Hearing — Protecting Consumers From Financial Fraud and Scams in the Pandemic Recovery Economy (2021)

Summary

This is a Senate hearing before the Subcommittee on Financial Institutions and Consumer Protection of the Committee on Banking, Housing, and Urban Affairs, titled Protecting Consumers From Financial Fraud and Scams in the Pandemic Recovery Economy, on August 3, 2021. The contents list opening statements by Chairman Warnock and Senator Tillis and witnesses including Liz Coyle, Executive Director, Georgia Watch, and John Breyault, Vice President of Public Policy, Telecommunications, and Fraud, National Consumers League. A written response in the record says financial institutions should be willing to place holds on transactions that have indices of fraud, even if the customer thinks the transaction is legitimate.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

                                                              S. HRG. 117–586

PROTECTING CONSUMERS FROM FINANCIAL
  FRAUD AND SCAMS IN THE PANDEMIC
  RECOVERY ECONOMY

                          HEARING
                                BEFORE THE

                SUBCOMMITTEE ON
      FINANCIAL INSTITUTIONS AND CONSUMER
                   PROTECTION
                                  OF THE


           COMMITTEE ON
BANKING, HOUSING, AND URBAN AFFAIRS
      UNITED STATES SENATE
         ONE HUNDRED SEVENTEENTH CONGRESS
                             FIRST SESSION

                                     ON

EXAMINING THE FINANCIAL SCAMS FOLLOWING THE COVID–19 PAN-
 DEMIC AND THEIR IMPACT ON FAMILIES AND CONSUMERS IN THE
 RECOVERING ECONOMY


                             AUGUST 3, 2021


Printed for the use of the Committee on Banking, Housing, and Urban Affairs




                                  (
                   Available at: https: //www.govinfo.gov /


                    U.S. GOVERNMENT PUBLISHING OFFICE
  51–115 PDF                 WASHINGTON : 2023
       COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
                        SHERROD BROWN, Ohio, Chairman
JACK REED, Rhode Island              PATRICK J. TOOMEY, Pennsylvania
ROBERT MENENDEZ, New Jersey          RICHARD C. SHELBY, Alabama
JON TESTER, Montana                  MIKE CRAPO, Idaho
MARK R. WARNER, Virginia             TIM SCOTT, South Carolina
ELIZABETH WARREN, Massachusetts      MIKE ROUNDS, South Dakota
CHRIS VAN HOLLEN, Maryland           THOM TILLIS, North Carolina
CATHERINE CORTEZ MASTO, Nevada       JOHN KENNEDY, Louisiana
TINA SMITH, Minnesota                BILL HAGERTY, Tennessee
KYRSTEN SINEMA, Arizona              CYNTHIA LUMMIS, Wyoming
JON OSSOFF, Georgia                  JERRY MORAN, Kansas
RAPHAEL WARNOCK, Georgia             KEVIN CRAMER, North Dakota
                                     STEVE DAINES, Montana
                         LAURA SWANSON, Staff Director
                      BRAD GRANTZ, Republican Staff Director
                          CAMERON RICKER, Chief Clerk
                          SHELVIN SIMMONS, IT Director
                        CHARLES J. MOFFAT, Hearing Clerk




    SUBCOMMITTEE ON FINANCIAL INSTITUTIONS AND CONSUMER PROTECTION
                      RAPHAEL WARNOCK, Georgia, Chair
             THOM TILLIS, North Carolina, Ranking Republican Member
ROBERT MENENDEZ, New Jersey              RICHARD C. SHELBY, Alabama
JON TESTER, Montana                      TIM SCOTT, South Carolina
MARK R. WARNER, Virginia                 MIKE ROUNDS, South Dakota
ELIZABETH WARREN, Massachusetts          BILL HAGERTY, Tennessee
CATHERINE CORTEZ MASTO, Nevada           CYNTHIA LUMMIS, Wyoming
CHRIS VAN HOLLEN, Maryland               JERRY MORAN, Kansas
KYRSTEN SINEMA, Arizona                  KEVIN CRAMER, North Dakota
                     ANNIE WANG, Subcommittee Staff Director
                RYAN ADAMS, Republican Subcommittee Staff Director

                                       (II)
                                        C O N T E N T S

                                       TUESDAY, AUGUST 3, 2021
                                                                                                                         Page
Opening statement of Chairman Warnock ............................................................                         1
Opening statements, comments, or prepared statements of:
   Senator Tillis ....................................................................................................     3
   Chairman Brown ..............................................................................................           5

                                                    WITNESSES
Liz Coyle, Executive Director, Georgia Watch ......................................................                        6
    Prepared statement ..........................................................................................         21
    Responses to written questions of:
        Senator Cortez Masto ................................................................................             42
John Breyault, Vice President of Public Policy, Telecommunications, and
  Fraud, National Consumers League ...................................................................                     7
    Prepared statement ..........................................................................................         21
    Responses to written questions of:
        Senator Cortez Masto ................................................................................             42
Rachel Greszler, Research Fellow, The Heritage Foundation .............................                                    9
    Prepared statement ..........................................................................................         29

                                                            (III)
PROTECTING CONSUMERS FROM FINANCIAL
 FRAUD AND SCAMS IN THE PANDEMIC
 RECOVERY ECONOMY

                    TUESDAY, AUGUST 3, 2021

                                      U.S. SENATE,
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS,
 SUBCOMMITTEE ON FINANCIAL INSTITUTIONS AND CONSUMER
                                              PROTECTION,
                                              Washington, DC.
  The Subcommittee met at 2:34 p.m., via Webex and in room 538,
Dirksen Senate Office Building, Hon. Raphael G. Warnock, Chair-
man of the Subcommittee, presiding.
  OPENING STATEMENT OF CHAIRMAN RAPHAEL WARNOCK
   Chairman WARNOCK. This hearing will now come to order. Wel-
come to the first hearing of the Subcommittee on Financial Institu-
tions and Consumer Protection in the 117th Congress.
   This hearing is in a hybrid format. Our Members are in person,
but we will have witnesses testifying both in person and by video.
We are grateful for their presence.
   For those joining remotely, just a few reminders: Once you start
speaking, there will be a slight delay before you are displayed on
the screen. To minimize background noise, please click the mute
button until it is your turn to speak or ask questions. You should
have one box on your screens labeled ‘‘clock’’ that will show how
much time is remaining.
   As we are all here in person, our speaking order will be as is tra-
ditional, that is, by seniority of the Members here when the gavel
came down and then by seniority of Members arriving later, alter-
nating between Democrats and Republicans.
   I am deeply honored to chair the Subcommittee and to work with
Ranking Member Tillis to ensure stability in our banks, credit
unions, and other financial institutions that serve families and
communities in Georgia and all across our country and to ensure
that consumers are protected from unfair, abusive, and deceptive
acts and practices in our financial system, including financial
scams and fraud.
   And this brings me to the topic of our very first hearing today,
which will examine financial scams following the COVID–19 pan-
demic and their impact on families and consumers in the recov-
ering economy. Needless to say, the economic turbulence of the last
year has pushed working American families to the brink, forcing
them to choose sometimes between their health and their liveli-
                                 (1)
                                 2

hoods. According to the Federal Reserve, one in four Americans re-
ported at the end of last year that they were financially worse off
than they were the prior year. This is the highest level since 2014.
   Compounding these economic setbacks has been the rise of
scammers shamelessly seeking to take advantage of working fami-
lies trying to navigate the pandemic, including already vulnerable
populations like senior citizens, communities of color, our
servicemembers, and veterans. For instance, when I held a tele-
town hall a few weeks ago with AARP, one woman from Georgia
told me that she was receiving three to five scam callers per day.
Scammers target these populations because they know that fami-
lies are desperate, clawing their way back from a pandemic.
   And despite the help provided by the American Rescue Plan Act,
many families still face limited economic opportunities during this
recovery as they watch their debt pile up. Naturally, they are look-
ing for help.
   And here are just a couple of examples of how scammers are
stepping in to take advantage of these vulnerable moments of eco-
nomic uncertainty: Just a month ago, the CFPB and the Georgia
Attorney General’s Office took action against the Burlington Finan-
cial Group, a company that falsely promised its services would
eliminate credit card debt and improve credit scores. The company
charged monthly fees that amounted to as much as 40 percent of
the debt owed, collecting thousands in fees from desperate Geor-
gians trying to grapple with mounting credit card debt.
   And what did consumers get in return for all of those fees? They
only got generic form letters to send to their creditors, thousands
of dollars in fees for a useless piece of paper. Many customers
never got a dollar of their debt reduced, and in some cases they
ended up in a worse financial position than before.
   In another case from just 2 weeks ago, the CFPB took on a Geor-
gia-based corporation, GreenSky, that took advantage of families
trying to make necessary repairs to their homes. This loan app was
supposed to help families access loans for home repair services. In-
stead, it allowed businesses to take out loans on behalf of cus-
tomers without their permission or knowledge. GreenSky was oper-
ating before the pandemic took place, but the group of consumers
that they exploited, who lacked access to traditional credit markets
and relied on digital tools to conduct financial transactions, was a
population that grew dramatically during the pandemic.
   Additionally, we know Federal benefits are often prime targets
for crooks and scammers have set their sights on struggling fami-
lies receiving Federal help from the American Rescue Plan. One
scam we have seen frequently in the last year occurs when
scammers actually impersonate Government officials and claim
that consumers need to hand over personal information to access
Federal support, like their COVID–19 relief check or child tax cred-
it. These scammers sometimes falsely claim that consumers need
to, quote, refund the Government for their benefits.
   And coupled with these increased opportunities for scamming are
new tools and financial platforms that enable these scams. Due to
the pandemic, more and more Americans are engaging in financial
transactions on new peer-to-peer, online payment platforms like
Cash App, Venmo, whose terms are often unclear and lack critical
                                  3

protections for consumers. Unlike traditional debit or credit cards,
many of these platforms offer only limited protections against
scams, leaving many users caught unaware that they have been de-
frauded. These platforms make it easier for scammers to swindle
consumers out of thousands of dollars, with little to no mechanism
to hold their scammers accountable. In some cases, a consumer
could simply put in one wrong number or hit one wrong button and
their money is gone forever.
   Collectively, these frauds swindle countless dollars from the most
vulnerable members of our society: seniors, marginalized commu-
nities of color and other communities that are marginalized, our
veterans, members of the military. And most heartbreaking of all,
many individuals who fall prey to these sophisticated criminals
face barriers in reporting these crimes and holding the perpetrators
accountable. Not only are consumers often embarrassed to admit
that they have been victimized, but they may also not know what
resources are available to remedy their losses, and even then, in-
vestigations can take years to deliver justice.
   Here is what I believe: I believe that Congress, and this Sub-
committee in particular, has a role to play in protecting these con-
sumers and preventing scammers from taking advantage of more
Americans. And so I am looking forward to hearing from our wit-
nesses today to learn more about today’s financial fraud and scams,
and how financial institutions, Congress, and Federal regulators,
including the Consumer Financial Protection Bureau, can take ac-
tion to curb financial fraud and scams. That is our work, particu-
larly scams involving companies, payment platforms, and other fi-
nancial institutions that are under this Subcommittee’s jurisdic-
tion. That is what this hearing is about.
   This hearing is about helping people. Hardworking American
families have already suffered enough from the pandemic, and as
their economic situation recovers, we cannot allow their hard-
earned dollars to be siphoned off by scams and cons. Thank you.
   And I will now turn to Ranking Member Tillis for his opening
statement.
       OPENING STATEMENT OF SENATOR THOM TILLIS
   Senator TILLIS. Thank you, Chairman Warnock, and for holding
this hearing, and thanks to the witnesses present in the chamber
and connecting remotely.
   I absolutely believe that fraud is despicable and illegal and
should be pursued vigorously and relentlessly. I have seen count-
less hearings when I was on the Aging Committee about how sen-
iors were being exploited. I am sure many other committees will
hear the same thing.
   But I do want to be clear. Some of what we are going to hear
today lies outside of the Committee’s jurisdiction and the jurisdic-
tion of financial regulators. The understandable desire to bring bad
actors to justice should not be an excuse to further broaden the
scope of Federal regulators’ purview. Not all fraud is financial serv-
ices fraud. Given the CFPB’s history on overreach, I believe that
is worth pointing out.
   I also believe that any conversation regarding protecting con-
sumers from fraud and scams must include unemployment insur-
                                 4

