mobile app, it makes no sense that only743some of these transactions are covered by EFTA and not others.744    We also need to update EFTA to include fraudulently induced745transfers, following the example of the U.K., which recently746adopted rules reimbursing victims of authorized push-payment747fraud, with industry recognition that making consumers safe is748central to confidence in the payment systems.749    Protecting victims should be central to any discussion750about combating fraud. We absolutely cannot push the burden of751fraud entirely onto its victims. Consumer education is752important and necessary, but it alone will not solve the753problem of fraud, especially with fraud schemes and technology754that are ever evolving.755    However, there are steps that we can collectively take to756keep the impacts of fraud on innocent consumers and even757financial institutions to a minimum and to incentivize more758effective use of innovation to prevent fraud and make our759system safe.760    I agree that telecommunication and social media companies761must take action to prevent fraud in the first instance,762especially since some know that they are carrying fraudulent763traffic. If a criminal fraudster cannot contact a victim764through fake texts, spam calls, or social media schemes, then765the fraud cannot occur.766    Payment systems and financial institutions must also bear767greater responsibility in the fight against fraud. Criminal768fraudsters need a way to receive those stolen funds. If these769criminals cannot get access to our payment rails or deposit770holding accounts, then innocent victims will not lose money771that way.772    As such, we need a stronger focus on the know-your-customer773obligations of the financial institution or payment provider774that allowed the fraudster or money mule to open an account and775receive the fraudulent funds.776    Victims should be reimbursed by the banks, who, in turn,777should be reimbursed by the institution that received the778fraudulent payment. If they bear liability, they will use more779innovative technology to detect and stop fraud. This already780happens on certain payment networks when there are claims of781unauthorized use.782    Simultaneously, we must give innocent consumers the right783to a swift resolution if their funds are frozen or closed by784overly aggressive fraud reporting.785    This is not the time to be weakening consumer protection or786the agencies that protect consumers. This CFPB was actively787working on addressing fraud but is now in tatters and Congress788blocked the CFPB from supervising peer-to-peer (P2P) apps,789which would have helped fraud victims and with the change in790leadership, the CFPB dismissed an enforcement action involving791fraud on Zelle.792    Meanwhile, President Trump has sparked an effort to reduce793the number of checks sent through the mail to and from the794government, which is incredibly important given the rash of795check washing fraud, but people will not be comfortable making796or receiving electronic payments if fraud is rampant.797    Moreover, we should not encourage the use of stablecoins,798crypto assets, and the crypto exchanges when they are a vector799for fraud and scams. These payment forms and systems cannot be800outside of our consumer protection laws.801    Thank you, and I am happy to take any questions.802803    [The prepared statement of Ms. Sanchez-Adams follows:]804    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]805806    Chairman Meuser. Thank you very much for your testimony.807    We will now turn to member questions. The chair recognizes808himself for 5 minutes.809    Fraud and scams are not new concepts. I am extremely810concerned by how rampant--as we all are--it has become in811recent years.812    Ms. Griffin, I would like to start with you. Can you813briefly explain the difference between fraud and a scam and814then elaborate--when you mentioned that fraud is a national815security crisis, who is behind the scams? Who is behind the816fraud? Many think it is lone actors. Others think, as you are817expressing, it is criminal networks. If you could expand,818please.819    Ms. Griffin. Yes, absolutely.820    Within the financial services ecosystem, a fraud occurs821when the customer has no knowledge or participation in the822transaction. So, if you buy a coffee on the street here in DC823and simultaneously your card is used to buy a computer in824Texas, your financial institution says, ``Hey, something is825going on here that is not right,'' but you had no knowledge of826that transaction.827    In a scam, you have, perhaps, met someone online; you828received a phone call from someone you believe is the Federal829Bureau of Investigation (FBI) asking you to move funds. You830authorize that transaction to your financial institution and831are part of the process. In that case, the financial832institution has very different sets of information about what833is happening in that transaction because you have authorized834it.835    You ask about who is behind this. The ``Annual Threat836Assessment of the U.S. Intelligence Community'' has identified837these scams--authorized transactions--as part of a nexus of838criminal activity threatening the United States perpetuated by839transnational criminal organizations and state-affiliated840groups that also engage in human trafficking, drug trafficking,841weapons and human smuggling.842    North Korean hackers, Mexican cartels, Russian crime843syndicates, and triad gangs affiliated with the Chinese844Communist Party (CCP) are among the U.S. adversaries that are845benefiting from these crimes.846    We also know that they are using human trafficking victims847in some places to commit those crimes. Scam compounds in848Southeast Asia may have as many as 400,000 enslaved people849forced to commit those scams against U.S. and other countries'850citizens.851    Chairman Meuser. Well, thank you. That is quite compelling.852    Mr. Bednowitz, what are some of the explanations for the853rise in financial fraud and scams? You mentioned it is a 33-854percent increase, I think you said, over a 2-year period. I855really appreciate you saying these are not just statistics;856these are people that are truly being seriously victimized.857    If you would, please.858    Mr. Bednowitz. Yes. Thank you for the question, Chairman.859    There are three primary drivers of the increase in scams860and fraud over time.861    Chairman Meuser. Lean into the mic a little bit.862    Mr. Bednowitz. Oh, sorry.863    There are three primary drivers of the increase in scams864and fraud over time: the increase in data breaches, the865industrialization of fraud, and the rise of AI.866    Data breaches have tripled since 2020, and that means there867is a plethora--this is according to the Interstate Technology &868Regulatory Council (ITRC) and our own data. What that means is,869there are now billions and billions of pieces of personal870information that are exposed on the dark web that criminals can871use to target people--to target them with compelling messages872from their banks, target them with spoofed numbers. That873information is very critical.874    Then you take that--as Ms. Griffin said, it is no longer an875individual in a basement somewhere. You have criminal876organizations across the world that are professional, that have877large staffs, at times human-trafficked themselves, that are878doing this and targeting victims day-in and day-out.879    Those two on their own are enough to drive the growth, but880then you take AI into it. I said AI was a double-edged sword.881In the hands of these organizations----882    Chairman Meuser. Right.883    Mr. Bednowitz [continuing]. you know, what would have taken884more time and cost to take that information that is out there885in the dark web and combine it with information from social886media and public internet, would be harder--that has become887easier and easier, so that no longer do we have the days of the888Nigerian prince scam with all of the spelling errors----889    Chairman Meuser. Right.890    Mr. Bednowitz [continuing]. but, instead, you have emails891that look like they are from your bank, that have your account892number in there, that have your name----893    Chairman Meuser. Right. Thank you. Great answers.894    Mr. Benda, relatively quickly, the Office of Scam and Fraud895Prevention you brought up. There are a lot of discrepancies,896whether it is $12 billion, $16 billion of loss from these897scammers and fraud experts. Talk about that, how important that898would be, to interconnect government agencies with them.899    Mr. Benda. Sure. I think the challenge we have--we have900heard that the numbers that Americans are experiencing scams901could be $100 billion, and yet you have to ask yourself the902question, who is in charge of scam and fraud prevention in the903U.S. Government? Is it the Treasury Department? Is it904Department of Justice? Is it Department of Commerce? We have no905central point to report these.906    In fact, consumers are confused as to where they should907even report a scam or fraud. Should they report to the FBI?908Should they report to the CFPB? Should they report to FTC and909others?910    So having a central place where we could report this911information, that could be acted upon, to actually take action912for the consumer----913    Chairman Meuser. My apologies. We will have to finish this914later.915    Mr. Benda [continuing]. would be helpful.916    Chairman Meuser. My time has expired.917    We will now turn to the gentleman from California, Mr.918Liccardo, for 5 minutes.919    Mr. Liccardo. Thank you, Mr. Chair.920    Thank you, each one of you, for your testimony.921    I wanted to ask one question and ask for hopefully the922feedback of each of you, if we can get it all done in 5923minutes. Let me describe the basis of the question.924    We have been very active in this committee in attempting to925set up rules to govern cryptocurrency and that is long overdue.926I think many in the industry would agree that this is an area927that needs some settled regulation rather than regulation by928litigation or other approaches that have been taken in the929past.930    We know that trillions of dollars are transacted in931centralized exchanges and decentralized protocols every year.932That number is increasing rapidly and with that quantity of933exchange, obviously, to the extent that particularly it is934happening off of decentralized exchanges, there is increasing935opportunity for fraud and for theft, as well as money936laundering and other kinds of criminal activity.937    We have recently in the House of Representatives passed a938bill, the CLARITY Act, that governs what happens on centralized939exchanges and perfectly or imperfectly, it has established940know-your-customer requirements, anti-money-laundering941requirements, other rules to establish centralized exchanges.942    We know, increasingly, the activity is moving from943centralized to decentralized, to decentralized finance (DeFi)944protocols and because of pseudonym anonymity, the person on one945end of the transaction does not actually know the identity of946the person at the other end of the transaction. If they try to947get a subpoena or they call the FBI to say, ``I was948defrauded,'' they cannot even find out who was doing it.949    So the question is, what do we do about DeFi? That was not950addressed in the bill that passed through the House.951    I am interested, Ms. Sanchez-Adams, do you have any952particular views?953    Ms. Sanchez-Adams. Yes. As I mentioned in my testimony, I954think that, regardless of the market regulation and structure955of the bill, you have to protect consumers.956    So, if you update or clarify--the CFPB can do it through957guidance, or you all can do it through legislation--that the958EFTA applies to crypto transactions, then those platforms will959be held responsible and liable when consumers are defrauded,960especially if you also update it to include fraudulently961induced transactions.962    Mr. Liccardo. If it is off a platform, what do you do then?963    Ms. Sanchez-Adams. I mean, you mean if it is, like, from an964unhosted wallet?965    Mr. Liccardo. That is right.966    Ms. Sanchez-Adams. Right. So, I mean, you can--I think that967there are problems with crypto and with the technology aside968from that, which I am happy to talk about at another point in969time, but I think you still hold them liable. They are the970party or the entity that is receiving the fraudulent fund.971    If they are--unfortunately, it would be like I am acting in972cash, and I am transacting in cash, right? So, if I have an973unhosted wallet that is being used to pay somebody else who has974an unhosted wallet, it is like I am giving them cash and so975they cannot be regulated the same way as a bank could be976regulated, but they are still subject to criminal fraud.977    Mr. Liccardo. Thank you.978    Ms. Griffin?979    Ms. Griffin. Thank you for question. The forthcoming report980will have a number of recommendations related to this, one of981which