Fraud in Focus: Exposing Financial Threats to American Families

House Financial Services Subcommittee on Oversight and Investigations

2025-09-18

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Summary

This meeting of the Subcommittee on Oversight and Investigations focused on "Fraud in Focus: Exposing Financial Threats to American Families," aiming to understand and combat the rising tide of financial fraud, including check fraud and senior scams, through improved federal agency cooperation, private sector engagement, and consumer education efforts[ 00:15:09-00:15:51 ]

. The hearing emphasized the urgent need for a unified, "whole-of-society" approach to address this increasingly sophisticated problem[ 00:18:37 ] .

Themes

Escalating Scale and Sophistication of Financial Fraud

Financial fraud is rapidly escalating, with reported consumer losses exceeding $12 billion in 2024, a 25% increase from the previous year, and actual losses potentially reaching $158 billion annually due to underreporting[ 00:16:40 ]

. Criminals are highly organized, leveraging sophisticated techniques such as deepfakes, spoofed caller IDs, stolen checks, and fake social media accounts[ 00:28:26 ] . The rise is driven by increased data breaches, the industrialization of fraud, and the use of artificial intelligence, allowing for personalized and highly convincing scams[ 00:47:48 ] . While individuals of all ages are at risk, young people are frequently victimized due to online activity, and seniors suffer the most devastating financial losses, averaging $35,000 per incident[ 00:18:43 ] .

Technology's Dual Role in Fraud

Technology, particularly AI, plays a dual role in the fraud epidemic. On one hand, criminals use AI to industrialize fraud by creating perfect phishing emails, compelling voice clones, and deepfakes to manipulate victims. Malvertising on platforms like Google and Meta is also a significant concern, with questions raised about these platforms potentially profiting from fraudulent ads and being slow to remove them[ 01:15:23 ]

. On the other hand, AI is a powerful defense, employed by companies like LifeLock for real-time fraud detection, identifying deepfakes, and blocking scams from reaching consumers. Furthermore, the development of mobile ID and digital driver's licenses is seen as a crucial technological solution to verify identity online, which could dramatically reduce fraud originating from identity theft[ 01:55:31 ] .

The Imperative for a Coordinated, "Whole-of-Society" Approach

Combating fraud requires a "whole-of-society" approach, involving federal, state, and local governments, the financial sector, technology platforms, and telecom companies[ 00:18:37 ]

. Witnesses advocate for establishing a White House Office of Fraud and Scam Prevention to coordinate federal efforts and create a national strategy, similar to successful models in other countries[ 00:30:42 ] . Key recommendations include holding telecommunication companies accountable for spoofed calls and texts, mandating quick removal of fraudulent ads and impersonation accounts by social media platforms, and improving information sharing among all stakeholders through safe harbors[ 00:29:25 ] . There is also a call for enhanced resources for law enforcement to investigate and prosecute cases, recognizing that fraud is not solely a banking problem but an ecosystem-wide challenge[ 00:30:34 ] .

The Role of Government Agencies and Consumer Protection

A central point of contention in the meeting was the role and effectiveness of government agencies, particularly the Consumer Financial Protection Bureau (CFPB). Democratic members and one witness criticized recent actions to weaken the CFPB, including reduced funding and the dropping of lawsuits against financial institutions involved in fraud, arguing this harms consumers. They emphasized the CFPB's past success in recovering billions for defrauded consumers and its vital role as a central point of contact for victim reporting. Conversely, some Republican members supported weakening the CFPB, citing regulatory burdens on small banks[ 01:19:22 ]

. There was general agreement on the need for updated, less antiquated laws like the Electronic Fund Transfer Act (EFTA) to protect consumers against fraudulently induced transactions and new payment methods, including cryptocurrencies.

Specific Fraud Challenges

The hearing highlighted several specific fraud challenges[ 00:15:22 ]

. Check fraud has more than doubled since 2021, exacerbated by mail theft, and witnesses suggested strengthening postal protections and developing a national check verification system[ 00:17:28 ] . The use of fake IDs to open fraudulent bank accounts further complicates this issue[ 01:07:14 ] . Elder fraud is a growing and particularly egregious concern, with scams becoming more sophisticated, using AI, and often involving channels like Bitcoin ATMs, where a high percentage of transactions have been linked to fraud against seniors. Finally, crypto scams pose a challenge due to the opacity of decentralized finance (DeFi) protocols, making it difficult to trace perpetrators and recover funds, underscoring the need for greater consumer awareness and regulation[ 00:43:03 ] .

Tone of the Meeting

The tone of the meeting was primarily serious and urgent, reflecting the widespread and escalating nature of financial fraud[ 00:16:06 ]

. Many members and witnesses expressed a strong desire for collaboration and proactive solutions among diverse stakeholders. However, the discussion was also marked by significant political contention and sharp disagreement, particularly regarding the role and funding of the Consumer Financial Protection Bureau (CFPB). There was a shared sense of frustration over the difficulty of combating sophisticated, often international, criminal enterprises and the perceived inadequacy of current responses.