ance fraud, UI fraud. Recent reporting is beginning to shed light
on the size, the scope, the implications of this fraud although the
full toll is likely not to be known for some time. And, Mr. Chair-
man, I would like to seek unanimous consent to put forth an article
from ProPublica that gives you jaw-dropping numbers on just the
extent of the UI fraud.
   Chairman WARNOCK. Without objection.
   Senator TILLIS. Thank you. The Department of Labor’s Office of
Inspector General placed the prepandemic and proper payment
rate for Federal UI system at 10 percent. It is one of the highest
rates in the entire Federal benefits system. Extrapolating this rate
out to all Federal dollars spent on UI, which is expected to be
about $873 billion by program end, it gives a total of $87.3 billion
of improper payments during the COVID era. $87.3 billion is
roughly 4 times the annual NASA budget.
   If $87.3 billion was the full extent, this would be a problem, a
major one, but not necessarily a scandal. But DOL’s Inspector Gen-
eral acknowledges the $87.3 billion is likely far too conservative.
Analysis of the total number of UI claims compared to the number
of unemployed individuals in the U.S. during COVID led research-
ers to place the amount of UI fraud far higher, at $357 billion or
40 percent of the entire program. Even worse, a unit for research
in news corporation Thomson Reuters believes 40 to 50 percent of
claims they analyzed are highly suspect for fraud.
   And I do want to maybe deviate from my comments for a mo-
ment. We are not talking about individuals, fraudulently. We are
talking about organized crime and a number of organizations who
have bilked the Federal Government and are going to create disas-
trous consequences for what would ostensibly be the recipients of
the UI benefit.
   If one adds the $166 billion that States contributed to UI during
the pandemic, the estimated total for the entire program surpasses
$1 trillion. A fraud rate on this total, similar to the Thomson Reu-
ters projection, would mean somewhere between $400 and $500 bil-
lion in fraud or between 50 to 65 percent of the entire annual De-
fense budget. That is a scandal. It is one of epic proportions.
   But aside from the egregious waste of taxpayer dollars, why
should the average American be concerned? Because there is a real
change their identity was stolen and used to file fraudulent claims.
Many experts see online hacking and identity theft as foundational
to any conversation of COVID-era UI fraud. Over the past several
decades, hackers have systematically stolen personally identifiable
information, PII, from the Government and private data bases
alike. The Privacy Rights Clearinghouse identified nearly 2,300
verified hacks from 2010 to 2019, which disclosed almost 6.9 billion
personal records.
   And while the availability and the ease or procurement of stolen
PII has accelerated over the past several years, it increased expo-
nentially during the pandemic. During 2020, the Federal Govern-
ment saw a 2,900 percent increase in consumer complaints filed
that someone’s identity had been stolen and used to file fraudulent
Federal benefits.
   This rise in fraud is driven by bad actors and, as I said earlier,
criminal organizations and individual actors. Research into dark
                                 5

web forums found at least 25 different platforms with users com-
piling and/or selling private information. Several have thousands of
participants, and they offer stolen identities for sale, tips for by-
passing the antifraud protections of State UI system and how to do
it, and often including feedback on which States are easiest to
scam.
   In 1 month in Vermont, they determined—the State of Vermont
determined 90 percent of UI claims—I am sorry, these were inde-
pendent investigators—were likely fraudulent, 90 percent, likely
the result of identifying the States that are the easiest targets.
Likewise, a single State working with Thomson Reuters’ fraud de-
tection group received fraudulent claims from IP addresses that
were traced back to nearly 170 countries around the world.
   Analysis reveals digital footprints that indicate foreign workers,
mostly commonly in China, Brazil, Mexico, and West Africa, have
been hired by sprawling and often highly organized criminal enter-
prises to systematically and repeatedly and effectively use stolen
American identities to claim UI benefits.
   America needs to be made aware of the fraud—of this fraud, and
Congress must work to carefully craft policies in the future that do
not jeopardize Americans and their personal information. It is im-
perative that we examine this fully to ensure that Government pro-
grams, without necessary programs, do not become a windfall for
scammers and fraudsters alike again.
   And when I get in my questions, I want to talk about some of
the impacts, Mr. Chairman, I think many Americans are going to
have next year when they are filing taxes or they get audited a
year or two from now for having not claimed income that they had
no earthly idea was claimed in their name. Thank you.
   Chairman WARNOCK. Thank you very much, Ranking Member
Tillis.
   The Chairman of our Committee is here. Chairman Brown will
offer remarks.
   OPENING STATEMENT OF CHAIRMAN SHERROD BROWN
  Chairman BROWN. Thanks and I will be brief. And thank you,
Mr. Chairman, Senator Tillis. Thanks for doing this hearing. You
said the first hearing of your Subcommittee, so congratulations.
  The COVID–19 pandemic has claimed the lives of more than
600,000 Americans. We have made great progress getting shots in
arms, but we are experiencing surges in areas across the Nation
we know that have low vaccination rates. It is important we con-
tinue to provide families with the resources they need to protect
themselves and their loved ones, both medical resources, like vac-
cines that will save their lives, and also economic resources as the
economy continues to fully recover.
  While we all hope to avoid, and must work to prevent, a future
pandemic, we also need to protect American families from those
who would use a public health emergency and use an economic cri-
sis as an opportunity to defraud and exploit them. We have seen
Americans reach out to the Consumer Financial Protection Bureau
in record numbers with complaints about credit reporting compa-
nies and banks and debt collectors. We have also heard from CFPB
and other Federal agencies that scammers are targeting student
                                 6

loan borrowers and homeowners and working families who are re-
ceiving advanced payments of the child tax credit.
  I look forward to working with my colleagues from both parties
to highlight what we can do to protect workers and their families.
No one should have their financial future ruined because of a glob-
al pandemic. Thank you, Mr. Chairman.
  Chairman WARNOCK. Thank you very much, Chairman Brown.
Let us now turn to our witnesses. Testifying today will be:
  Ms. Liz Coyle, the Executive Director of Georgia Watch. Founded
in 2002, Georgia Watch is the State’s leading nonprofit, consumer
advocacy organization. Georgia Watch advocates for policies that
open doors to the financial mainstream, increase individual and
family economic security, improve access to affordable health care,
and lower the energy burden on struggling families.
  Also testifying is Mr. John Breyault. Is that correct?
  Mr. BREYAULT. Yes, sir.
  Chairman WARNOCK. I want to pronounce your name correctly.
A nationally recognized consumer advocate with more than 18
years of experience championing the rights of consumers and the
underserved.
  Finally, our last witness is Ms. Rachel Greszler, a research fellow
at the Heritage Foundation, and she focuses on retirement and
labor policies.
  We appreciate your testimony, and we look forward to our discus-
sion. Ms. Coyle, who is testifying virtually, I will now turn things
over to you.
STATEMENT OF LIZ COYLE, EXECUTIVE DIRECTOR, GEORGIA
                      WATCH
  Ms. COYLE. Good afternoon. Thank you, Chairman Warnock,
Ranking Member Tillis, for inviting me to speak before this Sub-
committee today. I am truly honored to have this opportunity.
  As Members of this Subcommittee know, our country still is fac-
ing significant health risks tied to COVID–19 and recovery from
the pandemic economy remains challenging for many and fraught
with obstacles and dangers for the most vulnerable among us.
Today, we are here to talk about protecting consumers from scams
and fraud in the pandemic recovery economy. I am grateful to the
Committee for shining a light on this issue.
  I would like to share with you today some of my concerns as a
consumer advocate from Georgia. Every day, we work to help Geor-
gians with the issues that impact their lives and livelihoods. The
pandemic public health and economic crises further heightened
what we already knew. Those already struggling to access needed
health care, keep the lights on, pay off debts, and live in stable
housing would be much more significantly impact by the challenges
suddenly confronting all of us. Our toll-free consumer hotline start-
ed ringing on day one of this crisis, and we continue to hear regu-
larly from people needing assistance. This especially is the case
among our seniors on fixed incomes, veterans, lower-income house-
holds, and communities of color, who have long been disparately
impacted in times of crisis.
  We knew many consumers in Georgia were facing—were feeling
desperate and vulnerable. Bad actors definitely knew that, too.
                                 7

From the early days, scammers and fraudsters plotted to benefit
substantially from these conditions, and as we have learned from
Federal and State regulators, they did.
   While many of today’s scams look a lot like yesterday’s, a new
kid on the economic block may be having an outsized influence on
the current shape of fraud. Emerging financial technology tools cer-
tainly offer convenience and, for some under- and unbanked Ameri-
cans, access to the mainstream economy, which is good. However,
these fintech offerings may also be used by bad actors to facilitate
scam-based theft. For example, a mobile lending technology devel-
oped by a company from Georgia has been used by home repair
scammers as the perfect vehicle to steal from unsuspecting, vulner-
able homeowners. And Chairman Warnock touched on this in his
opening remarks.
   We also have heard from consumers who have been scammed
when using a common social media platform, Facebook, that has
been around for a very long time. We know that scammers use
Facebook to steal money from unsuspecting consumers. Someone
might see an ad while using this platform and be tricked into pur-
chasing a product from a fake company. When the merchandise
does not come, they are left with nothing more than a web address
and maybe an email address to a fraudulent, nonexistent company.
   In closing these remarks, I want to acknowledge the vitally im-
portant role played by the Georgia Attorney General and Depart-
ment of Law and the Consumer Financial Protection Bureau in
alerting us to emerging scams, and there are new ones that we are
alerted to practically every day. Notably, these regulators both
launched investigations and initiated enforcement actions related
to those home improvement scams you have already heard about
today.
   I recommend that policymakers ensure our State and Federal
regulators have the authority and the tools they need to regulate
effectively and enforce rules as necessary to protect consumers and
keep the emerging fintech marketplace safe for all. And I want to
thank you again, Chairman Warnock and Ranking Member Tillis,
for inviting me to speak before this Committee today.
   Chairman WARNOCK. Thank you so very much, Ms. Coyle.
   Next, we will hear from Mr. Breyault.