will include establishing parity of law enforcement982powers across money movement, including the civil forfeiture of983digital assets.984    So some things about treating digital assets as cash for985purposes of the civil forfeiture of fungible property;986clarifying U.S. Secret Service authorities regarding those987asset transactions--essentially, how do we empower our law988enforcement to be able to go after when crypto is involved in989the transaction.990    I think the other element of this that has come up quite a991bit in the task force deliberations is also related to the992risks posed by crypto ATMs--ATMs that are placed in community993stores, in nursing homes, in retirement homes, and where people994are directed to put their hard-earned cash into those ATMs for995the purposes of sending to criminals. That is an area where we996think there is a greater need for you all to be investigating.997    Mr. Liccardo. Thank you.998    Mr. Bednowitz, you might have the last word.999    Mr. Bednowitz. Yes, so thank you for the question, and I1000will be very brief.1001    I think, from our standpoint, I go back to what I said; I1002think awareness is very, very important. Consumers are not1003aware of the incredible risk that crypto poses. Crypto is at1004the heart of a lot of different scams, because people get1005excited about the potential returns, and they do not know when1006they send crypto to an individual, what risks they are opening1007themselves up to.1008    So making people more aware of the risks of crypto and that1009they should be much more thoughtful of when they are putting1010cash into crypto and where they do that is very, very critical1011to combating this issue.1012    Mr. Liccardo. At the very least, we should be making them1013aware if they are on a DeFi protocol as opposed to a1014centralized exchange with those kinds of----1015    Mr. Bednowitz. A hundred percent.1016    Mr. Liccardo. Thank you very much for your testimony.1017    Thank you. I yield.1018    Chairman Meuser. The gentleman yields.1019    The gentleman from Arkansas, Chairman Hill, who is our1020chair of our full committee, is now recognized for 5 minutes.1021    Chairman Hill. Thank you, Chairman.1022    Again, thanks to the panel. Great panel, good discussion.1023    I noted in my opening statement that our family was hit1024with washed checks from the Postal Service, and--really1025offensive. I want to credit my bank for finding it and1026recognizing the fraud and stopping it and helping work with the1027FBI and the local police to put the people in jail, which I was1028happy to do, but there are millions of people around the1029country that is not happening to. So this is such an important1030hearing.1031    Mr. Benda, I want to start with you and thanks for the ABA1032taking a keen interest in this.1033    All the comments I have heard are 100 percent true; there1034is just not a way to get at this. It is a whack-a-mole1035situation, and we do not have enough mole whackers working on1036it.1037    One of the things noted was, you said maybe $100 billion of1038losses and one of my complaints is, we cannot measure or tackle1039things we cannot see. I have argued that the bank call report1040should break fraud losses out of other expenses and make it its1041own line item.1042    Would you support that, Mr. Benda?1043    Mr. Benda. I think it is important for us to track fraud1044and scam losses in a consolidated manner. That would be one1045thing we would be open to looking at doing.1046    Chairman Hill. Good. Thank you.1047    Also, this all-of-the-above law enforcement effort that it1048takes--and all of you have kind of touched on that in your1049different remarks in answer to questions.1050    I went to Tyler, Texas, to look at the Tyler law1051enforcement center that the State of Texas has set up there to1052combat debit fraud--so, focused on debit skimming mostly at1053fuel pumps, operated by cartel-related gangs across Texas.1054Millions of dollars are lost per month. The card issuers are1055the eaters of those losses, not the merchants, generally.1056    What should we ask merchants to do in terms of 24-hour, 7-1057day-a-week, microscopic telecommunications pump point-of-sale1058fraud? You mentioned ATMs, a similar issue to prevent skimming.1059    Who wants to tackle that question?1060    Ms. Griffin, do you want to tackle that?1061    Ms. Griffin. I think the only thing I will say is, we have1062a number of members in the task force, I know, that have been1063working on this issue, both related to EBT cards, as Ms.1064Sanchez-Adams brought up, as well as other types of1065transactions.1066    There are increasing and emerging technologies they can use1067at the point-of-sale devices to detect when a skimming device1068has been put there----1069    Chairman Hill. Yes.1070    Ms. Griffin [continuing]. and more investment in that is1071needed.1072    Chairman Hill. The technology I saw is smaller than my1073little fingernail. It is inserted in the skimmer, both at1074point-of-sale at retail and at a gas pump and it is downloaded1075by Bluetooth to the criminal who just walks by the pumps on a1076regular retrieval basis.1077    This is not your grandmother's fraud, like you are all1078making the comments. This is super-sophisticated.1079    Attorney General Tim Griffin in my State has set up a1080Financial Fraud Task Force to bring all the forces together in1081Arkansas to combat this--text, phone, mail, check, the whole1082effort. So I really commend him for that.1083    Ms. Griffin, I wonder what your view is of how those1084stakeholders should try to work together on a national basis to1085do best practices.1086    In my example in Arkansas, tens of thousands of dollars are1087missing: $1.5 million out of my post office just in my little1088neighborhood was the publicly reported number. We have one1089postal inspector for the State of Arkansas, 3.4 million people.1090    So can you comment on the role of the FBI, the U.S. Postal1091Service, and other law enforcement?1092    Thank you, Ms. Griffin. Please.1093    Ms. Griffin. Yes. Thank you.1094    First of all, those agencies were all very active at our1095table. Lots of dedicated leaders focus on this and one thing1096that we heard quite often is that the collaboration around1097scams is a side-of-the-desk activity. There is not a directive1098from the top that anti-scam activity is a leading priority for1099law enforcement.1100    One of the actions that we believe can be facilitated by1101naming scams as a national priority to mount a coordinated1102response is to direct law enforcement to create greater1103resources toward those kinds of collaborations, because, as you1104rightly mention, they will yield benefits.1105    Chairman Hill. Yes.1106    It is a cross-Congress problem. I mean, we do not control1107the FTC on this committee, and yet the FTC and the Federal1108Communications Commission (FCC) should be very involved here1109due to the transmission means that you have all addressed, like1110in telecommunication-based scams, which is the fastest-growing,1111the most accurate. You have all testified to that. So I think1112we have to link the financial services industry with the1113transmission capabilities, which is mail and telephone and text1114and internet.1115    So I want to thank the panel.1116    Mr. Meuser, thank you for a great hearing, and I yield1117back.1118    Chairman Meuser. The chairman yields back.1119    The gentleman from Texas, Mr. Green, who is the ranking1120member of Oversight and Investigations, is now recognized for 51121minutes.1122    Mr. Green. Thank you, Mr. Chairman.1123    And, again, I thank the witnesses for appearing.1124    Let me start with a basic premise, and this premise is that1125consumers need all of the help they can get from whatever1126agencies are available to them, including the Consumer1127Financial Protection Bureau, which is currently under assault.1128    Currently, an effort is afoot to remove some 1,500 of the1129personnel from the CFPB. This would be tantamount to removing1130about 90 percent of the staff. Consumers need all the help they1131can get, at a time when this President is eviscerating the1132Consumer Financial Protection Bureau.1133    Now, Ms. Sanchez, you made a comment earlier--Sanchez-1134Adams--about the CFPB. Some of what my colleagues, my friends,1135as witnesses, are calling to our attention are things that the1136CFPB could be associated with. If needed, we could expand what1137the CFPB can do. Someone said, we need a central point of1138contact for consumers. Well, that sounds like a Consumer1139Financial Protection Bureau, which is being eviscerated.1140    This hearing is quite amazing to me. We want to help1141consumers, by some standards--not mine--by eviscerating the1142agency that helps consumers.1143    Ms. Sanchez-Adams, would you kindly respond?1144    Ms. Sanchez-Adams. Yes. I agree.1145    The CFPB, in January 2025, entered a consent order against1146Block, which is the owner of Cash App, for fraud that was1147happening there. They were not investigating properly1148unauthorized-use claims under EFTA. That was one of the1149violations, as well as a lot of other promises about a system1150that was safe and was supposed to protect them.1151    Now, under that order, they are supposed to receive--1152consumers and victims who were impacted by unauthorized use,1153that should have already gotten their money back, are supposed1154to get $120 million in redress. However, they have not received1155a penny yet.1156    I think part of that is, there is a reduced workforce that1157is not able to do the work that it is supposed to be doing for1158that reason. So I agree with you that we need to restore the1159strength of the CFPB.1160    Mr. Green. Yes.1161    You mentioned Zelle. Explain.1162    Ms. Sanchez-Adams. Yes, so they had also--in I believe it1163was December 2024, they had filed a suit against Zelle for1164similar infractions. So they also were not responding to the1165EFTA unauthorized use claims properly, timely, reimbursing1166impacted victims.1167    Also, they knew before it was time to launch the product1168that it was not yet safe and did not have all the guardrails1169that it may now have in place at the time, because they did not1170want to lose market share. So the claim in the petition is that1171they launched it before it was safe, as a violation of the1172Consumer Financial Protection Act (CFPA).1173    Unfortunately, as I mentioned in my testimony, with the1174change of leadership at the Bureau, that suit was dismissed,1175though it was picked up by the New York Attorney General's1176Office.1177    Mr. Green. Are you familiar with the Townstone Financial1178case?1179    Ms. Sanchez-Adams. Yes.1180    Mr. Green. Okay. This is invidious discrimination against1181Black people. Settlement was at hand. Tell us what happened,1182please.1183    Ms. Sanchez-Adams. Yes, in that case, there was actually a1184court order, and they were ordered to pay back money. The1185Bureau decided it did not want to pay that money out or to1186enforce that order and they wanted to vacate that order, and1187the court did not allow them to do so.1188    Mr. Green. What signal are we sending to consumers when we1189complain about the atrocities that they have to suffer and we1190eliminate the agency that is there to help them? What is the1191signal that we are sending, please?1192    Ms. Sanchez-Adams. That we do not care about them.1193    Mr. Green. If we cared about consumers, would we eviscerate1194the Consumer Financial Protection Bureau?1195    Ms. Sanchez-Adams. Not in my opinion.1196    Mr. Green. What could we do to strengthen it, in your1197opinion?1198    Ms. Sanchez-Adams. We do need to restore the funding so1199that it is able to function the way that Congress designed it1200to function under the Dodd-Frank Act. We also should not1201eliminate the workforce that is there to do the job of1202protecting American consumers.1203    Mr. Green. This is another example of how the President1204creates a problem and then decides that he will solve the1205problem with the solution that was already there. This is1206unbelievable that we would find ourselves now eviscerating the1207Consumer Financial Protection Bureau and saying that consumers1208need protection.1209    I yield back.1210    Chairman Meuser. The gentleman yields.1211    The gentleman from Georgia, Mr. Loudermilk, is now1212recognized for 5 minutes.1213    Mr. Loudermilk. Well, thank you, Mr. Chairman.1214    Before I get on with my main line of questioning--Ms.1215Benda? No? Oh, Mr. Benda. I am sorry. Yes. My apologies. Ms.1216Sanchez-Adams suggested simply shifting losses from one party1217to another. What would this do in practice?1218    Mr. Benda. I think we can see an example of that in the1219U.K. They have a reimbursement framework that she mentioned. If1220a consumer is fraudulently induced of transferring a payment,1221they are liable to reimburse, up to 85,000 pounds.1222    So the hope was that this was going to greatly reduce the1223amount of scams and fraud