We're in a fraud epidemic. The US government needs to up its game

-

Adobe Stock

If it feels like financial scams are getting worse these days, it's because they are. Technologies like artificial intelligence and caller ID "spoofing" now make it much easier for scammers to trick people out of their money. Foreign organized criminal rings and even rogue nations have weaponized their fraud operations, targeting Americans with industrial-scale efficiency. A recent report by the Identity Theft Resource Center, or ITRC, warns of "[a] dramatic increase in high-dollar losses impacting victims of identity scams, routinely exceeding six and occasionally seven figures." Their starkest statistic? Sixteen percent of the victims that called to report identity theft said that they had contemplated suicide because of it.

These numbers may even understate the problem. Many people who fall victim to scams don't report them. They may feel embarrassed or believe their money will never be recovered. As IRTC explains, "too many victims are shunned by organizations that should support them and ignored by government agencies that are too short-staffed or ill-equipped to help them."

And while any thug can perpetrate these frauds and scams, they are often orchestrated through organized crime rings and even state-sponsored actors — and they can finance other illicit activities such as drug and human trafficking.

Scams are a national crisis that requires a national response.

On behalf of America's leading retail banks, I call on the federal government to lead a national response to fraud and scams.

Regulation and compliance

Federal banking agencies extend comment period on bank-fintech risks

Banks now have until Oct. 30 to weigh in on potential risks of third-party fintech partnerships for banking products and services.

By Ebrima Santos Sanneh

September 13

Banks invest billions of dollars and thousands of hours to combat fraudsters and scammers each year. Bankers educate and warn customers about new threats. They are consistently experimenting with new technologies to monitor for harm, authenticate their customers and reduce risk. But bankers can't do it alone. Banks and other industries in the private sector need the government to cooperate, across industries, to protect Americans from fraudsters and scammers.

Fraudsters regularly use a wide range of tools to trick consumers: phone calls, text messages, spam emails, social media groups, dating sites and cryptocurrency exchanges. Because the bad guys are using an interdisciplinary, highly coordinated approach to scams, the "good guys" need the same level of response.

My organization recently helped publish an academic paper, "Stopping Scams Against Consumers: Roadmap for a National Strategy," that sets out an initial game plan for tackling fraud and scams. Scams are a long-game con: Fraudsters start talking to consumers well before consumers eventually send them money. Therefore, we need to protect consumers with a game plan that similarly stops fraudsters before funds start moving. This means that we need the government to help banks work with telecommunications companies; internet companies; cryptocurrency companies; and, most importantly, the state and federal agencies that regulate them to make sure we're all on the same page.

Election 2024

Flying blind: Bankers lean on policy glimpses to evaluate Harris, Trump

September 18, 2024 6:00 AM

For instance, if the same used car shows up for sale in all 50 states, someone should be able to flag that it's an issue and make sure everyone's taken it down. Similarly, if one profile sends 20,000 messages on a dating site, someone needs to make sure that the pictures (and email addresses) from that profile are shared with other companies to make sure that the bad guys can't just hop from one site to another.

And once these criminals have been identified, law enforcement must pursue them, and they must be prosecuted. In a recent roundtable that we held with government and private-sector experts, participants raised concerns that law enforcement isn't doing enough to deter repeat fraudsters and scammers.

In short, crime (currently) pays.

But that doesn't have to be the case. All too often, scams aren't prosecuted because the bad guys are overseas. A national strategy will only be successful if it's led by the U.S. government, which can then work with other countries to ensure appropriate cooperation, and, ultimately, prosecution.

Finally, the government needs to play a more proactive role in preventing fraud and educating consumers. This cannot be limited to any one agency and requires leadership from the White House, as well as relevant departments and agencies such as Treasury, Commerce, the Federal Communications Commission and, of course, the Consumer Financial Protection Bureau.

While Washington has recently turned its attention to scams and fraud, it's unfortunate that policymakers seem more focused on grabbing headlines and pointing fingers. Americans deserve better. Scams and fraud are complex and real issues. Washington needs to focus on complex and real solutions — linking arms with industry across the board to protect Americans across the country.