STATEMENT OF JOHN BREYAULT, VICE PRESIDENT OF PUB-
 LIC POLICY, TELECOMMUNICATIONS, AND FRAUD, NA-
 TIONAL CONSUMERS LEAGUE
  Mr. BREYAULT. Good afternoon, Chairman Warnock, Ranking
Member Tillis, and Members of the Subcommittee. My name is
John Breyault, and I am the Vice President of Public Policy, Tele-
communications, and Fraud for the National Consumers League.
Founded in 1899, NCL’s nonprofit mission is to advocate for social
and economic justice for consumers and workers in the United
States and abroad. I appreciate the opportunity to speak to you
today about how fraud linked to the COVID–19 pandemic and re-
cession has affected vulnerable consumers and the role that peer-
to-peer, or P2P, payment technologies have played in exacerbating
that harm.
                                  8

   To put it bluntly, the COVID–19 pandemic has been a perfect
storm for scams. By almost any measure, rates of fraud related to
the pandemic have mushroomed. In 2020, the Federal Trade Com-
mission received 4.8 million fraud complaints, more than at any
time in its 106-year history. Consumers reported $3.4 billion in
fraud losses to the FTC, with a median loss of $306. These num-
bers are widely acknowledged to be only the tip of a massive ice-
berg when it comes to fraud perpetrated during the pandemic. And
just as deaths, illnesses, and job losses related to COVID–19 have
fallen hardest on historically marginalized communities, so too has
the impact of fraud linked to the pandemic fallen disproportion-
ately on consumers of color.
   The ultimate goal for fraudsters is stealing money. Scammers
routinely take advantage of new financial technologies to facilitate
the transfer of funds. While no financial institution wants to be
used as a vehicle for crime, there is often tension between busi-
nesses’ desire to secure a particular payment vector from fraud
while still allowing for legitimate transactions to be processed
quickly. This tension is clear when it comes to the rapid growth of
P2P payment platforms such as PayPal’s Friends and Family and
Venmo services, Square’s Cash App, and Zelle, which is owned by
a consortium of major banks.
   These services have attracted tens of millions of users by allow-
ing for free or very low-cost payments to be sent between con-
sumers or from consumers to businesses. Even before the pan-
demic, roughly four in five Americans had used mobile payment
apps by one estimate. By 2023, it is estimated that more than $1
trillion will be transacted by P2P apps annually.
   Unfortunately, the same features that are fueling the rapid
growth of P2P apps, namely, low-cost, instantaneous payments
made via smartphone have made P2P a payment method of choice
for scammers. Analysts estimate that fraud rates on these plat-
forms are three to four times higher than for traditional methods
such as debit or credit cards.
   Despite the platforms’ efforts to educate users about the risks of
sending money via their platforms, more than half of consumers
surveyed by AARP incorrectly assume that their payments would
be protected if there is an error or fraud associated with the trans-
action. While no financial service is immune from fraud, protec-
tions for consumers who lose money to scammers on P2P apps are
sorely lacking. A big reason for this is the loophole in the Elec-
tronic Fund Transfer Act that excludes payments initiated by the
consumer from the protection for unauthorized charges. This is also
known as ‘‘fraud in the inducement’’ or ‘‘victim-assisted fraud.’’
This allows P2P services and banks to avoid liability for payments
sent from consumers to scammers even when such payments are
induced by fraud.
   The end result of this loophole is that the liability risk for fraud
is transferred from the platforms and banks to consumers them-
selves. The only recourse for many victims of fraud committed via
these apps is to throw themselves at the mercy of the banks or
platforms and beg to be made whole. Unfortunately, thanks to the
lack of legal protections, it is far too easy for the banks and P2P
apps to simply tell fraud victims that they are out of luck. And,
                                 9

Senator, we hearing from these consumers with these stories every
day at NCL.
  To ensure that P2P apps are secure for their users and do not
continue to be powerful tools for fraudsters, action by Congress is
urgently needed. My written testimony includes a number of legis-
lative actions to strengthen protections for consumers using P2P
apps. In particular, I would like to urge the Members of the Sub-
committee to work to enact legislation that expands the EFTA’s
definition of unauthorized electronic fund transfer to cover fraudu-
lently induced payments, with ultimate liability resting with the
institution that received the fraudulent payment. Doing so would
give consumers the confidence that they would be made whole if
they are induced to send money to scammers via P2P services. It
would also create a strong incentive for all stakeholders in the P2P
payment ecosystem to make security a priority just as it is in the
debt and credit card space.
  In conclusion, Chairman Warnock, Ranking Member Tillis, on
behalf of the National Consumers League, thank you for continuing
your work to protect consumers and for holding today’s hearing. I
look forward to your questions.
  Chairman WARNOCK. Well, thank you so very much for your
work in this sector and for bringing that experience to your testi-
mony.
  Ms. Greszler will testify in person.
   RACHEL GRESZLER, RESEARCH FELLOW, THE HERITAGE
                     FOUNDATION
   Ms. GRESZLER. Good afternoon and thank you for the opportunity
to testify today. Having closely followed the expansion in unem-
ployment insurance benefits since the pandemic, I would like to
focus my remarks today on some of the unintended consequences
of those expansions, which serve as a caution against future expan-
sions and also a caution against the creation of new Government
benefit programs.
   It was clear from the outset that certain components of the un-
employment expansion were problematic, including the $600 and
now $300 weekly bonus payments, that both prolonged unemploy-
ment and also contributed to the current labor market shortage by
making it advantageous for some people to be unemployed as op-
posed to employed.
   But what was not anticipated was the massive increase in fraud
in these UI programs. Unemployment benefits are supposed to be
reserved for individuals who lose their job through no fault of their
own, and employers are supposed to verify that individuals have
lost their jobs. But the expansions effectively required States to
base eligibility determinations on self-certification information,
which made it relatively easy for criminals to steal information and
Government benefits. And it certainly did not help that many Gov-
ernment benefit programs operate on decades-old technology that
makes it hard for them to adapt quickly and also to prevent fraud.
   In a single year, the number of identity theft reports filed with
the FTC by individuals who had their information used to obtain
Government benefits or Government documents increased 27-fold.
It went from 23,000 identity theft reports the year prior to the pan-
                                 10

demic to 637,000 the year after the pandemic, and that is only the
people who know that their identity was stolen and who actually
filed a report because of it.
   Instead of just helping individuals who lost their jobs and in-
comes, much of the UI expansions have instead fueled fraud. My
analysis of the Department of Labor’s data shows that the total
number of UI benefits sent out between April 2020 and May 2021
was 1.36 billion checks. But had the programs simply covered 100
percent of unemployed workers, which was an ambitious goal, 807
million checks would have been needed. That means that 557 mil-
lion benefit checks, equal to $357 billion worth of taxpayers’ money,
went to individuals, mostly criminals, who were not actually unem-
ployed.
   While States have undertaken efforts to update their technology
and to prevent fraud, some States’ actions have instead fueled
fraud. For example, California’s Employment Department sent out
38 million pieces of mail containing individual Social Security num-
bers since the start of the pandemic, and this was after a 2019
State auditor report advised them to stop that practice.
   And unfortunately, Government programs themselves are not im-
mune to compromise. Massive data breaches across State revenue
departments, within military medical systems, and at the Office of
Personnel Management have resulted in tens of millions of Ameri-
cans having their personal information compromised.
   UI expansions were supposed to last for about 5 months, but in-
stead they are track to last for about 18 months. And despite these
unintended consequences and the surge in fraud, many policy-
makers want to make parts of these UI expansions permanent and
also to add new Government programs, but these things would si-
multaneously up the ante for criminals and also create new ave-
nues for individuals’ and children’s personal information to be ex-
ploited.
   Even prior to the pandemic, Government benefit programs had
incredibly high rates of fraud and improper payments, including 12
percent in the child tax credit and 24 percent in the earned income
tax credit. Creating child payments that are worth up to $3,600 per
year, while eliminating the income requirements and converting
them into monthly benefits, will almost certainly increase errors
and fraud. And other benefit programs, like a Federal paid family
leave program, childcare subsidies, would add new privacy con-
cerns. Along with the creation of these programs would be new
data bases, and there would be requirements for employers, and for
private childcare and medical providers, to collect and to transmit
personal information such as health records, children’s Social Secu-
rity numbers.
   So rather than requiring individuals to pay higher taxes and dis-
close their personal information to multiple Government agencies,
in order to receive what politicians think they need to provide for
their families, instead, lawmakers should let Americans keep and
freely save more of their own money so that they can use it on the
things that they want and need without the restrictions of Govern-
ment programs and without putting their personal information at
risk. Allowing individuals to save in universal savings accounts is
just one measure that would help this goal. Thank you.
                                  11

   Chairman WARNOCK. Thank you very much. We will turn now to
questions. We are grateful to all of the witnesses for their testi-
mony.
   Last month, thanks to the American Rescue Plan, over 2 million
Georgia children began receiving the $300 per month child tax
credit. Experts tell us that this will cut child poverty up to 50 per-
cent in our country. Eradicating childhood poverty is an issue that
touches me deeply. It emerges from my own experience and my
own faith. And championing this tax cut has been one of my proud-
est moments in the Senate. I think ordinary folks, working class
people, poor people deserve a tax cut.
   The child tax credit not only helps give working families finan-
cial stability and peace of mind; it boosts the economy for all of us.
But unfortunately, cybercriminals have been targeting this benefit
as they target all benefits. The IRS recently warned parents of
fraudulent phone calls, emails, and text messages asking for their
personal information. Other scammers have pretended to be the
IRS, and even parents, for payment via gift cards, wire transfer,
or cryptocurrency to receive the benefit.
   Mr. Breyault, what can lawmakers do to protect families from
these types of phishing scams?
   Mr. BREYAULT. Senator, thank you for the question. What can
happen is that the Senate could consider legislation and other pro-
tections that would better secure the payment technologies that
scammers are relying on to—when money is sent from them—from
consumers to the scammers. So for example, I mentioned changes
that could be made to better secure P2P payment apps. I will tell
you that, for example, Cash App, which is one that I mentioned
and I believe you mentioned in your opening remarks, is now being
used to buy cryptocurrency. From a scammer’s point of view, this
is almost the perfect tool for them to use. So considering legislation
that would better protect those vulnerable payment vectors is one
way to go about better protecting consumers when they are eligible
for these types of benefits that you described.
   Chairman WARNOCK. Thank you so much. As families continue
to receive the child tax credit, I think it is important for us to mon-
itor these types of fraud reports and to work to ensure that families
who deserve the tax cut, for whom it was determined, are actually
receiving the tax cut.
   I have got a couple more minutes. I am proud to say that Georgia
has long been a national leader in the fight against predatory lend-
ing. Georgia imposes a strict 10 percent usury limit on small-dollar
loans. Almost 1 in 10 Georgians is a veteran. Every one of them
deserves protection against predatory mortgage lending markets.
   Last year, the CFPB issued a civil penalty against a company
that was found to have consumers’ mailers for mortgage lenders
guaranteed by the Department of Veterans Affairs that contained
false, misleading, and inaccurate information. This is not the first
company doing things like this, and sadly, it probably will not be
the last.
   Ms. Coyle, what can be done to ensure that Georgia’s veterans
and veterans all across our country, servicemembers, military fami-
lies do not fall victim to scams like this one, who prey on those in
uniform?
                                 12