out there, spur investment. What1224unfortunately has happened is that--banks had already heavily1225invested in anti-fraud and anti-scam protections; scam losses1226only went down by 1\1/2\ percent.1227    The challenge that it would create for banks, though, here1228in the U.S. is, not only would it not necessarily reduce scam1229losses, but it would also put banks in the uncomfortable1230position of trying to tell American consumers how they can and1231cannot spend their money.1232    We talk about sending--we do not want people to send money1233to someone they do not know and trust. By the time they are1234ready to make that payment, they believe they know and trust1235who they are talking to. We have countless stories where you1236can talk to a family member that could not convince someone not1237to send money and now you are going to have a bank teller that1238is going to be responsible for making that decision?1239    We do not believe that Americans want banks telling them1240who they can and cannot send money to.1241    Mr. Loudermilk. Okay.1242    While I have you, Mr. Benda--I apologize--the Georgia1243Bankers Association brought something to our attention earlier1244this year. As the chairman of the full committee, Chairman1245Hill, brought up, we also in Georgia have had a big issue with1246check washing, especially through the post office--stealing of1247checks. I mean, hundreds of thousands of dollars have been1248fraudulently stolen that way.1249    They brought up a scenario where the fraudster or the1250criminal would go to a nonlocal bank and, most likely using1251fraudulent identification, would open a bank account, and that1252would pass the know-your-customer standards. Then they would1253take these fraudulent checks and deposit those in that bank but1254instead of the Big Bank putting a hold on the check, they are1255paying those checks and clearing them.1256    Is that a problem that you have been aware of? Is this1257something that would be an easy fix of requiring the banks to1258hold the checks?1259    Mr. Benda. So check fraud is a very substantial problem1260that does not appear to be going away.1261    We have a lot of challenges right now with fake IDs that1262are out there. If anyone has a college-age student, they know1263that it is relatively easy. AI is now allowing criminals to1264generate very realistic-looking statements from a utility1265company, from a telephone company.1266    So banks are really struggling with, when the documents1267being used to open an account look completely legitimate and in1268many cases pass through certain verification procedures, they1269will open up those accounts. So what we train banks to do is1270look at the age of the account, look at the holistic nature of1271what is being done, what is the pattern of deposits.1272    So banks would like more flexibility, quite frankly, on1273being able to hold those checks. Certain checks have certain1274timelines and when they have to release the funds, such as a1275Treasury check. So we would be very open to having a discussion1276of how we could increase those hold times appropriately when1277fraud is suspected and that is something our members would be1278very interested in.1279    Mr. Loudermilk. Okay. Thank you for that.1280    In your testimony, you mentioned that criminals effectively1281took advantage of the economic devastation during Coronavirus1282disease 2019 (COVID-19), especially the unprecedented1283government response to support small business and out-of-work1284Americans.1285    How has the COVID-19 pandemic had a lasting effect on1286fraud?1287    Mr. Benda. Well, and I think Mr. Bednowitz mentioned that1288the identity theft that is out there.1289    Let me give you the example. We talked about that trust1290issue that the scammers built. If you get a phone call that1291comes in, it shows the number on the caller ID of your bank,1292and they say, ``Mr. Loudermilk, is this you? Do you live at1293this address? Is this the last four of your Social Security1294number? Can I talk to you about some potential suspicious1295transactions on your account?''1296    The vast majority of Americans do not realize that all that1297information is out there, do not realize their phone number can1298be spoofed--that the bank phone number can be spoofed, and they1299are going to believe they are talking to their bank, and they1300are going to give up that information.1301    That is the challenge that we face. We face a very1302sophisticated criminal adversary that is leveraging the loss of1303all that information and the technology available to them to1304steal from American consumers.1305    Mr. Loudermilk. Has the pandemic actually helped create new1306criminal networks?1307    Mr. Benda. I believe so. What we have seen is, the1308unemployment insurance fraud created that market for the1309personally identifiable information, but it also created a1310belief that this white-collar crime does not get enforced. So1311check fraud vastly increased after 2020; identity theft1312increased after 2020.1313    These white-collar financial crimes have vastly gone up.1314Unfortunately, enforcement, due to lack of resources, simply1315has not kept up.1316    Mr. Loudermilk. Okay.1317    I see my time has expired, and I yield back.1318    Chairman Meuser. The gentleman yields back.1319    The gentlewoman from California, Ms. Waters, who is also1320the ranking member of the full committee, is now recognized for13215 minutes.1322    Ms. Waters. Thank you very much.1323    Let me just start by saying, Donald Trump is the most1324profound--pro-fraud President in history. He dismantled the1325CFPB, rolled back protections, and dropped lawsuits against Big1326Banks and crypto scammers, making it easier to basically scam1327retirees, students, and working Americans.1328    He is $7.7 billion richer and continues profiting off the1329Presidency at the expense of constituents. Under his watch,1330fraud targeting American consumers has soared, from meme-coin1331pump-and-dump schemes to insider trading linked to his own1332tariff announcements.1333    Ms. Sanchez-Adams, earlier this year, Trump's CFPB, since1334he took it over, dropped a lawsuit that the agency previously1335filed against Zelle, Bank of America, JPMorganChase, and Wells1336Fargo, where they found hundreds of thousands of consumers lost1337nearly $1 billion through various payment fraud schemes.1338    With enforcement cases like this being dropped by the Trump1339Administration, how will these harmed consumers get their money1340back?1341    Ms. Sanchez-Adams. That is a great question. Thank you for1342that question.1343    Unfortunately, right now, they are relying on their State1344regulators to pursue that enforcement. As I mentioned earlier,1345the New York AG filed suit against Zelle for the same actions,1346but that is only protecting New Yorkers, and the rest of the1347country also needs protection. You do not want to hear from1348your constituents, ``Why are not you doing anything? New York1349is doing something, but we are not doing anything.''1350    So that would be one answer, is that we need more1351protection by the CFPB, more enforcement, instead of dropped1352suits.1353    Ms. Waters. Well, let me just say that this hearing is a1354sham. Committee Republicans are defunding the very agencies1355designed to protect consumers and oversee the financial system.1356    Just 2 months ago, Republicans voted to eliminate half of1357the CFPB's budget--you heard all that discussion this morning--1358all while rejecting every attempt by Democrats to rein in1359Trump's crypto fraud. Instead of protecting consumers,1360committee Republicans have chosen to enable scams and defend1361Trump's fraud-first agenda.1362    What can we expect further from the CFPB that has now been1363reduced to practically nothing, with all of the layoffs and1364firings, et cetera, et cetera? What can we expect them to do?1365How much more harm can they rain on the American people?1366    Ms. Sanchez-Adams. Thank you for that question.1367    Unfortunately, taking steps to deregulate the industries1368that pose a threat and harm consumers is not the right step to1369take, and I hope that is not what continues. I hope that they1370do not bend to the pressures of industry to let them do what1371they want and continue to harm consumers.1372    I hope that they do continue to enforce laws, and I hope1373that they continue to do supervision like they are supposed to1374do, instead of weakening their efforts to protect consumers.1375    Ms. Waters. Would you agree that the way that they have1376defined this hearing, ``Fraud in Focus: Exposing Financial1377Threats to American Families,'' is misleading?1378    Ms. Sanchez-Adams. I hope that we are taking steps to1379protect families against fraud and not just paying lip service.1380    Ms. Waters. Having a hearing like this, where the opposite1381side of the aisle is talking about ``fraud in focus,'' again,1382``exposing financial threats to American families,'' do you1383think that, based on some of the comments that I have made1384about the Consumer Financial Protection Bureau and others--I1385was one of the ones sitting on the conference committee of1386Dodd-Frank reform when we actually got some protection from1387consumers with the CFPB--do you think that I have at all1388missed, somehow, defining correctly what has happened to the1389CFPB?1390    Ms. Sanchez-Adams. No. I think it is accurate that they are1391not doing the job that they were ordered by Congress to do;1392they are not currently protecting consumers against harm.1393    Ms. Waters. Is there anything that you think they can say1394to deny anything that I have said?1395    Ms. Sanchez-Adams. No. I just hope that Congress restores1396their funding and they hire their employees back so that they1397can get back to doing their job.1398    Ms. Waters. Thank you very much.1399    I yield back.1400    Chairman Meuser. The gentlelady yields back.1401    The gentleman from Tennessee, Mr. Ogles, is now recognized1402for 5 minutes.1403    Mr. Ogles. Thank you, Mr. Chairman.1404    Thank you to the witnesses for being here.1405    Mr. Benda, the banking industry has reported that1406fraudulent ads purchased through Google and Meta are being used1407to impersonate legitimate financial institutions, tricking1408families into handing over sensitive credentials and wiring1409away their life savings, otherwise known as ``malvertising.''1410    When banks flag these ads, what specific obstacles do you1411face enforcing Big Tech to remove them quickly and are these1412platforms effectively profiting while dragging their feet on1413takedowns?1414    Mr. Benda. Thank you for the question.1415    So I think that what we are seeing is significant levels of1416profiting from these ads. The best source we have is a Wall1417Street Journal article that said Meta earns $160 billion from1418ads. They estimated 70 percent of those ads were either illicit1419or poor goods or fraudulent ads.1420    It can take 8 to 32 strikes to take down an ad and so you1421can imagine someone reporting something 25 times is not1422sufficient; it has to be 30.1423    So, I would say, not all social media companies are the1424same. Google is an example, I think, of a company that is1425improving. They have a Priority Flagger program where they1426partner with financial institutions to report things. During1427the pilot, they took down ads with--they took down around 971428percent of the ads that were reported within a very quick1429timeframe.1430    We think that type of activity needs to be done across all1431social media platforms, whether voluntarily or mandated but we1432also think user-sponsored content, which the Google Priority1433platform does not account for, needs to have a way to be1434examined when they are portraying themselves as a financial1435services company and luring people into scams.1436    Mr. Ogles. Just to clarify, you said Meta, $160 billion,1437roughly 70 percent was fraudulent?1438    Mr. Benda. That is what The Wall Street Journal reported,1439sir.1440    Mr. Ogles. Goodness.1441    Ms. Griffin, the GAO has found that responsibility for1442countering scams is spread across 13 Federal agencies, with no1443real coordinated strategy.1444    Given that malvertising on Google and Meta is now a common1445vector for fraud, should national anti-fraud strategy1446explicitly include requirements for these platforms to vet and1447verify financial advertisers before an ad ever goes live?1448    Ms. Griffin. Thank you for that question.1449    One of the things that was clear in the conversations we1450had among the task force members, which included the companies1451we are talking about today, is that there are very different1452business incentives and legal and regulatory requirements1453across these different sectors.1454    We believe that there is an important step to take that1455outlines the private-sector expectations or responsibilities1456that companies have for scam prevention and combine that with1457Good Samaritan legal safe harbors when