  Ms. COYLE. To——
  Chairman WARNOCK. Ms. Coyle, you are on mute. If you could
start again.
  Ms. COYLE. Our nice technical helper, Mr. Moffat, has gotten me
out of trouble once again.
  Thank you, Chairman Warnock, and I only—I have a minute to
say that, yes, we are the proud home to many veterans,
servicemembers, and their families. And we know, tragically, that
some of these predatory, bad actors prey on them. We know that
car title lenders, for example, cluster around military bases. And
we are very pleased that the Department of Defense a couple of
years ago updated the Military Lending Act. The Consumer Finan-
cial Protection Bureau is a great resource for our servicemembers.
  Right now, we are concerned about scammers who are going
after veterans and their surviving spouses, trying to get not only
their pension but, in some cases, their Aid and Attendance benefits.
And they will try to trick them into thinking that they can get you
your money faster or get you more benefits. And so it is just so im-
portant that we rely on our regulators and organizations like Geor-
gia Watch to provide educational resources and, when we hear
about scams, to alert the authorities as quickly as possible so that
they are shut down and enforcement happens.
  Chairman WARNOCK. Thank you so much, Ms. Coyle.
  Ranking Member Tillis.
  Senator TILLIS. Thank you, Mr. Chairman, and once again
thanks to the witnesses for being here.
  Ms. Greszler, the Department of Labor Office of the Inspector
General wrote, ‘‘The unprecedented infusion of Federal funds into
the UI program gave individuals and organized criminal groups a
high-value target to exploit. That, combined with easily attainable,
stolen, personal, identifiable information and continuing UI pro-
gram weaknesses identified by the OIG, over the last several years,
allowed criminals to defraud the system.’’ Do you agree with that
topline assessment?
  Ms. GRESZLER. Yes.
  Senator TILLIS. Can you explain how the UI system design al-
lowed for both individual and organized criminal elements to ex-
ploit it using PII?
  Ms. GRESZLER. Yes. And you know, part of it had to do with the
nature of the program at the time being outdated, and part of it
had to do with all of these expansions that were thrown onto these
systems very quickly.
  You know, the reason that Government benefit programs will be
utilized for criminals to steal money is that, first, an individual’s
information, which is fairly readily available out there, has to have
a value on it. And so what this UI program did is it increased basi-
cally the price tag on individuals’ personal information.
  Prior to the pandemic, maybe you could use somebody’s home ad-
dress and date of birth and name to sell to a telemarketer for a
very small sum of money. If you were lucky, then you got credit
card information. You could go charge some money on it for a short
period of time.
  But after the pandemic, you effectively tied $1,000 a week UI
benefit to every individual’s personal information, and so you are
                                 13

increasing the price tag and thus attracting more criminals. The
more Government benefit programs you have, then more dollar
value you tie to those. And unfortunately, a lot of Government ben-
efits programs are targeted toward lower-income individuals. A lot
of the ones that are being proposed now would be means-tested or
income-limited, and so the criminals go after those populations that
have the highest dollar value on them.
   But, second, the programs themselves can be a source of com-
promised information. Some of these State unemployment insur-
ance systems were running non COBOL, which was designed in the
1960s. Universities stopped teaching it in the 1980s. So they were
incredibly outdated, and they were not able to adapt quickly. And
they did not have the authority like a private company, to say,
‘‘Hey, we need to slow things down. We are not going to do this
until we know it is safe and we can protect our customers’ informa-
tion.’’ They were required to start delivering the benefits as soon
as the legislation was enacted.
   Senator TILLIS. Yes, Mr. Chairman, I think this is—one of the
reasons why I am highlighting it is I think the storm on the hori-
zon with all these benefits that were fraudulently obtained. I am
thinking about households that are going to be completing their
taxes next year, or the year after next, and somehow being sur-
prised by the idea that they have received several thousand dollars
in taxable benefits, Federal and, where applicable, State taxes.
   And then what are they going to have to go through to reconcile
it? They may have to hire an attorney. They have got to file a fraud
complaint. They could potentially get some concession on not hav-
ing to pay it, pending the fraud complaint. But I think this is going
to be a huge issue that we may have to play a role.
   I was trying to sort out this morning how, you know, maybe we
can sync up the Department of Labor system, which administered
the UI benefit, and banking, which could potentially swim into
our—or I should say IRS, so that we can try and identify before
they get the big surprise a year from now or 2 years from now, if
they were subject to an audit and this information somehow inter-
sects.
   Ms. Coyle, I want to ask you a question. We are talking about—
in your opening Statement, you made a comment about stepping
up, providing more tools for prosecution. What advice would you
give us on more work that Congress should do in the area of pre-
vention and financial literacy? What more should we be doing on
that front?
   Ms. COYLE. Thank you. This time I did it. Thank you, Ranking
Member Tillis, for that question. You know, the conversation that
has been about theft of benefits is certainly one that we are con-
cerned about. I can tell you that in June I heard from a Georgia
consumer whose identity was stolen and found—and used to apply
for unemployment benefits. And he had an incredibly difficult time
navigating the system of having this issue resolved. So the more
we can help the States untangle some of those challenges that are
in place, to make sure that those Georgians needing help when
they have been scammed, or when their identity has been stolen,
would be one of the primary recommendations I would make.
   Senator TILLIS. Thank you. Thank you, Mr. Chair.
                                 14

   Chairman WARNOCK. Senator Cortez Masto.
   Senator CORTEZ MASTO. Thank you, Mr. Chair and Ranking
Member. Thank you to the panelists.
   Let me just start by saying I agree with Senator Tillis. I, listen,
as a former attorney general, dealt with fraud and identity theft.
And they are interconnected, and it is a reality, and we have not
done anything to address really the rampant identity theft.
   But I agree with him that we have to put additional resources
into the enforcement mechanism against fraud for the IRS as well
as Labor, wherever we can, and we have the ability to do that. We
have done that in the past. And I think it is going to be important
for us to continue, as we look at providing essential resources to
individuals, to guard against the predatory nature of fraud which
is going to happen.
   And so my question to—let me start with Ms. Coyle and to all
the panelists. Really, what we are talking about, the essential piece
of all of the fraud, is the identity theft that is associated with it.
   And, Ms. Coyle, let me start with you. What can be done to ad-
dress identity theft and/or educate the consumer so that they can
guard their personal information or protect against identity theft?
Is it too late, or are there things that the individual consumer can
do? And let me start with Ms. Coyle, and I will go down the panel,
if you——
   Ms. COYLE. I sent a message to Mr. Moffat, who is providing
technical support. I can—I am unmuted, but unfortunately I was
not able to hear that last question directed to me. May I ask that
you repeat it? And I hope I will be able to hear it this time, and
perhaps Mr. Moffat can fix the technology on his end.
   Senator CORTEZ MASTO. Yes, not a problem. Let me then start
with Mr. Breyault.
   Ms. COYLE. I am sorry I am not able to hear your sound.
   Senator CORTEZ MASTO. No, that is not a problem. I am just ask-
ing a question. Yes, I am asking the question about——
   Ms. COYLE. I am hoping Mr. Moffat can help.
   Senator CORTEZ MASTO. Can you hear me now?
   [Technical difficulties.]
   Senator CORTEZ MASTO. For the sake of the time, let me just
then go to Mr. Breyault. The question, same question, with respect
to identity theft, is it too late, or are there things that we should
be doing or can be doing that consumers can use to guard against,
to protect themselves?
   Mr. BREYAULT. Yes, Senator. Certainly, the information the in-
formation that identity thieves need to defraud millions of con-
sumers is readily available on the dark web thanks to the number
of data breaches that Senator Tillis alluded to earlier. What can be
done is to do things like better data security standards so that the
supply of information from banks and other institutions that hold
sensitive personal information is cutoff, so it is harder for the
scammers to get it in the first place.
   Other things that can be done is to follow the money. Scammers
ultimately, end of the day, want to be paid. And so making sure
that banks or State UI insurance agencies, who detect this kind of
fraud, can claw that money back before it gets lost to the con-
sumers.
                                 15

   And certainly, working with financial institutions who are facili-
tating the transfer of this money to make sure that they are mak-
ing security a priority in addition to the speed at which these
transactions can be processed. So right now, the Federal Reserve
is considering a new money transfer service called FedNow that
would allow nearly instantaneous money transfers in competition
with the banks’ Zelle program. Unfortunately, the regulations that
have been put out there for FedNow we and many other consumer
advocates do not feel properly prioritize security. And so we are
worried that in the name of convenience and speed that the ability
of fraudsters to continue to commit identity fraud and ultimately
get paid will only become easier.
   Senator CORTEZ MASTO. Thank you. I appreciate that.
   Ms. Greszler, any thoughts on how we can address the identity
theft?
   Ms. GRESZLER. Yes. I would just like to add that after somebody
actually has the information it is still possible to make it more dif-
ficult for them to use that information to obtain Government bene-
fits. And the GAO has identified three sources of improper pay-
ments, and while there are some administrative and process errors,
the bulk of it comes down to insufficient documentation to deter-
mine whether or not somebody is eligible and what the proper
amount of the payment should be. And so if you have more docu-
mentation and more requirements to actually verify that this is the
person that they say they are, that would help. It is going to slow
the process down a little bit, but I think that it is still something
that is necessary to ensure the integrity of the programs.
   Senator CORTEZ MASTO. Thank you. And is there—this is my last
question, but I think this is also the challenge that I have found
in the past is educating the consumer. To what extent should we
be putting resources into educating the consumer to beware of po-
tential scams and how to protect themselves?
   Mr. BREYAULT. Senator, consumer education is vital to any fraud
prevention program, but as I have said in many other instances,
this is a problem that we cannot consumer-educate our way out of.
The genie is out of the bottle when it comes to identity fraud. And
putting the responsibility on consumers alone to protect their infor-
mation, when they are fighting back against highly sophisticated,
criminal rings of identity thieves, who are often beyond the reach
of U.S. law enforcement, is far too much to—a responsibility to put
on individual consumers. It has to be an effort that includes banks,
that includes software companies, and the Government to try and
get a handle on this program.
   Senator CORTEZ MASTO. The enforcement is key.
   Mr. BREYAULT. Yes, ma’am.
   Senator CORTEZ MASTO. Thank you.
   Chairman WARNOCK. Ms. Cortez Masto, we had a technology
glitch. If you need more time?
   Senator CORTEZ MASTO. No.
   Chairman WARNOCK. OK. Senator Tester.
   Senator TESTER. Thank you, Mr. Chairman and Ranking Mem-
ber. I am Chairman of the Veterans Affairs Committee. Senator
Tillis sits on that Committee. I am interested in how we are pro-
tecting the men and women who have protected us. And so this is
                                16

question is for you, Mr. Breyault, and that is: How has fraud dur-
ing the pandemic and economic crisis impacted our veterans?
   Mr. BREYAULT. Senator Tester, thank—is my mic on?
   Senator TESTER. Yes.
   Mr. BREYAULT. Senator, thank you for the question. Members of
the military, their families, and others in the military community
are uniquely vulnerable to fraud because of the nature of their job.
They have a guaranteed income stream. They are often moving
around, on a frequent basis, as they move from posting to posting.
They are often targeted by fraudsters.
   And so the solutions that try and better protect them have to be
unique, and those solutions have to come from not only within the
Department of Defense, to give these military servicemembers the
resources they need to spot and avoid these scams in the first
place, but it also have to come from enforcement agencies, like the
Department of Justice, the Federal Trade Commission, and bank-
ing regulators to crack down on predatory lenders who may target
them, on fraudulent direct sellers who may target military families,
or other fraudsters who are specifically trying to take advantage of
the unique nature of members of the military community.
   Senator TESTER. So you are talking about active military. I am
talking about the folks who went from active military to the civil-
ian life, that are now civilians or veterans because they have
served our military. Are the same challenges—the same solutions
to their challenges the same as active military?
   Mr. BREYAULT. Well, I think military veterans are certainly de-
serving of special attention when it comes to fraud protection. As
with active military, military veterans often have a guaranteed in-
come stream.
   Senator TESTER. True.
   Mr. BREYAULT. And that makes them very attractive to
scammers. So, yes, I do believe they deserve special attention.
   Senator TESTER. So the question becomes: As these scammers
that are out there stealing information and using it in a way that
deprives people who need the benefits that are out there for them,
whether it is unemployment insurance or whether that is in bene-
fits that they get through a disability, so how do we protect them?
I mean, how do we actually get to the bottom of this? Is this an
issue?
   The lady who is here in person talked about old computer sys-
tems. And, look, computer systems in the 1960s probably should
have been replaced 30 years ago, but the truth is: What do we need
to do? Where do we need to put our focus?
   Mr. BREYAULT. Senator, I wish there was one silver bullet that
could address this bullet, but there just is not. There needs to be
a layered approach to better protecting consumers, including vet-
erans, from identity fraud. And that is going to require work by
credit reporting bureaus——
   Senator TESTER. OK.
   Mr. BREYAULT ——by banks, by software companies, by State
unemployment insurance programs to update their technology. It is
something that is going to take a long time and is going to require
investment at all of those levels that I just described.
   Senator TESTER. OK. Ms. Coyle, can you hear me?
                                 17

   She cannot. Well, then there is no need asking her any questions.
   We are going to go over to the testimony. Let me get your name
because I do not want to botch it up too bad. It is not so bad. Ms.
Greszler, OK? In your testimony, you talked about—and you talked
about this in your opening Statement, too—that there is about 557
million checks that were not actually employed; 807 million went
to people who were actually employed and 557 million did not.
Those are pretty stark statistics. How confident are you that those
are correct?
   Ms. GRESZLER. Well, what I did is to tabulate the entire number
of checks that went out and then to tabulate the entire number of
weeks that people were actually unemployed. You know, tradition-
ally, about 40 percent of people who are unemployed will collect an
unemployment insurance benefit.
   And so what I said is, well, what if actually 100 percent? If the
programs perfectly got everybody that was unemployed and they
all got a check, what would that total be? And that is where you
have the 807 million benefit checks would have gone out if you
were simply covering 100 percent. And so the excess above that is
557 million.
   Now because we do not have a match to see those——
   Senator TESTER. Yes, I got you.
   Ms. GRESZLER ——we do not know exactly. But it is kind of a
conservative estimate, to say, that these people were not unem-
ployed and they were receiving benefits.
   Senator TESTER. So have you been able to do any research to de-
termine how much of that 557 million was collected by organized
crime or organized criminals, however you want to put it, versus
people who are just crooked and applied for unemployment benefits
when they were not unemployed?
   Ms. GRESZLER. I think given the magnitude of it—and you know,
the company ID.me that is working with some of the States to in-
crease their fraud protection has estimated it is a $400 billion sum.
Given how large that is, I think the overwhelming majority of this
is criminal activity as opposed to just individual-level fraud and
abuse.
   Senator TESTER. OK. I appreciate that. Thank you very, very
much.
   Chairman WARNOCK. Senator Warren.
   Senator WARREN. Thank you, Mr. Chairman. This is a very im-
portant Subcommittee, and I am glad to be part of it under your
leadership.
   So I would like to talk today with you all about mobile apps. You
know, these allow people to instantaneously transfer money to
friends or family or merchants with just a few taps on their phone.
They have proved to be a valuable resource in our socially
distanced, pandemic economy, but along with the benefits of in-
stant and contactless payments, these apps have made it easier for
scammers and fraudsters to reach more people faster.
   A recent report using data from the CFPB shows that consumer
complaints about digital payment apps steadily increased over the
last few years before skyrocketing during the pandemic. The num-
ber of consumer complaints about these apps increased more than
300 percent in just the first 4 months of the pandemic, reached a
                                 18

peak in April of this year at nearly double the previous high back
in 2020.
   So, Mr. Breyault, I see you nodding as we go through this. Your
organization has done a lot of good work to protect consumers from
scams and fraud and abuse, including the scams that they face on
mobile apps. So I just want to ask you, when a consumer wants
to use their Venmo or Cash App account to pay a friend for lunch,
but they make a mistake, say by sending the money to another per-
son who happens to have the same name as their friend, are they
usually able to get the money back?
   Mr. BREYAULT. No, Senator.
   Senator WARREN. Yes. In fact, I understand that if you go to
Venmo’s help center to figure out what to do when you have been
paying the wrong person, the first thing it tells you is ask the per-
son you accidentally paid to send the money back. And if that per-
son is not very nice, I take it you are just kind of out of luck.
   Mr. BREYAULT. Yes, that is correct, Senator.
   Senator WARREN. All right. So let us just push this a little fur-
ther, Mr. Breyault. Let us say a consumer is tricked into sending
money to someone who pretends to be a coworker collecting money
for a gift or to a scammer who promises to flip that money into a
bigger payday but never makes good on the deal. In your experi-
ence, are consumers likely to get their money back then?
   Mr. BREYAULT. No, Senator, they are not.
   Senator WARREN. So money in these accounts are more like cash
in your wallet than like money in a bank account. Once it is gone,
I take it is probably gone for good. Not only does that leave con-
sumers extremely vulnerable to scam artists and to fraudsters, it
also leaves them vulnerable to being hounded by the apps them-
selves. Venmo has deployed predatory debt collection tactics
against consumers whose accounts have been drained into the red
by scammers, and it has not let up during the pandemic.
   So, Mr. Breyault, do you believe that mobile peer-to-peer pay-
ment apps should face greater scrutiny from regulators to ensure
that they provide consumers with stronger protections against
scam and fraud and, frankly, even simple mistakes?
   Mr. BREYAULT. Yes, Senator, I do. And I have detailed a number
of the steps that this Committee can take to better protect those
consumers in my written testimony.
   Senator WARREN. Yes. And thank you for that testimony and for
the suggestions. You know, I agree with you on this, and that is
why I am very glad to see that the CFPB has begun taking steps
to strengthen and to clarify consumer protection rules for payment
apps.
   These apps are helping to fill gaps in a payment system that is
too slow; it is too expensive, and it is too inconvenient. And there
is no doubt that these apps have played an important role in our
pandemic economy. But we cannot leave consumers to fend for
themselves on a level playing field that is making it even easier for
scammers and fraudsters to use these apps to do harm. That
means that if we really do want to level the playing field we have
got to make the rules stronger and we have got to make sure there
is adequate enforcement, to ensure that mobile payment apps take
responsibility for protecting their customers.
                                19

   I want to say thank you, Mr. Chairman, for holding this hearing,
giving us a chance to look at this and so many other aspects of
where fraudsters have figured out pandemic is a good time for
them to make money and to step up their efforts to cheat everyone
else. I look forward to our continuing to work on this, and I look
forward to your next hearing.
   Chairman WARNOCK. Thank you so much, Senator Warren, for
your work in this area for such a long time.
   I see that Senator Van Hollen is present and just in time to ask
your question.
   Senator VAN HOLLEN. Well, thank you, Mr. Chairman, Ranking
Member Tillis, for conducting this hearing. I thank all of you for
your testimony. And, Ms. Coyle, thank you for all the work that
you do in Georgia.
   I have a question related to medical debt because on this Com-
mittee, you know, we have learned over the years that many Amer-
icans are burdened by all sorts of debt. We obviously have student
loan debt, household debt. The debt that is most under collection
and most responsible for personal bankruptcies continues to be
medical debt. Despite improvements many of us think we have
made in the health care system and affordability, we have a long,
long way to go on that front, but in the meantime, we have people
who are being just buried with medical debt.
   And so my question is—I do not know if Ms. Coyle is remote, but
is, what are you doing in Georgia, because my understanding is
that you have some programs underway to try to address this. So
what are you doing, but what is the longer-term solution based on
your experience?
   Ms. COYLE. Thank you, Senator, so much for that question, for
your work in this space. Right now in Georgia, some 30 percent of
adults have medical debt and 48 percent lack access to a rainy day
fund. It is those emergencies, whether it is an unexpected, surprise
medical bill, which thanks to hard work in our legislature over a
few years we now have a ban on surprise billing in Georgia. But
people do not have that even $500 saved up if they have another
problem, a very high utility bill or a car that need repaired.
   And so with medical—with medical debt, we have put together
a comprehensive guide, and Georgians call us for advice all the
time. It is our number one call to our consumer hotline. We know
that medical debt is actually a barrier to health care itself. We
know that because of the fear of the potential cost of a procedure,
and the lack of transparency about what a procedure might cost,
many people forego getting needed care until they are even sicker
and the care will be even more costly.
   In Georgia, we have not yet expanded Medicaid, and we do know
that the number of uninsured in Georgia as of 2019 is over 13 per-
cent.
   Medical debt puts an incredible strain on people’s financial
health. Thirty-seven percent of people with medical bills’ issues
used up all their savings to pay for those bills. We call on our
health systems, our hospitals, and health care providers to be much
more transparent and up-front about offering financial assistance.
Many of the Georgians and Americans trapped in medical debt are
being hounded by hospitals or other—or third-party debt collectors,
                                  20

and those same individuals would have qualified for financial as-
sistance if it had been offered. So we want to see much more robust
spending in that space and a much better job of working with con-
sumers to offer payment plans and to make sure that the cost of
care is transparent and that we do everything we can to ensure,
as we do, that people know where they can get free and reduced
care. Thank you for that question.
   Senator VAN HOLLEN. Well, thank you for what you are doing.
Senator Chris Murphy and I and others have introduced legislation
during this pandemic to, at least on an emergency basis, you know,
prevent some of the debt collectors, some of these worst practices
from being implemented because people are being chased down
even as they are experiencing other hardships.
   But clearly, we need a long-term solution. Part of it is, of course,
more affordable health care, but there are other things we can be
doing here. I do not know about some of my colleagues. We have
a number of churches and other faith-based institutions in our
State, who are raising money and paying off people’s medical debt.
That is a great and kind thing for them to do, and I applaud them
for doing, but we should not have a health care system that de-
pends on, you know, people passing a hat at services as the pri-
mary mechanism to keep people from experiencing bankruptcy.
   And as we see from the figures, despite all their efforts, there is
still lots of people who are going into personal bankruptcy and then
losing their homes and other things.
   So I hope that we will find a way to address this because, as you
pointed out, Ms. Coyle, so many times it is like, well, you have this
hospital bill, and you are—you know, someone hit the back of your
car. You have got to replace your fender. You have got to spend
$400 on a car breaking down or whatever it may be, and then you
do not pay your medical debt. Then you get hounded. Then you get
a bad credit rating. And then you have this cycle. And since med-
ical debt is the number one cause of personal bankruptcy, I really
hope we will take a look at it.
   Thank you, Mr. Chairman and Ranking Member, and thank all
the witnesses.
   Chairman WARNOCK. Thank you very much, Senator Van Hollen.
And with that, all questioning is concluded.
   Thanks again to our witnesses for taking the time to be with us
today and to provide your testimony.
   Today’s hearing on frauds and scams is an important step toward
protecting consumers during the pandemic recovery economy, and
I look forward to working with my colleagues on both sides of the
aisle on this issue. And as I said at the outset, this topic is about
helping American families and ensuring that they are not swindled
out of their hard-earned dollars.
   For Senators who wish to submit questions for the record, those
questions are due 1 week from today, on Tuesday, August 10th.
And for our witnesses, you have 45 days to respond to any ques-
tions. Thank you again. And with that, this hearing is adjourned.
   [Whereupon, at 3:41 p.m., the hearing was adjourned.]
   [Prepared statements and responses to written questions sup-
plied for the record follow:]
                                        21
                   PREPARED STATEMENT OF LIZ COYLE
                     EXECUTIVE DIRECTOR, GEORGIA WATCH
                                  AUGUST 3, 2021
   Good afternoon. Thank you Chairman Warnock and Ranking Member Tillis for in-
viting me to speak before this Subcommittee today. I am truly honored to have this
opportunity.
   As Members of this Subcommittee know, our country still is facing significant
health risks tied to COVID–19, and recovery from the pandemic economy remains
challenging for many and fraught with obstacles and dangers for the most vulner-
able among us. Today, we’re here to talk about protecting consumers from scams
and fraud in the pandemic recovery economy. I am grateful to the Subcommittee
for shining a light on this issue.
   I would like to share with you today some of my concerns as a consumer advocate
from Georgia. Every day, we work to help Georgians with the issues that impact
their lives and livelihoods. The pandemic public health and economic crises further
highlighted what we already knew. Those already struggling to access needed
health care, keep the lights on, pay off debts, and live in stable housing would be
much more significantly impacted by the challenges suddenly confronting all of us.
Our toll-free consumer hotline started ringing on day one of this crisis and we con-
tinue to hear regularly from people needing assistance. This especially is the case
among our seniors on fixed incomes, veterans, lower income households and commu-
nities of color, who long have been disparately impacted in times of crisis. We knew
many consumers in Georgia were feeling desperate and vulnerable. Bad actors defi-
nitely knew that, too. From the early days, scammers and fraudsters plotted to ben-
efit substantially from these conditions. And as we’ve learned from Federal and
State regulators, they did.
   While many of today’s scams look a lot like yesterday’s, a newer kid on the eco-
nomic block may be having an outsized influence on the current shape of fraud.
Emerging financial technology tools certainly offer convenience, and for some under-
or unbanked Americans, access to the mainstream economy. However, these fintech
offerings may also be used by bad actors to facilitate scam-based theft. For example,
a mobile lending technology developed by a company from Georgia has been used
by home repair scammers as the perfect vehicle to steal from unsuspecting, vulner-
able homeowners.
   We also have heard from consumers who’ve been scammed when using a common
social media platform, Facebook. Scammers use Facebook to steal money from
unsuspecting consumers. Someone might see an ad while using the platform and be
tricked into purchasing a product from a fake company. When the merchandise
doesn’t come, they’re left with nothing more than a web address and maybe an
email address to a fraudulent, nonexistent company.
   In closing these remarks, I want to acknowledge the vitally important role played
by the Georgia Attorney General and Department of Law and the Consumer Finan-
cial Protection Bureau in alerting us to emerging scams. Notably, these regulators
both launched investigations and initiated enforcement actions related to the home
improvement scams I just referenced. I recommend policy makers ensure our State
and Federal regulators have the authority they need to set and enforce rules that
protect consumers and keep the emerging fintech marketplace safe for all. Thank
you again.