firms act in good faith1458to prevent scams.1459    Doing so, I think, would go a long way toward creating a1460better playing field for all of these different sectors at the1461table.1462    Mr. Ogles. Mr. Bednowitz, your company specializes in1463monitoring and protecting consumers against identity theft.1464From your vantage point, how often do victims first encounter1465fraud by clicking a fraudulent search and/or social media1466promotion?1467    Given the sophistication of AI-generated scams, do you1468believe that Google and Meta's so-called consumer education1469efforts are keeping pace with the real threat, or are they1470leaving Americans to fend for themselves?1471    Mr. Bednowitz. Yes. Thank you for the question, and it is a1472very good one.1473    I am looking at data here. From our own protection, we see1474that 63 percent of scam-related threats were observed on1475Facebook, 22 percent on YouTube and criminals are using AI-1476generated personas and deepfakes to make these scams appear1477legitimate, like what we are talking about here.1478    There is also another vector of threat from the social1479media companies by them encouraging people that it is in their1480best interest for people to have their information publicly and1481people do not realize that they hide privacy controls. The more1482information that is out there, the easier that criminals can1483take advantage of that and use that with AI to put together1484sophisticated profiles that allow them to target people in the1485most personalized ways possible.1486    Mr. Ogles. Well, I want to caution, you know, when you are1487a hammer--i.e., the Federal Government--everything looks like a1488nail. The last thing I want is more government, which is why I1489supported gutting the CFPB. In fact, in a hearing, I said, ``To1490be or not to be,'' and I said the one agency that deserves to1491die the most painful death is, in fact, the CFPB because of the1492regulatory restraints they were putting on small banks.1493    That being said, when you look at this issue, the crisis at1494hand, especially the seniors but in general the scams and the1495loss of funds, Mr. Benda, what can we do--and we have 281496seconds--what can we do to fix this?1497    Mr. Benda. I think one of the things that is critical is to1498have a takedown process. We recognize these ads are up there.1499When someone is being impersonated, say, your local banker, and1500it is scamming people into crypto schemes that need to be taken1501down and need to be taken down quickly. At a minimum----1502    Mr. Ogles. Mr. Bednowitz, you will get the last word.1503    Mr. Bednowitz. I agree with what Mr. Benda is saying. There1504needs to be vetting of the advertisers on the platform and then1505also pressure to make privacy controls more transparent to the1506consumer.1507    Mr. Ogles. Thank you, Mr. Chairman.1508    Thank you to the witnesses. You all have a great day.1509    Chairman Meuser. The gentleman yields back.1510    The gentleman from Louisiana, Mr. Fields, is now recognized1511for 5 minutes.1512    Mr. Fields. Thank you, Mr. Chairman.1513    Thank you, Acting Ranking Member.1514    Let me thank all the guests who are here today as well.1515    In Louisiana, we have been faced with a different type of1516fraud. We have had--and it is not just the elderly; it is all1517ages--where a person or group of people will send a text1518message. The most recent was a text message reportedly from the1519DMV saying you have to pay a fine, a ticket that happened1520whenever ago, or you will lose your driving privileges, and1521they give them a certain time.1522    I have the email here. Actually, they sent it by text, but1523it is from an email and the attorney general, obviously, went1524to work to try to find out the origin of this bad email but1525there were just good people, young, old, all races of life, all1526walks of life, and many of them were responding.1527    What can we do to figure out where the emails come from? Do1528we have a system in place to do that? That is for all of you.1529    Because it is hitting our State hard, and it is just1530paining to hear constituents call and say, ``Should I pay this1531ticket? I do not remember it, but should I pay it?'' and then1532you say, ``It is a scam,'' you know?1533    What can we do?1534    Ms. Sanchez-Adams. I am happy to take that question,1535because I have gotten the same text message over and over1536again.1537    So part of it is, as we put in our paper, in our written1538testimony, we have recommendations that tell communication1539companies what they should do to prevent those types of text1540messages from hitting consumers. They should do the same thing1541that banks do of knowing your customer. They should do the1542exact same thing.1543    As I mentioned, they know when they are trafficking1544fraudulent activity; they just do not have the incentive to1545stop that, which is why we think the FCC and Congress should1546act to require higher and stiffer penalties. I know that is1547outside of this committee.1548    I think we should not wait for them to act; this committee1549can also act. Part of that is my recommendation that consumers1550are also made whole and that they are reimbursed for1551fraudulently induced payments.1552    We need to have everybody acting to protect consumers.1553    Mr. Fields. Good.1554    Ms. Griffin. I would like to add to that. Thank you for the1555question. Certainly, that particular text message is one we are1556all familiar with.1557    We spend a lot of time in our task force really talking1558about the interface between the private sector and law1559enforcement and their ability to share information with one1560another about things like this that would create better1561information for law enforcement to act and better information1562across the private sector so that, for example, if someone1563acting on that text message directed their financial1564institution to send a payment, the financial institution might1565have information that helps to disrupt or stop that payment.1566    There are not clear, easy protocols right now for law1567enforcement and the private sector to be sharing that data. It1568is a critical element that we will be talking about more in the1569forthcoming report. Often, in fact, those things are done1570manually. We heard tales of stacks and stacks of PDF files,1571with hundreds of pages of raw data and knowing what we know1572about the ways that we have technologically to be able to share1573that data, it is an issue that I think we can make some real1574progress on to be able to strengthen everyone's ability to act.1575    Mr. Fields. Thank you.1576    Mr. Bednowitz. Thank you for the question.1577    I would say, there are two ways that we can address this,1578and I look at this from the consumer angle.1579    One is awareness, and I come back to this a lot. If people1580have vigilance--we have to tell people that they can no longer1581trust communications coming from SMS, email, or phone. Anything1582that comes, they need to go and verify that. They need to stop,1583breathe, verify.1584    The other thing that I would say is, there are solutions in1585the private sector that can help, that can scan people's1586emails, texts, and block their phone calls so that these1587things--they get warnings or they get blocked before it ever1588reaches them.1589    There are interfaces that have AI to be able to battle AI,1590that they can take these communications, put them in, that are1591trained on millions and millions of scam emails, to say, hey,1592is this a scam or not? So they also need that level of1593protection. In a world where the scammers have AI, we need1594consumers to have AI to defend them as well.1595    Mr. Fields. I am out of time, but I would love to hear your1596response.1597    Thank you, I will yield back the balance.1598    Chairman Meuser. The gentleman yields back.1599    The gentleman from Florida, Mr. Haridopolos, is now1600recognized for 5 minutes.1601    Mr. Haridopolos. Thank you, Mr. Chairman.1602    I first want to express my gratitude to our sheriff back at1603home, Sheriff Wayne Ivey. He has been very aggressive in1604getting out the information. As I think everyone in the room1605knows, this is all about prevention, because the odds of1606catching these characters are very, very low. It is great to1607see law enforcement leaders like my sheriff, Sheriff Ivey,1608getting out there, using social media for a positive, and1609making sure that people recognize these scams, as each of you1610are talking about, so that we do not even have these problems1611to deal with in the first place, because people are aware and I1612think they are making smarter decisions.1613    I actually talked to one of my friends today, talking about1614a financial issue. He said, ``Can you please give me a call? I1615want to make sure it is you asking me this question.'' I think1616that this is a lot of the things that we are going through in1617this real-life world. So I really applaud the locals getting1618into that.1619    Ms. Griffin, I would like to ask you first question. I1620would like to focus on your work with the National Task Force1621on Fraud and Scam Prevention, which I understand is a working1622group with law enforcement.1623    How do Federal, State, and local groups work together so we1624do not have these different silos, but they actually work in1625concert, so we are not wasting resources and getting this broad1626message across?1627    Ms. Griffin. Absolutely. Thank you very much for the1628question. I just have nothing but praise for the dedication and1629passion of law enforcement agents working on this issue across1630local, State, and Federal agencies.1631    We heard multiple instances of local task forces where1632that, sort of, multiplicity of agencies were working together1633in a local community both to try to deconflict cases and to try1634to raise awareness in those communities but I cannot stress1635enough how often we also heard that this was a side-of-the-desk1636activity, that this was happening in off-hours through the1637passion and dedication of those agents and not because anti-1638scam efforts were a dedicated priority of the agencies in1639question.1640    We also heard that there is a greater need for more1641training of local law enforcement agents on how to work with1642scam victims, so that when a victim does come forward to local1643law enforcement, which is rare, they are treating that victim1644in a way that, A, shows compassion, but, B, is able to elicit1645the information that we need in order to go after those1646criminals.1647    Mr. Haridopolos. Well, thank you.1648    I will build on the question. I know--just recently, I1649spoke about it with my other sheriff down in Indian River1650County, Sheriff Flowers. Almost daily, he has people coming in1651saying, ``I thought this person was this person versus that1652person,'' and tens of thousands of dollars. This is not a small1653scam. This is a serious number, at least in the communities1654that we are living in.1655    So how do those local sheriffs share information, Ms.1656Griffin, across the jurisdiction so that one can quickly get1657the scam out there?1658    I know, whenever I get the oddball text, I will often go to1659one of my search engines and say, is this number real, is this1660real?1661    How do we make sure that, once we see a small activity--1662maybe others can chime in on this as well--that we quickly get1663the information, so we stop that scam in its tracks and people1664are alert enough to say, is this real or not?1665    Ms. Griffin. Yes. No, it is a great question. There are1666multiple resources available for consumers, but the fact that1667there are multiple resources available for consumers then makes1668it also sort of a noisy environment. Where do consumers turn to1669is a real question, I think, that we need to solve for.1670    There are also not always easy ways for law enforcement to1671know what to do in that scenario. We talked earlier today about1672how the criminals who are perpetrating these crimes are often1673representatives of foreign criminal enterprises, and so the1674jurisdiction of local law enforcement is quite limited in that1675case. So their ability to then liaise effectively with Federal1676agents who can take action is something that we need to create1677more strategic and streamlined pathways for them to do so.1678    Mr. Haridopolos. Well, thanks, Ms. Griffin.1679    I will just close with this, Mr. Chairman. I really applaud1680my local sheriffs, Sheriff Ivey and Sheriff Flowers. They are1681really aggressive getting out there in their local community,1682and I am glad that we are raising this awareness. That is1683probably the biggest weapon we have.1684    As you mentioned, Ms. Griffin, so many of these criminal1685syndicates are not within the borders of the United States, and1686the likelihood of recovering these dollars is very, very slim,1687given the realities of these crimes.1688    I think--I know that some folks have talked about the CFPB1689getting involved in this issue. This is a front-end issue. This1690is not a back-end issue. The likelihood of us, kind of, coming1691through with some government agency to recover these are1692probably pretty slim but I hope that we can use the coordinated1693efforts for the future so that, when one scam happens, we can1694use the power of the internet in positive ways so that people1695realize, if you see this number, beware.1696    These are just the challenges of the day. It is1697frustrating. We have so many great innovations coming with1698social media, but these are clearly one of the detractions from1699it.1700    So, with that, Mr. Chairman, thank you for highlighting1701this issue. It is a huge issue, unfortunately, in our district1702and the fact that you are bringing this to people's attention1703will probably save a lot of folks a lot of money.1704    Thank you.1705    Chairman Meuser. The gentleman's remarks are appreciated.1706The gentleman yields.1707    The gentlewoman from Georgia, Ms. Williams, is now1708recognized for 5 minutes.1709    Ms. Williams of Georgia. Thank you, Mr. Chairman.1710    Thank you to all of our witnesses today for your testimony1711and being here.1712    I appreciate my Republican colleagues for focusing on this1713hearing and exposing financial threats and potential solutions1714to fight off fraudsters in this space. Y'all, I do need to1715point out that we had an independent watchdog that helped to1716protect consumers and deliver dollars back to constituents, and1717it was the Consumer Financial Protection Bureau, but my1718Republican colleagues decided in the billionaire bailout bill1719to reduce funding for the CFPB, leaving opportunities for1720fraudsters to flourish.1721    Since Acting Director Vought's takeover of the CFPB,1722ongoing cases to hold financial institutions accountable for1723deceptive practices have been dropped. Many of the rules that1724were either proposed or implemented by former Director Chopra1725have been dropped as well, all of which were aimed at helping1726consumers find relief and the most baffling: It is mid-1727September, y'all, and we still have no clue when the Acting1728Director is going to testify in front of the full committee.1729Perhaps I missed the memo, but what we are focused on today1730is--or, my focus today is on the consumer. The billionaire1731bailout budget opened the door for scammers, a poisoned CFPB,1732and pivoting from the previous administration's rulemakings1733that put consumers over schemers.1734    Y'all, the schemers are real. I just heard this week a news1735report down in Columbus, Georgia, where the local sheriff's1736office, working with the FBI, was at point-of-sale transactions1737at Target, Walmart, gas stations, pulling the skimmers from the1738machines, because people's cards were being cloned and1739purchases being made all over the country.1740    Then, of course, we are all too familiar with, like my1741colleague from Louisiana stated, those text messages, where1742even my 10-year-old son, Carter, is like, ``Mommy, I do not1743drive a car. What do they mean, they are going to take my1744driver's license if I do not pay?'' This is rampant across the1745board but because of these reductions at the CFPB and all of1746the changes, I am going to use this time to remind the American1747people how this administration is prioritizing scammers and1748fraudsters and hurting our constituents.1749    Ms. Carla Sanchez-Adams, last December, the CFPB announced1750at the time that they were distributing $1.8 billion--with a1751``B,'' billion dollars--to 4.3 million consumers, including1752$103 million delivered to Georgia, for consumers that were1753harmed by a group of predatory credit-repair companies. That is1754real money. This was the largest-ever distribution from the1755Bureau's victim relief fund in history, and I applaud the1756Bureau for acting against these scams, but I think we know that1757there are still widespread financial scams like this that are1758still ripping off American consumers.1759    Ms. Sanchez-Adams, have you heard of this type of financial1760scheme and is this the type of scam impacting customers that1761you work with?1762    Ms. Sanchez-Adams. Yes. So ``credit-repair'' organizations,1763quote/unquote, do charge consumers to help them fix their1764credit. Often, they actually charge and collect that money1765before actually doing anything to help address some of the1766credit issues, or they make false promises that they can do1767something that they cannot actually do. It is indeed a big1768problem, and I agree with that.1769    I also just want to take this moment to respond to1770something that was said, that, like, fraud and scams is a1771front-end issue and not a back-end issue. I take issue with1772that, because fraud encompasses both scams and also1773unauthorized use. I hear so many cases where consumers are1774being impacted by unauthorized use, meaning someone takes over1775their account, someone initiates a transaction without them1776knowing about it, and yet their banks are not making them1777whole, even though under the law they are supposed to not just1778banks, but P2P apps, which is what the Zelle lawsuit and the1779Cash App lawsuit were about.1780    That is supervision. That is the Bureau stepping in and1781saying, ``Hey, you guys are not complying with the law. You are1782supposed to be protecting consumers.''1783    So I just wanted to clear that up.1784    Ms. Williams of Georgia. Thank you for that.1785    Building upon that and the conversation around the1786predatory practices around cleaning up your credit reports, do1787you think there is an opportunity for Congress to crack down on1788these scams and better protect consumers who are trying to get1789their financial lives back on track and just trying to live in1790this economy?1791    Ms. Sanchez-Adams. Yes.1792    Ms. Williams of Georgia. Ms. Sanchez, I ask because, as1793someone who spent years paying off my student loans--they are1794done, y'all. I owe zero student loans.1795    My husband, that is another story, Chairman Meuser. We are1796still working on his, but I spent years paying off my student1797loans. I understand how important it is to understand debt and1798building creditworthiness. It is still an important issue, to1799fight off predatory actors in the credit repair space.1800    I remember, during my first term in Congress, when we were1801in the majority, then-Chairwoman Waters would hold hearings and1802testimony from the CEOs of the largest banks. We have not had1803that in a while, so I hope that is coming.1804    I see that I am coming up on time, so, Mr. Chairman, I want1805to leave this last question on the record to get a written1806response.1807    What do you say to consumers who the banking industry has1808failed and who have relied on the CFPB as the final course of1809action when all else has failed them?1810    I would love to get that on the record in writing.18111812    [The information referred to can be found in the appendix1813on page 190.]18141815    Ms. Williams of Georgia. Thank you, and I yield back.1816    Chairman Meuser. Okay. The gentlelady yields.1817    The gentleman from North Carolina, Mr. Moore, is now1818recognized for 5 minutes.1819    Mr. Moore. Thank you, Mr. Chairman.1820    Financial fraud is touching every corner of our society,1821and no demographic is immune. This is not a Republican issue, a1822Democratic issue. This is an issue that impacts everyone.1823    From sophisticated AI-driven scams to check washing, you1824name it, criminals are stealing billions from seniors,1825veterans, working families, really anybody. I know of stories1826where these crimes have drained retirement accounts, wiped out1827savings, and really, if not put in check in some way, erode our1828financial system.1829    Ms. Griffin, what I would just ask you is: From your1830experience, who would you say, who is most at risk of fraud1831today: seniors, young people, small business, and then, are you1832seeing any particular types of scams being targeted at any of1833these groups?1834    Ms. Griffin. Yes. No. It is such an important question,1835because, really interestingly, in the survey data that we have1836been analyzing, there are no discernable demographic1837differences among the victims.1838    Mr. Moore. Huh.1839    Ms. Griffin. It is perhaps one of the only social problems1840we have in America with that characteristic. Young and old,1841urban and rural, different geographies, different races,1842different incomes--everyone is at equal risk of being impacted1843by this issue.1844    I would say, the only other discernable difference is that1845older Americans lose more money, and I think that is largely a1846result of them having had more time in their lives to1847accumulate more money to steal.1848    Mr. Moore. The scope of this problem is really staggering.1849In 2024 alone, the FTC reported that 2.6 million consumers1850reported being victims of fraud, with a combined loss of a1851staggering $12.5 billion. As our witnesses have testified1852before, we expect the true monetary impact of fraud to be much1853higher because of non-reporting, et cetera.1854    Mr. Benda, community banks and credit unions, I know, are1855devoting enormous resources in fighting fraud, but the threat1856is larger than any single industry can possibly tackle on its1857own. Can you describe the scale of fraud that your members are1858seeing?1859    Mr. Benda. Thank you for the question.1860    It is really hard to describe because, as you said, we do1861not have accurate numbers. We have numbers that are all over1862the place.1863    The one thing we can look at is the trend lines. So both1864the FBI claimed a 33-percent increase in fraud from 2023 to18652024, and FTC showed a 25-percent increase from 2023 to 2024.1866So fraud is going up 25 to 30 percent every year, in terms of1867what we are seeing.1868    From our members' perspective, we have spent an inordinate1869amount of time on check fraud, and we have seen that the1870suspicious activity reports (SARs) being reported on check1871fraud have tripled, frankly, in the past 4 or 5 years, and that1872number is not going down.1873    Then we continue to see the rise of scams trying to1874convince consumers to send money out and that is simply going1875to continue to increase.1876    Mr. Moore. Right.1877    Well, let me ask you this. How have the banking regulators1878been engaged in helping financial institutions fight scams and1879fraud? As a secondary, have there been any regulatory or1880interagency fragmentation that has made it harder to respond?1881    Mr. Benda. The regulators have not--I will focus on the1882scam issue. The regulators have not really focused on the scam1883issue, because it is--I think it is more focused on the front-1884end thing, which is a consumer being induced to commit some1885type of act.1886    So what we would like to see them focus on is ways that we1887can better share information. We really want to focus on1888preventing the fraud from happening in the first place and that1889requires sharing information that we receive from suspicious1890activity reports, sharing information from law enforcement, and1891allowing banks and other financial institutions to share1892information about bad accounts being used in real-time so those1893accounts cannot be used to commit fraud.1894    Mr. Moore. With respect to this, I mean, would you say that1895the scams are just--I mean, this is probably a rhetorical1896question. They are becoming more sophisticated, though, these1897scams are.1898    Mr. Benda. They are. They are. They are using the data that1899they have stolen. They are using AI to fabricate documents.1900They are using AI to deepfake voices. They are using AI to1901commit fraud at scale. It is no longer a simple thing, to spot1902a phishing email; it is very challenging.1903    Mr. Moore. You mentioned AI. That brings me to Mr.1904Bednowitz.1905    I will ask you a question. We know AI is a double-edged1906sword. Criminals are using it, of course, to create more1907convincing scams, but my understanding is that companies are1908also deploying it to detect fraud.1909    How effectively is AI being used in protecting consumers1910today, and what gaps still remain?1911    Mr. Bednowitz. Yes. Thank you for the question.1912    AI is definitely a double-edged sword, and we utilize it in1913our tools to scan millions of data points to detect fraud in1914real-time, to detect deepfakes, prevent scams from ever1915reaching consumers via their email, phone, or text. We are not1916alone. The private sector is innovating very heavily with AI to1917combat these scams and these fraudsters.1918    The gaps that I keep coming back to are just awareness on1919the side of consumers to be able to adopt these types of1920protections and to also be aware to breathe and stop, to know1921that they need to check, that they should not just respond to1922any email, phone, or text, that they cannot--they have to be1923vigilant, they unfortunately cannot trust their communications1924today.1925    Mr. Moore. Right.1926    I know I am out of time, Mr. Chairman. I just will point1927out, now criminals can actually use artificial intelligence to1928mimic a loved one's voice. I mean, someone gets a call, and1929they think they are actually getting a call from a family1930member or whatnot, saying that they need this or need that.1931    It is scary, how it is out there and so I appreciate the1932effort that the industry is making on this.1933    With that, Mr. Chairman, I yield back.1934    Chairman Meuser. The gentleman yields back.1935    The gentlewoman from Michigan, Ms. Tlaib, is now recognized1936for 5 minutes.1937    Ms. Tlaib. Thank you so much, Chairman.1938    We are talking about all of this, and all I keep thinking1939about is how paralyzed the CFPB is right now. I mean, this is1940where the 911 for consumer fraud is.1941    I mean, romance fraud is up. I have this huge fraud right1942now--you have to check this out, Chairman--where they say,1943``Oh, you did not respond to the jury response''--did you hear1944about this one?