             PREPARED STATEMENT OF JOHN BREYAULT
 VICE PRESIDENT OF PUBLIC POLICY, TELECOMMUNICATIONS, AND FRAUD, NATIONAL
                            CONSUMERS LEAGUE
                                  AUGUST 3, 2021
Summary
  The COVID–19 pandemic has been a boom time for scammers and a nightmare
for their victims. By almost any measure, rates of fraud related to the pandemic
have mushroomed. In 2020, the Federal Trade Commission received more fraud
complaints than at any time in its 106-year history. The House Select Subcommittee
on the Coronavirus Crisis estimates that potential fraud involving the Small Busi-
ness Administration’s Paycheck Protection Program (PPP) and Economic Injury Dis-
aster Loan (EIDL) programs could cost taxpayers $84 billion. The impact of this
fraud has fallen disproportionately on historically marginalized communities, al-
ready suffering from high rates of COVID-related illnesses, deaths, and economic
hardship.
                                               22
   We are pleased to contribute to the Subcommittee’s examination of the role that
insecure peer-to-peer (P2P) payment platforms are playing in the transfer of funds
from fraud victims to scammers during the pandemic. Unfortunately, the same fea-
tures that are fueling these services’ explosive growth—low cost, nearly instanta-
neous payments made via a mobile app—have made P2P an increasingly popular
payment method for scammers. Analysts estimate that fraud rates on these plat-
forms are three to four times higher than for traditional payment methods such as
debit and credit cards.
   The lack of consumer protections for victims is a significant reason why fraud
rates are so high. Scammers are unlikely to abandon P2P platforms as long as they
can be used to easily obtain fraudulent payments. To address this, we recommend
that Congress consider extending existing limited liability protections for debit and
credit card transactions to cover fraudulently induced payments, requiring more
stringent investigations of potentially fraudulent transactions, pushing regulators to
enforce error resolution responsibilities for consumer errors and fraudulently in-
duced payments, and mandating more responsive customer service by P2P plat-
forms.
Introduction
   The National Consumers League appreciates the opportunity to provide the Sub-
committee with our views on protecting consumers from financial fraud and scams
as America begins to emerge from the COVID–19 pandemic.
   Founded in 1899, the National Consumers League (NCL) is the Nation’s pio-
neering consumer and worker advocacy organization. Our nonprofit mission is to ad-
vocate on behalf of consumers and workers in the United States and abroad. 1 For
more than 20 years, NCL has worked, via our Fraud.org campaign, to educate con-
sumers about the warning signs of fraud and promote public policies that protect
the American public from scams of all kinds.
The COVID–19 Pandemic Has Been a Perfect Storm for Fraudsters
   The last 16 months have been boom times for scammers and a nightmare for their
victims. To put this in context, in 2020 the Federal Trade Commission (FTC) re-
ceived 4.72 million complaints from consumers, a 45.7 percent increase over 2019
and by far the largest year-over-year increase in the FTC’s history. 2 The median
loss reported by victims of these scams was $374, though many victims lost far
more. A consumer who contacted NCL’s Fraud.org campaign lost $15,000 to a
scammer. 3 What is clear is that even these sobering numbers are only the tip of
a gigantic iceberg when it comes to COVID-linked fraud.
   For example, the Department of Labor recently estimated that one type of fraud
alone—unemployment insurance fraud—will have cost taxpayers more than $87 bil-
lion over the course of the pandemic. 4 Other estimates have put the amount of un-
employment fraud during the pandemic as high as $400 billion. 5 Fraudsters are
having a heyday. One Bronx man received $1.5 million in 10 months, a California
real estate broker stole more than $500,000 over 6 months, and a Nigerian Govern-
ment official was recently accused of fraudulently obtaining over $350,000 in less
than 6 weeks. 6 Even high-profile politicians are not immune. The personal informa-
tion of Senator Diane Feinstein 7 and Ohio Governor Mike DeWine 8 was reportedly
used by unemployment insurance fraudsters to try and improperly obtain benefits.

  1 For more information, visit www.nclnet.org.
   2 Federal Trade Commission. ‘‘Consumer Sentinel Data Book 2020’’. February 2021. P. 6. On-
line: https://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-data-book-
2020/csn-annual-data-book-2020.pdf.
   3 Fraud.org. ‘‘Cash App Scams on the Rise’’, June 1, 2021. Online: https://fraud.org/cash-app-
alert/.
   4 United States Department of Labor Office of Inspector General. ‘‘DOL–OIG Oversight of the
Unemployment Insurance Program’’, June 10, 2021. Online: https://www.oig.dol.gov/
doloiguioversightwork.htm.
   5 Salmon, Felix. ‘‘Half of the Pandemic’s Unemployment Money May Have Been Stolen’’,
Axios. June 10, 2021. Online: https://www.axios.com/pandemic-unemployment-fraud-benefits-
stolen-a937ad9d-0973-4aad-814f-4ca47b72f67f.html.
   6 Podkul, Cezary. ‘‘How Unemployment Insurance Fraud Exploded During the Pandemic’’,
ProPublica. July 26, 2021. Online: https://www.propublica.org/article/how-unemployment-in-
surance-fraud-exploded-during-the-pandemic.
   7 White, Jeremy. ‘‘Californian Allegedly Obtained UI Benefits Using Feinstein’s Identity’’, Po-
litico. December 17, 2020. Online: https://www.politico.com/states/california/story/2020/12/
17/californian-allegedly-obtained-ui-benefits-using-feinsteins-identity-1348423.
   8 Bischoff, Laura. ‘‘Unemployment Fraud So ‘Widespread’ It Even Happened to DeWine and
Husted’’, Dayton Daily News. January 19, 2021. Online: https://daytondailynews.com/local/un-
employment-fraud-so-widespread-it-even-happened-to-dewine-and-husted/
XRDFXUC7EFHKVD2C54SEJGFCCQ/.
                                              23
   The statistics are equally sobering for fraud involving other pandemic relief pro-
grams. A recent analysis by the House of Representatives’ Select Subcommittee on
the Coronavirus Crisis identified nearly $84 billion in potential fraud involving the
Small Business Administration’s Paycheck Protection Program (PPP) and Economic
Injury Disaster Loan (EIDL) programs. 9
   The variety of scams linked to COVID–19 is staggering. Fraudsters have run ad-
vance fee scams targeting consumers’ stimulus checks. 10 They have committed iden-
tity fraud linked to the sharing of COVID–19 vaccination cards online. 11 Imposter
scams have preyed on consumers’ fears about Federal Deposit Insurance Corpora-
tion-backed bank accounts. 12 Scammers even taken advantage of grieving families
by targeting the Federal Emergency Management Agency’s COVID–19 Funeral As-
sistance Program. 13
   The Department of Justice and other enforcement agencies have done yeoman’s
work to try and crack down on this wave of criminality, particularly scams targeting
taxpayer-funded COVID–19 relief programs. 14 Unfortunately, given the scale of
fraud linked to the pandemic, these efforts are likely to be little more than tem-
porary setbacks for the armies of sophisticated and well-organized criminal rings.
   Many factors have contributed to the historic increase in fraud during the pan-
demic. Rampant misinformation and disinformation about the virus have been fer-
tile ground for scammers peddling all manner of COVID-prevention pills, testing
kits, and treatments. Unprecedented economic distress has created ample opportuni-
ties for scammers to run imposter schemes threatening dire consequences if pay-
ments aren’t made. Scammers can easily contact victims over the phone, text mes-
sage, email, or over the Web, putting millions of potential victims at their fingertips.
These transactions happen with speed and anonymity through gift cards, peer-to-
peer (P2P) payment apps, cryptocurrencies, and other money transfer services.
Cashing out is easy and relatively risk-free for the criminals.
   Taken together, these factors have created a perfect storm of fraud during the
pandemic.
The Impact of Fraud Linked to COVID–19 Has Fallen Disproportionately on
     Marginalized Communities
   Consumers’ vulnerability to fraud increases during times of economic uncertainty.
The COVID–19 pandemic has been no exception. High unemployment, the threat of
eviction, and social isolation brought on by social distancing measures have all con-
tributed to high rates of fraud.
   While fraud affects consumers of all races, ages, and income levels, consumers
from historically marginalized communities have been at particular risk of scams.
According to a 2017 FTC survey, 19.2 percent of African Americans and 17.3 percent
of Hispanic consumers reported being a victim of fraud compared to 15.9 percent
of consumers overall and 14.9 percent of non-Hispanic Whites. 15 The same survey
found that 20.4 percent of consumers who have experienced a serious negative life
event (e.g., death of a family member or close friend, a serious injury or illness in
the family, or the loss of a job) reported being victims of fraud, compared to 13.1
percent of consumers who had not experienced such an event. 16