--``to jury duty, and a warrant is out for your1945arrest.'' They get these calls, and I had one constituent lose1946$11,000 on that one. They are getting so sophisticated,1947because, you are right, they even have a website with dot-org,1948like, so--not dot-gov, but dot-org, like, so it looks real. It1949almost looks exactly like--and the number that they call them1950from is the same county number.1951    All of that to say, CFPB was doing an incredible job, and1952it is being paralyzed right now. Why? Because it goes after1953banks that cover up the scams, let us be honest. Let us be1954frank here. Everybody keeps thinking about that, but think1955about it. I do not know why they do not want to, like, help and1956aid in regard to this.1957    I mean, to see them in March, CFPB, under the current1958administration, dropped the case against digital payment app--1959what was it--Zelle, a joint venture between Wells Fargo, Chase,1960Bank of America, delivering a de facto pardon to the company1961for failing to protect its users from fraud. We are almost1962giving them, like, ``Hey, well, that is not our fault. We1963cannot--oh well.''1964    I mean, that does not make any--there should be a sense of1965responsibility on the consumer to be protected if these Big1966Banks are, again, having their consumers, use their service. It1967does not make any sense to me.1968    One of the things--and this is to all the witnesses. If1969banks fail to fulfill their obligations under the Electronic1970Funds Transfer Act--some protections in there requiring them to1971investigate customer complaints of fraud. If those banks1972willfully ignore hundreds of millions of dollars in consumer1973losses, would you agree that at that moment, they are not going1974to be held accountable and they are not going to even actually1975proceed unless we force them to?1976    I feel like people think they are just going to do the1977right thing and I am like, ``No. CFPB made them do it.''1978    What I continue to see--I do not care if it is the loan1979services for the student loans; I do not care if it was the1980folks targeting the veterans--and some of this stuff never gets1981headlines. It never gets in the headlines.1982    I would love to hear from all of you. I mean, you saw this1983case get dropped and be honest, I think my time--be honest. Do1984you think them dropping that case exposed a lot of our1985consumers right now?1986    Ms. Sanchez-Adams. So I will jump in really quick.1987    Ms. Tlaib. Yes.1988    Ms. Sanchez-Adams. So the EFTA--one of the brilliant things1989about that statute is that it actually has a private1990enforcement----1991    Ms. Tlaib. She is talking about, for my residents,1992Electronic Funds Transfer Act.1993    Ms. Sanchez-Adams. Sorry.1994    Ms. Tlaib. I just want them to know. When they see that,1995they do not know that there are protections in there.1996    Ms. Sanchez-Adams. Right.1997    Ms. Tlaib. They just think it is something to do with1998transfer of money.1999    Ms. Sanchez-Adams. So it does have private enforcement with2000really strong remedies if it is violated, including punitive2001damages and treble damages.2002    However, not everybody can afford a lawyer.2003    Ms. Tlaib. That is right.2004    Ms. Sanchez-Adams. One of the brilliant things about the2005CFPB is it acted on behalf of all of those who cannot afford--2006--2007    Ms. Tlaib. I have said that to people.2008    Ms. Sanchez-Adams.--a lawyer.2009    Ms. Tlaib. ``Oh, the elder law clinic cannot take the2010case''--I am serious, Chairman. ``They did not take the case;2011they cannot do any-''--I send them to CFPB and sometimes CFPB2012just calls or sends the letter, an inquiry; gets it fixed like2013that.2014    Ms. Sanchez-Adams. Yes. I----2015    Ms. Tlaib. I have seen it happen.2016    Ms. Sanchez-Adams. I also just want to respond to something2017that one of the witnesses talked about, which is about private2018entities that are able to help protect consumers.2019    Ms. Tlaib. Yes.2020    Ms. Sanchez-Adams. Now, that is all well and good, and I2021love that but there are low-income consumers who cannot afford2022those services.2023    Ms. Tlaib. Right.2024    Ms. Sanchez-Adams. That is the importance of government2025agencies----2026    Ms. Tlaib. I mean, what do you all think, other than, I2027mean, Ms. Carla here, what do you all think about them dropping2028the case? You think that was a great idea?2029    We are talking about $870 million in losses to the public.2030This is 1 of 22 enforcement actions, by the way.2031    Do not be afraid. Was this a good action on behalf of CFPB,2032to drop that case?2033    Paul?2034    Mr. Benda. I am sorry, Congresswoman. I am not familiar2035with the case. I cannot speak to that.2036    Ms. Tlaib. Okay.2037    How about you, Ian?2038    So it is okay; they are just not going to enforce the2039Electronic Funds Transfer Act.2040    Go ahead, Ian.2041    Mr. Bednowitz. No, I appreciate the question. I am also----2042    Ms. Tlaib. Okay.2043    Mr. Bednowitz [continuing]. unfamiliar with----2044    Ms. Tlaib. All right.2045    Mr. Bednowitz [continuing]. the case.2046    Ms. Tlaib. Kate, you are familiar. You know that CFPB just2047dropped an $870 million case against these folks. I mean, Zelle2048is participating with these banks, and they are letting it2049happen and pretty much, they are like, ``Sorry. You lost that2050money. We cannot do anything about it.''2051    Ms. Griffin. Thank you for the question.2052    One of the things that we talked about a lot in the task2053force that we have been organizing is the ability, in this2054example of the text messages, for the banks to get information2055from the telecommunications companies about that interaction--2056--2057    Ms. Tlaib. That is right.2058    Ms. Griffin [continuing]. so that they know whether that2059case is fraudulent.2060    Ms. Tlaib. Why do they not just want to----2061    Ms. Griffin. There are a lot of actions----2062    Ms. Tlaib. I do not understand why they do not want to2063help.2064    Ms. Griffin. Well, I think the issue we will come out with2065in this report is how we can help all of those institutions to2066better share information so that they can take more2067preventative action.2068    Ms. Tlaib. Yes. Thank you.2069    I yield.2070    Chairman Meuser. The gentlelady yields.2071    The gentleman from Oklahoma, Mr. Lucas, is now recognized2072for 5 minutes.2073    Mr. Lucas. Thank you, Mr. Chairman.2074    Thank you to our witnesses for being here today.2075    Of course, it goes almost without saying, this hearing2076could not be more relevant to our world today. One of the most2077pressing topics I hear from credit providers in my district is2078the growing prevalence of fraud and financial threats to our2079families and institutions.2080    According to CFTC, in my home State of Oklahoma, over $752081million was lost last year in fraud attacks but we know these2082crimes are severely under-reported and the actual number is2083most likely dramatically higher.2084    So let us focus, again, on the core stuff here. All of our2085Federal agencies must prioritize the effective prevention tools2086and work together to find and punish bad actors.2087    So, Mr. Bednowitz, how has your company had success--let us2088talk about some success here--in fighting bad actors and what2089are the lessons the Federal agencies could learn from private-2090sector experiences?2091    Mr. Bednowitz. Yes, absolutely and thank you----2092    Mr. Lucas. You have been in the trenches. Tell us about it.2093    Mr. Bednowitz. Yes. Thank you for the question.2094    We protect over 500 million consumers globally from these2095types of threats, and we do it through a variety of technology2096solutions that the private sector offers.2097    I want to say a few things to address the comment earlier.2098Just because it is private sector does not mean that it has to2099be something that people cannot afford. There are partnerships,2100from peers in the industry, between banks and those credit2101bureaus, that offer free solutions for people to be able to2102protect themselves. There is the Identity Theft Resource Center2103that helps people when they have problems, in addition to the2104paid solutions that are out there but the success is really2105based on having comprehensive protection of your devices2106through security, having identity-theft protection. Scam2107protection is coming out and then there is restoration and2108remediation and some of these providers, including us, provide2109support every step of the way when someone falls victim, as2110well as the insurance to help reimburse them for those losses2111that they have.2112    So there are solutions out there.2113    We have many stories of people--one story comes to mind of2114an elder gentleman who, as we talk about these bitcoin ATMs, he2115was tricked into--that money, $9,000 had come into his2116account--into giving $9,000 into one of those ATMs, but because2117he was covered by our insurance, we were able to reimburse him2118for that loss.2119    Mr. Lucas. Mr. Benda, could you comment on this as well?2120    Mr. Benda. Absolutely, Congressman.2121    So I think what we are seeing is, banks are making some2122success at trying to combat these scams and fraud, sharing2123information where they can, but I think the focus really needs2124to be here on the prevention side of things.2125    I think we need better sharing from the telecoms in terms2126of the text messages that are being out there. I think we need2127better enforcement from the FCC to shut down those telecoms2128that are sending those bad text messages, but I think there has2129to just be better information-sharing across the ecosystem. You2130can share across financial institutions without fear of2131liability, but social media, telecoms, and others cannot2132necessarily share that same level of information.2133    We know that banks file 6,000 SARs a day--suspicious2134activity reports--a day focused on fraud, but that information2135never comes back to financial institutions in a manner they can2136use to prevent that fraud from occurring.2137    Mr. Lucas. Continuing with that, Mr. Benda, we have heard a2138lot about those gaps in the data collection from Federal2139agencies on the financial fraud.2140    Can you talk about the need for and expand more on this2141cross-agency collaboration and whole-of-government approach? I2142mean, why are the information silos ineffective? You touched on2143that. Just in a moment, would you----2144    Mr. Benda. I did.2145    Mr. Lucas [continuing]. expand on that?2146    Mr. Benda. Thank you.2147    I think that is the critical need.2148    The question you have to ask yourself is--we hear many2149times, let us say a small bank gets--their local area gets2150blanketed with these fake fraud alerts. You hear about this.2151They send these thousands of messages out, and then they2152overwhelm--one of our small banks got 600 calls a day. We know2153crimes are being committed at that exact moment. There is no2154911. There is nowhere to call to say, how do I stop these text2155messages, how do I stop this crime from occurring?2156    We need to have a centralized strategy. Other countries--2157like, Australia has developed a national anti-scam center, has2158a national strategy in place. They have seen a reduction in2159scam losses of 25 percent. We need that type of centralized2160approach to build capabilities.2161    Mr. Lucas. In the few seconds I have left, Ms. Griffin, how2162can we make sure the Federal Government and its private2163industry partners stay competitive against bad actors? How do2164we adapt to emerging threats? This is moving quickly every2165moment, it sounds like.2166    Ms. Griffin. Yes. Thank you for the question.2167    I just want to underscore what Paul is talking about here2168in terms of the importance and the urgency of a coordinated2169national strategy that leverages the best of what America has2170to offer. The innovation, the ability to coordinate are all2171paramount. We need to create better clarity of expectations of2172the private sector for their role in helping to prevent scams.2173    Mr. Lucas. Thank you very much.2174    I yield back, Mr. Chairman.2175    Chairman Meuser. The gentleman yields back.2176    The gentleman from Illinois, Mr. Foster, is now recognized2177for 5 minutes.2178    Mr. Foster. Thank you, Mr. Chairman, and to our witnesses.2179    I probably stayed up later than I should have last night2180reading Mr. Benda's excellent testimony. The thing that struck2181me over and over, reading that, is that identity fraud was at2182the core of every single one of the frauds, the long list of2183frauds, whether it is the text message that starts a long2184romance scam or whatever it is.2185    The point to stop this is at the beginning, and the tool at2186hand is to provide people with a means of proving they are who2187they say they are in an online environment.2188    Because of inaction by the Federal Government, States are2189doing this. They are standing up for what is called the Mobile2190ID, the digital driver's license. This is simply connecting2191your Real ID-compliant driver's license issued by the State,2192which is a pretty unique identity that cannot be--it is very2193difficult to get many fraudulent copies of the Real ID. We have2194done a pretty good job, federally, on that but then what you do2195is, you associate that with your cell phone, take advantage of2196the fact that a modern cell phone is like a security dongle; it2197has a unique, secret ID in there. It is a unique device in the2198world and when it gets associated with a Real ID, that allows2199you to prove you are who you say you are in a legally traceable2200method online.2201    Certainly, every time you open a bank account, that has to2202be an option to people. Because if you talk about the check2203washing fraud that we are talking about, they say, Okay, you2204transfer that to a fraudulently opened bank account. Well,2205guess what. If you are in other countries--just pick your2206country--say, Korea, if you want to open a bank account, you2207get out your cell phone and you prove you are who you say you2208are, and you can open the account like that, because that has2209been compared against a list of bad actors. You are a single2210legally traceable person with responsibility for that account.2211    It does not happen in countries that have done this and the2212U.S. is falling behind on this. Countries around the world2213understand that you need to be able to prove you are who you2214say you are.2215    We can do everything that we want with trying to identify2216patterns of fraud and all of the deepfake impersonations, but2217the bad guys are getting sophisticated too fast for that. The2218other side of the coin that they will never be able to beat is2219when you have a cryptographic assurance of being able to prove2220you are who you say you are.2221    The tool at hand is the Mobile ID that is being rolled out2222by many--digital driver's license--rolled out by many States2223and this is the real answer to this.2224    I think that we have to use this for Federal Government2225purposes. We have gotten very close, for Federal Government2226purposes, to having motion in both the House and the Senate,2227never in the same session but the time has passed for that.2228    I think that if industry had access to a simple, efficient2229way for people to prove they are who they say they are, there2230would be a huge adoption immediately and a dramatic drop in2231fraud.2232    So does anyone--that whole little spiel I just gave, are2233there any details you think need to be corrected on that? Or do2234you all agree that is a----2235    Mr. Benda. Congressman, if I could jump in there, I would2236like to thank you for your leadership in this mobile identity2237space. You have done a great job of pushing that issue forward,2238so I want to personally thank you for that.2239    We partner with the Better Identity Coalition. We recognize2240the value of mobile digital driver's license. We partnered with2241them to send a letter to the FDIC asking them to make sure that2242their examiners are aware that we can use those.2243    We think it is a critical need, to have a reservoir of2244truth, to be able to go back to those DMVs. Not every State2245participates in the DMV validation piece. Having mobile2246driver's license, digital authentication, we think it is2247critical. We are happy to partner with you going forward on2248that effort to do anything we can to spur adoption of that.2249    Mr. Foster. Yes. It will be just a tremendous2250simplification.2251    One of the big things we were struggling with during COVID,2252it was costing, like, $400 to onboard an unbanked person for a2253bank and that was a huge barrier to getting COVID relief to2254people that needed it the most.2255    It did not happen in countries where you say, ``Okay, you2256want your COVID relief check? Get out your cell phone, smile at2257it, do your biometric login, have that cell phone prove you are2258who you say you are and authenticate to a bank account,'' and,2259boom, there is your COVID relief check.2260    It is just--it was heartbreaking to see the delays there2261and the amount of fraud. Hundreds of billions of dollars of2262taxpayer money stolen by fraudsters because we do not have a2263decent way to prove you are who you say you are.2264    Anyway. So I sense there is some motion, some bipartisan2265motion, to get this to happen, because the level of fraud is2266just out of control.2267    Ms. Sanchez-Adams. I just want to say, until legislation2268like that is passed, that is why we need to enforce Bank2269Secrecy Act regulations and do supervision to ensure that2270fraudulent accounts are not being opened and money is not being2271laundered that way.2272    Mr. Foster. Yes.2273    I echo everything that was said by my colleagues about the2274tragedy of what has been done to the CFPB and the anti-fraud2275mission of the CFPB is a small part of what--the damage that2276was done there.2277    So I just want to thank you all and look forward to2278actually building some momentum on this.2279    I yield back.2280    Mr. Steil [presiding]. The gentleman yields back.2281    I now recognize myself for 5 minutes to ask questions.2282    I appreciate you all being here on a really important2283topic. I cannot tell you how many constituents I talk to that2284have been victims of financial scams, problems--in particular,2285pig butchering, where people are integrating romantic2286relationships online--purported romantic relationships online2287and then delving into a financial side.2288    Later today, I am holding a hearing in particular as it2289relates to artificial intelligence and AI. There are a lot of2290positive things that can be done by AI. There are also a lot of2291challenges.2292    I just want to touch on how some of the challenges affect2293this area, about financial challenges.2294    Mr. Benda, if I can ask you, in particular, how bad actors2295are utilizing AI in this way and then I want to get into2296questions, following that, about the ways that we can utilize2297technology or AI itself to prevent those.2298    Mr. Benda. Sure. Sure. There have been a couple things here2299today, and I will just reiterate some of those.2300    I think it is the ability to create very realistic and2301legitimate-looking phishing emails, phishing texts. We are2302worried about agentic AI that is going to be able to act on its2303own, can access personally identifiable information, can2304deepfake voices to make it sound like someone else, and then2305interact with either banks or other companies who are trying to2306fraud them.2307    I think that the scams part of things is really the tragic2308piece, in that we are now seeing romance scams being committed,2309because they can change their visage, they can change their2310voice. It can be someone from overseas of a completely2311different race, and pretend to be someone else, and interact2312and try and build that romance scam, build that trust over2313time, so that someone loses their life savings.2314    Mr. Steil. How are financial services firms navigating2315these new, choppy waters?2316    Mr. Benda. Well, I think there are lot of challenges that2317we have in terms of the phishing. We have one thing in place;2318there is a thing called dot-bank where you can actually2319register your bank's internet domain. It is less resistant to2320phishing, simply because no one else--you have to be a2321financial services company to put your website on there.2322    We have activities, anti-phishing advertising campaigns,2323such as our ``Banks Never Ask That'' that is out there trying2324to inform consumers. So I think a lot of it is really on2325consumer education to try to make people aware of the problem.2326    Mr. Steil. So the consumer education, what the companies2327are doing. Should our regulators be reviewing whether or not2328companies are utilizing some of these anti-fraud projection2329tools?2330    Mr. Benda. We would love to partner with the regulators on2331a consumer education campaign.2332    Mr. Steil. Let me build on some of the AI with you, Mr.2333Bednowitz, if I can. Mr. Benda just referenced AI being used to2334duplicate voice, to duplicate images. I think that is one of2335the things that is uniquely challenging.2336    You can think of fraud against calling maybe a grandma or a2337grandpa, imitating the voice of a grandson or granddaughter2338saying that they need assistance, taking that grandparent fraud2339to the next step. It is uniquely challenging, especially if2340that sure sounds like your grandson or granddaughter who needs2341quick help, and, of course, it is a criminal on the other end2342saying, send $100 to this location.2343    How should we be thinking about that or navigating against2344that?2345    Mr. Bednowitz. Sure. There are two ways.2346    There is a low-tech way, which is teaching people to be2347vigilant and just using safe words. So, across families, if you2348have a safe word, which is a unique, nonsensical word that no2349one is writing down, then if someone is actually having a2350threat, then they can use that safe word, and you know that is2351actually that person on the other end or not.2352    Now, on the more high-tech solutions, my company, others in2353the private sector are building using AI, like you talked2354about, to help defend against that type of AI, to detect2355deepfakes, to detect scams and fraud, whether it is coming2356through video, through voice, through email. So that is2357absolutely a front in a battle that we are tackling.2358    AI is also, though, in the background--what Mr. Benda did2359not talk about--it is less flashy, but AI allows criminals to2360take information that is out there in the dark web, that is out2361there in social media sites, data brokers, and create profiles2362of you to either steal your identity or to target you with very2363personalized scams.2364    Mr. Steil. And to do it with incredible volume----2365    Mr. Bednowitz. Yes.2366    Mr. Steil [continuing]. in a way that was not possible2367previously.2368    I will come to you to close this out, Ms. Griffin. How do2369you think we should be navigating the downside risk of the AI?2370    Ms. Griffin. Thank you very much for the question.2371    One of the first things that comes to mind to me is to make2372sure that our law enforcement is able to use the same tools.2373When we think about the kinds of data that are available, both2374in terms of what the private sector has due to consumers2375reporting to them as well as the kind of data Paul mentioned,2376the SARs data base, the ability for our law enforcement to2377deploy AI, as well, to query those data bases and construct2378cases and go after criminals at scale is a critical element.2379    Mr. Steil. I think what you are saying, to bring us home,2380is, there is downside risk of AI for sure, but there is also2381massive upside potential to address these frauds and making2382sure that we do not throw the baby out with the bathwater is2383going to be incredibly essential as we dive into AI.2384    We will be having a hearing looking at that later today.2385    I appreciate you being here.2386    I yield back and now recognize the gentleman from Ohio, Mr.2387Davidson, who is the chair of the Subcommittee on National2388Security, who is now recognized for 5 minutes.2389    Mr. Davidson. Thank you, Chairman. I appreciate this and2390really appreciate the work of the committee staff, Chairman2391Meuser, and others to get focused on fraud.2392    As chairman for National Security and Illicit Finance, we2393opened the year up talking about scam centers and consumer2394fraud. We had a great panel of witnesses, and I think, once2395again, we have a great panel of witnesses, albeit different2396witnesses.2397    So thank you for your work to protect people from these2398kinds of scams.2399    It is clear that financial fraud remains one of the most2400pressing threats to