   9 House Select Subcommittee on the Coronavirus Crisis. ‘‘Lowering the Guardrails: How the
Trump Administration Failed To Prevent Billions in Pandemic Small Business Fraud’’, March
25, 2021. Online: https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/
2020-03-25-Staff-Memo-Small-Business-Fraud.pdf.
   10 Leonhardt, Megan. ‘‘5 Common Stimulus Check Scams Experts Are Warning Consumers To
Watch For’’, CNBC.com. December 29, 2020. Online: https://www.cnbc.com/2020/12/29/stim-
ulus-check-scams-here-are-red-flags-to-watch-for.html.
   11 Gressin, Seena. ‘‘Social Media Is No Place for COVID–19 Vaccination Cards’’, Federal Trade
Commission. February 5, 2021. Online: https://www.consumer.ftc.gov/blog/2021/02/social-
media-no-place-covid-19-vaccination-cards.
   12 Federal Deposit Insurance Corporation. ‘‘FDIC: Insured Bank Deposits Are Safe: Beware
of Potential Scams Using the Agency’s Name’’. Press Release. March 18, 2020. Online: https://
www.fdic.gov/news/press-releases/2020/pr20032.html.
   13 Gressin,    Seena.    ‘‘Scammers    Target     Loved  Ones    of   COVID–19      Victims’’.
MilitaryConsumer.gov. April 20, 2021. Online: https://www.militaryconsumer.gov/blog/
scammers-target-loved-ones-covid-19-victims.
   14 United States Department of Justice. ‘‘Justice Department Takes Action Against COVID–
19 Fraud’’. Press release. March 26, 2021. Online: https://www.justice.gov/opa/pr/justice-de-
partment-takes-action-against-covid-19-fraud.
   15 Anderson, Keith. ‘‘Mass-Market Consumer Fraud in the United States: A 2017 Update’’.
(Staff Report of the Bureau of Economics, Federal Trade Commission.) Table 11. October 2019.
Online:        https://www.ftc.gov/system/files/documents/reports/mass-market-consumer-fraud-
united-states-2017-update/p105502massmarketconsumerfraud2017report.pdf.
   16 Ibid. P. 106.
                                              24
   Specific data on the intersection of COVID–19 fraud and minorities is lacking.
However, given what we know about the vulnerability of consumers of color to fraud
and the high toll that COVID–19 has taken on their communities in terms of
deaths, illnesses, and economic harm, 17 we can conclude that fraud linked to the
pandemic is taking a similarly disproportionate toll on historically marginalized con-
sumers.
   Anecdotal evidence supports this conclusion. This spring, the FTC and the State
of Arkansas sued the operators of a ‘‘blessing loom’’ pyramid scheme that allegedly
targeted African Americans struggling financially during the pandemic. According
to the FTC, the scammers behind the scheme defrauded thousands of consumers of
tens of millions of dollars by promising investment returns as high as 800 per-
cent. 18 The National Caucus and Center on Black Aging has also reported an in-
crease in fraud cases targeting cash-strapped or unemployed older African Ameri-
cans since the pandemic began. 19
Scammers Are Exploiting a Lack of Protections for Payments Made via
     Peer-to-Peer Services
   The ultimate goal for fraudsters is stealing money. This can take the form of di-
rect payments from the victims to the scammers or stealing information that can
then be used to obtain money through identity fraud or other schemes. Scammers
routinely take advantage of new financial technologies to facilitate the transfer of
funds. While no financial institution wants to be used as a vehicle for crime, there
is often tension between businesses’ desire to secure a particular payment vector
from fraud while still allowing for legitimate transactions to be processed quickly.
   This tension is clear when it comes to the rapid growth of P2P payment platforms
such as PayPal’s Friends & Family and Venmo services, Square’s Cash App, and
Zelle, which is owned by a consortium of major banks. These services have attracted
tens millions of users by allowing for free or very low-cost payments to be sent be-
tween consumers or from consumers to businesses. 20 Even before the pandemic,
roughly 4 in 5 Americans (79 percent) has used mobile payment apps, by one esti-
mate. 21 Social distancing regulations put in place during the pandemic have super-
charged consumers’ embrace of these services, with the volume of payments ex-
pected to grow by roughly 37 percent in 2021. 22 The explosive growth of these serv-
ices is not expected to end any time soon. By 2023, it is estimated that more than
$1 trillion will be transacted via P2P platforms. 23
   Unfortunately, the same factors that are fueling the rapid growth of P2P payment
platforms during the pandemic—low-cost, nearly instantaneous payments made via
a mobile app—have made P2P a payment method of choice for scammers. In 2020,
the FTC received nearly 62,000 complaints from consumers who sent money to
fraudsters via payment apps or similar services, with a total reported loss of $87
million. 24 Consumer complaints to the Consumer Financial Protection Bureau
(CFPB or Bureau) tell a similar story. A recent MASSPIRG Education Fund anal-
ysis found that more than 5,200 complaints about mobile or digital wallets were
filed with CFPB over the 12-month period preceding April 2021. Three companies—
PayPal (which owns Venmo), Square (which owns Cash App), and Coinbase (a plat-
form for buying and selling cryptocurrency)—accounted for more than two-thirds of

   17 Zamarripa, Ryan, and Roque, Lorena. ‘‘Latinos Face Disproportionate Health and Economic
Impacts From COVID–19’’. Center for American Progress. March 5, 2021. Online: https://
www.americanprogress.org/issues/economy/reports/2021/03/05/496733/latinos-face-dispropor-
tionate-health-economic-impacts-covid-19/.
   18 Federal Trade Commission. ‘‘FTC and the State of Arkansas Charge Operators of ‘Blessing
Loom’ With Running an Illegal Pyramid Scheme’’. Press release. June 17, 2021. Online: https://
www.ftc.gov/news-events/press-releases/2021/06/ftc-state-arkansas-charge-operators-blessing-
loom-running-illegal.
   19 NAACP. ‘‘Elder Abuse: Another COVID–19 Evil’’, March 1, 2021. Online: https://
naacp.org/articles/elder-abuse-another-covid-19-evil.
   20 Kunst, Alexander. ‘‘Statista Global Consumer Survey’’. November 19, 2020. Online: https://
www.statista.com/forecasts/997123/peer-to-peer-payments-in-the-us.
   21 El Issa. ‘‘Most Americans Go Mobile With Payment Apps—Here’s How They Roll’’,
NerdWallet.com. February 26, 2020. Online: https://www.nerdwallet.com/article/banking/mo-
bile-payment-app-survey.
   22 Ho, Justin. ‘‘P2P Payment Apps Are Booming, Thanks to the Pandemic’’, Marketplace.org.
March 15, 2021. Online: https://www.marketplace.org/2021/03/15/p2p-payment-apps-are-
booming-thanks-to-the-pandemic/.
   23 Kats, Rimma. ‘‘In 2023, More Than $1 Trillion Will Transact via Mobile P2P Apps’’, Insider
Intelligence. April 19, 2021. Online: https://www.emarketer.com/content/breaking-down-mobile-
p2p-payments-biggest-players.
   24 Federal Trade Commission. ‘‘Consumer Sentinel Network Data Book 2020’’. February 2021.
P. 11. Online: https://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-
data-book-2020/csn-annual-data-book-2020.pdf.
                                             25
all digital wallet complaints to the Bureau through April 2021. 25 The Better Busi-
ness Bureau has reported a similar increase in complaints involving P2P services. 26
   A complaint NCL received recently from a consumer in Pennsylvania is typical
of the experience for far too many consumers who are induced to send money to
fraudsters via P2P payment apps. In the process of trying to activate her Cash Card
debit card for Square’s Cash App service, the consumer’s wife was directed to a
phishing website where she inadvertently gave a scammer access to her Cash App
account. The fraudsters quickly drained more than $5,000 from the consumer’s ac-
count. When the consumer contacted his bank and Cash App to address the fraud
he was told there was nothing that could be done because he his wife had given
her permission for the transaction to the scammer.
   Another consumer from Massachusetts sent us a similar story last year. She
thought she had booked a vacation rental in Provincetown and she was instructed
by the ‘‘owner’’ of the property to send a $1,150 deposit via PayPal. When she ar-
rived at the address on the listing, she found that no such property existed. ‘‘The
neighbor told me he’d heard of many such scams in Provincetown,’’ she wrote. 27 She
contacted PayPal twice to dispute the transaction, but was told that there was noth-
ing that could be done to get her money back.
   P2P services are aware that fraudsters use their services to obtain funds from
their victims. An NCL review found that all of the major P2P platforms make some
effort to educate their users about how to avoid scams. However, voluntary disclo-
sures or consumer education alone are not terribly effective by themselves. Despite
the platforms’ efforts to educate users about the risks of sending money via P2P
platforms, more than half of consumers surveyed by AARP incorrectly assumed that
their payments would be protected if there is an error or fraud associated with the
transaction. 28
   While P2P services do employ technological measures to stop fraudulent trans-
actions, there is a business incentive not to introduce too many security roadblocks
in the payment process. This is because P2P payment platforms, and their sky-high
valuations, 29 30 are dependent on maintaining large transaction volumes. P2P plat-
forms’ desire to reduce ‘‘friction’’ in the payments experience is in direct tension the
need to prevent fraud. 31 Yet if these platforms are making the decision to skew
their services towards speed and convenience at the expense of safety and protec-
tion, they must take responsibility for those choices.
   What is clear is that existing efforts to secure P2P payments are falling far short
of what is needed. Major P2P platforms operators like Square, PayPal and Zelle do
not publicly disclose their fraud rates. They should be required to do so. Analysts
estimate that fraud rates on these platforms are three to four times higher than tra-
ditional payment methods such as debit and credit cards. 32 Javelin Strategy and
Research recently found that P2P services saw a 733 percent increase in fraud from
2016 to 2019. 33 The popularity of P2P payments during the pandemic is also evi-

   25 Mierzwinski, Ed, et al. ‘‘Virtual Wallets, Real Complaints’’. MASSPIRG Education Fund.
June 2021. P. 2. Online: https://masspirg.org/sites/pirg/files/reports/MA-wallets.pdf.
   26 Zamost, Scott. ‘‘Criminals Launder Coronavirus Relief Money, Exploit Victims Through
Popular Apps’’, CNBC.com. November 18, 2020. Online: https://www.cnbc.com/2020/11/18/
criminals-launder-coronavirus-relief-money-exploit-victims-through-popular-apps.html.
   27 See, e.g., Martin, Sean. ‘‘Vacationers Continue To Be Fooled by Rental Scams’’,
Provincetown Banner. August 15, 2019. Online: https://provincetown.wickedlocal.com/news/
20190815/vacationers-continue-to-be-fooled-by-rental-scams.
   28 AARP. ‘‘AARP Survey Finds Majority of Americans Using Payment Apps Unaware of Dan-
ger Posed by Scammers’’. Press release. May 12, 2020. Online: https://press.aarp.org/2020-5-
12-AARP-Survey-Finds-Majority-of-Americans-Using-Payment-Apps-Unaware-of-Danger-Posed-
by-Scammers.
   29 Hale, Kori. ‘‘Hip-Hop’s Role in Square’s $40 Billion Cash App Business Success’’, Forbes.
September 22, 2020, Online: https://www.forbes.com/sites/korihale/2020/09/22/hip-hops-role-
in-squares-40-billion-cash-app-business-success/?sh=10d7f8ee7489.
   30 Rudegeair, Peter. ‘‘Cash App’s Surge During COVID–19 Pandemic Fuels Square Stock’’,
Wall Street Journal. September 2, 2020. Online: https://www.wsj.com/articles/cash-apps-surge-
during-covid-19-pandemic-fuels-square-stock-11599039003.
   31 Doyle, Ciaran. ‘‘Removing Friction and Fraud From P2P Payments’’, IBM RegTech Innova-
tions. December 6, 2018. Online: https://www.ibm.com/blogs/regtech/removing-friction-and-
fraud-from-p2p-payments/.
   32 Popper, Nathaniel. ‘‘When Your Last $166 Vanishes: ‘Fast Fraud’ Surges on Payment
Apps’’, New York Times. October 11, 2020. Online: https://www.nytimes.com/2020/10/11/tech-
nology/fraud-payment-apps.html.
   33 Javelin Strategy and Research. ‘‘Identity Fraud Losses Increase 15 Percent as Consumer
Out-of-Pocket Costs More Than Double, According to 2020 Identity Fraud Report’’. Press release.
May 13, 2020. Online: https://www.javelinstrategy.com/press-release/identity-fraud-losses-in-
crease-15-percent-consumer-out-pocket-costs-more-double.
                                             26
dent from conversations among fraudsters themselves on the Dark Web. In August
2020 alone, analysts noted that Cash App was mentioned more than 10,500 times,
an increase of 450 percent from the previous year. Listings mentioning Venmo and
Zelle increased by around 50 percent in the same period. 34
  While no financial service is immune from fraud, protections for consumers who
lose money to scammers on P2P apps are sorely lacking. When scammers obtain a
consumer’s bank account information and use it to initiate a preauthorized payment
through the ACH system, or obtain debit card information and use it to initiate pay-
ment for fraudulent purchases, the consumer typically has limited liability for such
transactions, thanks to the Federal Electronic Funds Transfer Act (EFTA), imple-
mented through the Federal Reserve’s Regulation E. 35 Similar consumer protections
exist for fraudulent credit card transactions exist under the Fair Credit Billing Act
(FCBA). 36 Thanks to these measures, consumers are protected, and credit and debit
card issuers and participants in the ACH system have strong incentives to imple-
ment stringent antifraud countermeasures. The benefits to consumers of these regu-
latory incentives is clear. Today, it is not uncommon for a credit card holder whose
account has been compromised to be notified by her bank before she even notices
a fraudulent charge on her statement.
  Unfortunately, while P2P platforms are covered by the EFTA, victims of fraud
committed via P2P platforms are often unable to take advantage of the protections
afforded. A big reason for this is a loophole in the EFTA that excludes payments
initiated by the consumer from the protection for unauthorized charges (also known
as ‘‘fraud in the inducement’’ or ‘‘victim-assisted fraud’’). 37 This allows P2P services
and banks to avoid liability for payments sent from consumers to scammers, even
when such payments are induced by fraud. 38
  The end result of the loophole for fraudulently induced payments made via P2P
platforms is that the liability risk for fraud is transferred from P2P platforms and
banks to consumers themselves. Yet it is the platforms that have designed systems
that encourage this type of fraud and who set the level of fraud they are willing
to tolerate. Moreover, institutions are far more able to handle the costs of protecting
consumers from small amounts of fraud in the system, whereas a single instance
of fraud can be devastating to a consumer. Unfortunately, the only recourse for
many victims of fraud committed via P2P platforms is to throw themselves at the
mercy of the banks or P2P platforms and beg to be made whole. Unfortunately,
thanks to the lack of legal protections, it is far too easy for the banks and P2P plat-
forms to simply tell fraud victims that they are out of luck.
  Indeed, another problem is that most financial institutions are taking an unduly
narrow view of their error resolution responsibilities under the EFTA. When con-
sumers call to complain about a fraudulently induced payment, or about a mistake
such as entering the wrong amount or wrong cell phone number for the recipient,
many institutions are refusing to treat that as an error and refusing to investigate
or to try to resolve it. Yet there is nothing in the EFTA or Regulation E that ex-
cludes consumer errors from the definition of ‘‘error.’’ Even if a consumer might ulti-
mately be liable for a payment because it was initiated by the consumer and thus
is not ‘‘unauthorized,’’ that does not mean that institutions do not have a duty to
investigate and try to resolve the matter. A refusal to take these fraud reports and
to pass them on to the receiving institution also deprives that institution that holds
the scammer’s account (or that of a money mule who themselves may be a victim
of fraud) of the information needed to put a hold on the funds or shut down that
account to prevent further fraud.
  Difficulty in obtaining appropriate customer service is especially acute with app-
based services that rely on automated communications and do not make live cus-
tomer service available or adequately staff customer service lines. Problems that
consumers have experienced with neo-bank accounts like Chime show the impor-