economic security for American families,2401and there is certainly a lot to cover.2402    Today, I want to focus my time on elder fraud. These are2403some of the most evil, contrived schemes that take advantage of2404our seniors. They have accumulated money; they are just trying2405to live out their years. These wicked elder schemes have turned2406into a global enterprise at this point. It is not like a local2407crime, generally.2408    So the good news is, fighting elder fraud is an issue that2409does unite Democrats and Republicans, should unite all2410Americans. It is time to cut the party-line pushback and make2411laws to protect our seniors more effective.2412    One example here is the Guarding Unprotected Aging Retirees2413from Deception (GUARD) Act. It is a bipartisan legislation put2414forth by my colleagues Congressmen Nunn, Gottheimer, and2415Fitzgerald. While the FBI, FTC, and the Financial Crimes2416Enforcement Network (FinCEN) are tracking the elder-abuse fraud2417schemes, the missing piece here is amping up coordination2418between Federal, State, and local law enforcement. A lot of2419times when I talk to my prosecutors, they can detect the fraud,2420but they have a hard time getting the resources. We are working2421with FinCEN to try to get more of this.2422    So, Mr. Benda, scams targeting seniors are on the rise.2423According to the FBI, from 2023 to 2024, there was a 46-percent2424increase in complaints and a 43-percent increase in revenue2425losses. How have scams targeting seniors evolved over the2426years?2427    Mr. Benda. Thank you for the question, Congressman.2428    So I think they have evolved fairly significantly in terms2429of, we talked about the use of AI in targeting the elderly2430folks. One of the things that was really interesting was the2431use of bitcoin ATMs to cash out on these scams.2432    We mentioned earlier, DC originally has just brought suit2433against Athena, which is a bitcoin operator that operated for 52434months here in the District. It turns out that--they analyzed2435the transactions of the bitcoin ATM--93 percent of the2436transactions of the ATM were fraudulent, 93 percent. The2437average age of the victim? 71. The average loss? $8,000. So the2438question is, is a 71-year-old really going to buy bitcoin at an2439ATM inside a convenience store? They are not.2440    So really the challenge is, they are targeting these2441elderly folks, and they are trying to convince them, whether2442threaten or cajole them, and they are cashing out through these2443bitcoin ATMs.2444    Mr. Davidson. Yes. Thank you for that.2445    I think, a couple things there that you highlight. The2446techniques are used--bitcoin ATMs did not exist a long time2447ago. AI was not around but the other things is these data2448centers that are making all this possible are on the back end.2449    So, as a member of the Foreign Affairs Committee, we are2450seeing, even nation-state-level structuring of data centers to2451be able to create income for poor countries. They make some of2452their--a significant portion of their GDP off of helping scam2453seniors. So this is becoming way beyond the scope of what State2454and local law enforcement can do.2455    You highlight one of the ways that they can do it, and2456certainly bitcoin ATM has been used for fraudulent activity,2457but I would also highlight that blockchain tracing tools have2458made it so it is easier to follow the money, in some cases.2459    So let me turn to Mr. Bednowitz.2460    How might consumer education, specifically efforts geared2461toward seniors, help decrease barriers in reporting?2462    Mr. Bednowitz. Yes. This is a great question and thank you2463for that question.2464    Our data shows that, despite elderly consumers reporting in2465total $5 billion of fraud, a staggering amount, 67 percent of2466them think that they are invulnerable, that they are safe from2467scams and frauds. So there is a huge gap in expectations and2468reality.2469    So it is very important to partner with organizations to2470raise that level of awareness. We have a partnership with the2471AARP to help any way that we can reach out to these seniors and2472let them know that they are vulnerable.2473    Because seniors think, ``Hey, it happens to seniors in2474general, but it does not happen to me. I am smarter than2475everyone else'' and that is the problem; That overconfidence2476leads them to be able to fall victim more easily.2477    Mr. Davidson. Yes, I was particularly impressed with the2478AARP witness earlier in the year in highlighting the nonprofit2479center that they are working with in Pittsburgh.2480    I think the complement to that might be a customer-oriented2481function for FinCEN that works not only with citizens and2482consumers but with our State and local law enforcement. We will2483see if we can do that. I think it is a bipartisan answer. The2484GUARD Act is a good start, but I appreciate your time today.2485    Chairman Meuser [presiding]. The gentleman yields back.2486    We now will have--excuse me. The gentleman from Iowa, Mr.2487Nunn, is now recognized for 5 minutes.2488    Mr. Nunn. Well, thank you very much, Mr. Chair and I want2489to thank the witnesses for being here.2490    You have all echoed what all of our seniors, what too many2491Americans already know: This country and the individuals in it2492are losing billions of dollars each year to sophisticated2493scams.2494    In 2024, there were a reported 2.6 million fraud cases in2495the United States. It resulted in $12.5 billion being scammed2496from individuals, many of those dollars going overseas.2497    These are not just national statistics. They are real,2498everyday Americans. They are families, friends, communities,2499veterans, seniors, not just in my district but across the2500country.2501    In Iowa, my home State, last year, the attorney general2502reported receiving more than 13,000 fraud cases and this is a2503small farm State by comparison to some. It resulted in the loss2504of $42 billion.2505    My office just worked with a 68-year-old veteran who lost2506$100,000 to someone he thought he was helping, only to be2507scammed out of his military pension.2508    This is why I am grateful to be working with this committee2509on a bill that we have introduced called the GUARD Act that2510provides State and local law enforcement better tools to track2511fraud, as well as the bill we are leading in a bipartisan way,2512the Task Force for Recognizing and Averting Payment Scams2513(TRAPS) Act, to really stop fraudulent payment schemes2514targeting seniors at a national level, working both locally and2515strategically to be able to address these issues.2516    I am also proud to be co-chairing a new-formed caucus2517called STOP Scams. This is a bipartisan effort on best2518practices that we should be sharing, and it is one of the2519reasons I am so grateful this committee is speaking about our2520scam attacks today.2521    Mr. Benda, I would like to begin with you. As you know,2522banks are on the front line. Too often, fraud occurs there, and2523coordination with regulators and law enforcement happens after2524the damage has already been done.2525    Would not a coordinated task force, like what is created2526under the TRAPS Act, help to address and disseminate best2527practices before these events occur?2528    Mr. Benda. Thank you for the question, Congressman. Thank2529you for your leadership and thank you for establishing the STOP2530Scams Caucus. We think more effort; more focus on this can only2531help.2532    So we think the TRAPS Act is a good effort to try and2533coordinate the activities across the Federal Government. We2534applaud your efforts in that space, and we hope that you will2535be able to gather information and come up with a consolidated2536plan moving forward.2537    Mr. Nunn. Ms. Griffin, I would also like to ask for your2538input on this.2539    Look, the task force has called for a national fraud2540prevention strategy, specifically with the TRAPS Act. Would2541this help address a nationwide strategy to oppose the type of2542scams that we are seeing?2543    Ms. Griffin. Yes. Thank you for the question and thank you2544for your leadership with your fellow co-chairs in creating the2545STOP Scams Caucus.2546    Your question and the efforts of the caucus really2547represent what is needed here. We talked about this as a whole-2548of-society or a whole-of-ecosystem approach. There are a lot of2549jobs to be done. There are jobs to be done by this committee,2550by other committees here in this building. The efforts of2551things like the TRAPS Act that really recognize that and name2552for leadership within the executive branch of government as2553well to create a national strategy are critically important at2554this moment.2555    Mr. Nunn. I think we all want to go one step further here.2556It cannot just be the role of the Federal Government, trying to2557solve this. As you note, this is not just a whole-of-government2558approach; this needs to be a whole-of-Nation approach and that2559includes our guys on the front line, whether it is a mainstream2560bank or whether it is the county sheriff.2561    One of the things we are trying to do is put more resources2562in the hands of our frontline defenders. We are leading an2563effort called the GUARD Act. The GUARD Act looks at empowering2564local law enforcement to give muscle to the strategy that the2565TRAPS Act would come up with.2566    Local law enforcement, as we all know, they are at the2567front lines. They hear the calls. They talk to the senior2568citizens. They heard from our veteran and, often, they feel2569powerless in their ability to help and by the time the Federal2570Government shows up, as we noted, it is too little, too late.2571    The GUARD Act provides local law enforcement with tools to2572act, while the TRAPS Act would establish a Federal coordinating2573hub.2574    Would you say the two bills together create both a top-down2575and a holistic approach and a strategy that right now is not2576available to too many?2577    Ms. Griffin. Yes. Thank you very much for that.2578    I will say that what we have heard from victims are both2579stories of times when local law enforcement has been enormously2580helpful and times when local law enforcement has not known what2581to do and they have turned away in shame.2582    So the ability to create more resources so that local law2583enforcement has training and the incentives to be working with2584victims and elevating this issue is critically important. Thank2585you for that leadership.2586    Ms. Sanchez-Adams. Representative, if I may?2587    Mr. Nunn. Yes.2588    Ms. Sanchez-Adams. I appreciate the TRAPS Act. The one2589thing that I ask is that it be expanded to not just cover2590electronic payments but all types of payments.2591    Mr. Nunn. That is very good. I appreciate that feedback.2592    Together, I think we need to be able to come up with a2593strategy, first of all, to be able to implement and help our2594folks at the local level.2595    With that, I yield back my time.2596    Chairman Meuser. The gentleman yields. The chair thanks the2597gentleman for his remarks.2598    Before we adjourn, I ask unanimous consent to enter two2599documents into the record: one letter from the Consumer Bankers2600Association discussing the need for cross-industry2601collaboration, and the other from the Bank Policy Institute2602discussing how banks, government, and telecoms need to work2603together to solve this issue.2604    Without objection, so ordered.26052606    [The information referred to can be found in the appendix2607on pages 141-164.]26082609    Chairman Meuser. I would like to thank our witnesses for2610their testimony today.2611    I do want to apologize for the earlier remark made by the2612ranking member that characterized this hearing as a sham. This2613is the furthest thing from a sham. We are all here collectively2614to try to work together to correct the escalating fraud that2615has occurred over the last 3 to 4 years.2616    I am sure that the results of our work will be preventing2617such fraud being caused and forced upon thousands and thousands2618of innocent Americans. So that is our goal, and I look forward2619to working with you all on it over the next several months and2620years or whatever it takes.2621    Without objection, all members will have 5 legislative days2622within which to submit additional written questions for the2623witnesses to the chair.2624    The questions will be forwarded to the witnesses for their2625response. I ask our witnesses to please respond no later than2626October 23, 2025.26272628    [The information referred to can be found in the appendix.]26292630    Chairman Meuser. This hearing is adjourned.26312632    [Whereupon, at 12:07 p.m., the subcommittee was adjourned.]26332634                                APPENDIX26352636                              ----------26372638                   MATERIALS SUBMITTED FOR THE RECORD2639[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]26402641                                 [all]