   34 Popper, Nathaniel. ‘‘When Your Last $166 Vanishes: ‘Fast Fraud’ Surges on Payment
Apps’’, New York Times. October 11, 2020. Online: https://www.nytimes.com/2020/10/11/tech-
nology/fraud-payment-apps.html.
   35 Federal Deposit Insurance Corporation. ‘‘Laws and Regulations: Electronic Funds Transfer
Act’’. February 2019. Online: https://www.fdic.gov/news/financial-institution-letters/2019/
fil19009b.pdf.
   36 15 U.S.C. 1666-1666j.
   37 Cornell Law School Legal Information Institute. ‘‘Fraud in the Inducement’’. June 2020.
Online: https://www.law.cornell.edu/wex/fraud-in-the-inducement-Fraud-in-the-inducement-oc-
curs-damages-or-terminate-the-contract.
   38 Mierzwinski, Ed, et al. ‘‘Virtual Wallets, Real Complaints’’. MASSPIRG Education Fund.
June 2021. P. 9. Online: https://masspirg.org/sites/pirg/files/reports/MA-wallets.pdf.
                                                27
tance of making human beings available to address problems when things go
wrong. 39
The Federal Reserve Should Ensure That FedNow Is Safe for Consumers
     Before the System Is Launched
   The Federal Reserve Board (FRB) is in the middle of building a new faster pay-
ment system called FedNow, which will be an alternative to Zelle and other private
systems. 40 The FRB has recently proposed one set of rules governing the system. 41
   We see the value in the FRB’s decision to build a real time payment system. It
is imperative, however, that the inadequacies in consumer protection with regards
to fraudulent P2P payments not be exacerbated as the FRB continues development
of its FedNow service. 42 The rules proposed to date do not address the problems
discussed in these comments.
   As a public body, the FRB has an especially great responsibility to make sure that
a system it designs and runs is safe. Protections in the FedNow system can be a
model for other P2P systems. Congress has a critical role to play by insisting that
the FRB meets this challenge. Now, during its design phase and before it is de-
ployed to the public, these challenges must be addressed.
New Protections Are Needed To Protect Consumers From Fraud and Er-
     rors on P2P Payment Platforms
  The lack of consumer protections for users of P2P payment platforms must not
be ignored. It is clear from their explosive growth that P2P payment apps are here
to stay. It is equally clear that absent regulatory incentives, effective self-regulation
by the P2P services will be stymied in the name of protecting transaction volume
growth. NCL has spoken with P2P platforms and urged them to offer far more ro-
bust fraud protection, but so far we have seen little improvement. The P2P services
will continue to rely on marginally effective warnings and disclosures to con-
sumers—an old-fashioned tactic—rather than embracing their responsibility to de-
sign systems for safety and using modern artificial intelligence, machine learning,
data analytics, and other methods to prevent and remedy fraud.
  To ensure that P2P platforms are secure for their users and do not continue to
be powerful tools for fraudsters, action by Congress is urgently needed.
  Specifically, we urge Congress to:
  • Enact legislation to expand the definition of ‘‘unauthorized electronic fund
    transfer’’ in the Electronic Funds Transfer Act to cover fraudulently induced
    payments, with ultimate liability resting with the institution that received the
    fraudulent payment;
  • Push regulators to require P2P platforms to investigate errors and fraud, even
    in cases where the consumer sent a payment erroneously or as a result of fraud
    in the inducement;
  • Urge bank regulators to emphasize fraud prevention and remediation as part
    of financial institutions’ know-your-customer duties;
  • Enact legislation to require P2P platforms to prominently display warning
    about fraudulent use of P2P payments and how to avoid scams;
  • Require P2P platforms to provide and prominently display a customer service
    telephone line and respond to customer service inquiries in a timely manner;
    and, 43
  • Insist that the Federal Reserve promulgate rules for the design of the FedNow
    payments service that prioritize safety and security of payments.

   39 Kessler, Carson. ‘‘A Banking App Has Been Suddenly Closing Accounts, Sometimes Not Re-
turning Customers’ Money’’. ProPublica. July 6, 2021. Online: https://www.propublica.org/arti-
cle/chime?utm-source=sailthru&utm-medium=email&utm-campaign=dailynewsletter&utm-
content=feature.
   40 Tahyar, Margaret et al. ‘‘FedNow: The Federal Reserve’s Planned Instant Payments Serv-
ice’’, Harvard Law School Forum on Corporate Governance. August 31, 2020. Online: https://
corpgov.law.harvard.edu/2020/08/31/fednow-the-federal-reserves-planned-instant-payments-
service/.
   41 FRS-2021-0214-0001. Online: https://www.regulations.gov/document/FRS-2021-0214-0001.
   42 Letter from Americans for Financial Reform Education Fund, et al., to Board of Governors
of the Federal Reserve System. November 7, 2019. Online: https://www.nclc.org/images/pdf/
cons-protection/coalition-letter-interbank-settlements.pdf.
   43 Note: The California legislature is currently considering AB-1320, which contains similar
requirements.       Online:        https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill-
id=202120220AB1320.
                                      28
Conclusion
  Chairman Warnock, Ranking Member Tillis, and the Members of the Sub-
committee, we thank you for your continuing work to protect consumers and for
holding this hearing. On behalf of the National Consumers League, thank you for
including the consumer perspective as you consider these important issues.
                    29
PREPARED STATEMENT OF RACHEL GRESZLER
   RESEARCH FELLOW, THE HERITAGE FOUNDATION
               AUGUST 3, 2021
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               RESPONSES TO WRITTEN QUESTIONS OF
              SENATOR CORTEZ MASTO FROM LIZ COYLE
Q.1. What are the risks of wire transfer fraud schemes connected
to real estate closings?
A.1. New payment system technologies enabling faster payments
directly from the payer to the payee offer potential benefits to con-
sumers, but also may increase the risk of fraud or simply very cost-
ly mistakes. These increased risks are exposing consumers to
fraudulent schemes tied to real estate closing transactions.
Scammers hack into lenders’ computers to access email addresses
tied to pending transactions and send fraudulent emails tricking
home buyers into wiring funds to the scammers’ accounts rather
than the intended financial institution. According to the National
Credit Union Administration (NCUA), wire transfer scams involv-
ing real estate closings are increasing, based on a 2016 report of
the Federal Bureau of Investigations.
Q.2. What can financial institutions do to alert their customers to
suspicious transactions?
A.2. Federal and State regulators, financial institutions, payment
system developers and other impacted or interested stakeholders
should prioritize the development and implementation of cyberse-
curity, notification, fraud detection and prevention, and consumer
awareness systems and regulations. Financial institutions should
install stronger fraud and error resolution protections for their cus-
tomers, including requiring the use of two-factor authentication. In
2021, the Federal Financial Institutions Examination Council
(FFIEC) issued guidance titled Authentication and Access to Finan-
cial Institution Services and Systems ‘‘to provide financial institu-
tions with examples of effective risk management principles and
practices for access and authentication.’’
Q.3. How can financial institutions help people get their stolen
funds returned?
A.3. Financial institutions should prioritize prevention to mitigate
risk. Institutions should be held responsible for returning fraudu-
lently stolen funds to customers. The Cyber Crime Support Net-
work is an excellent resource for the industry, regulators, and vic-
tims of cybercrime.

            RESPONSES TO WRITTEN QUESTIONS OF
         SENATOR CORTEZ MASTO FROM JOHN BREYAULT
Q.1. What are the risks of wire transfer fraud schemes connected
to real estate closings?
A.1. Wire transfer fraud during real estate closings is a real risk
to consumers that can be financially and emotionally ruinous. Ac-
cording to the Internet Crime Complaint Center, there were 13,638
victims of wire fraud in the real estate/rental sector in 2020 (a 17
percent increase over 2019), with losses of more than $213 mil-
lion. 1 According to a recent survey by the American Land Title As-
  1 Federal Bureau of Investigation Internet Crime Complaint Center. ‘‘Internet Crime Report
2020’’. March 17, 2021. Online: https://www.ic3.gov/Media/PDF/AnnualReport/2020-
IC3Report.pdf.
                                               43

sociation, cybercriminals attempted to trick employees into wiring
funds to a fraudulent account in a third of all real estate and mort-
gage transactions. Full recovery of lost funds was only possible in
29 percent of cases involving wire fraud targeting title agencies. In
40 percent of the cases, less than 10 percent of the funds were re-
covered. 2
   Wire fraud targeting real estate closings affects participants in
all phases of the closing, including title companies, law firms, real
estate agents, buyers, and sellers. A typical scenario begins with a
hacker gaining access to a title company’s or lender’s email server
and searching for upcoming real estate closings. 3 Fraudsters may
also search Multiple Listing Service websites such as Trulia or
Zillow to identify pending home sales and the associated parties in
those transactions. 4 The fraudsters then send spoofed emails to
participants in one or more closings. The emails may appear to
come from a transaction participant and typically contains instruc-
tions directing the recipients to change the payment type and pay-
ment location so that payments go to accounts controlled by the
fraudsters. If the funds are sent to a fraudulent account, they are
typically quickly obtained by the scammers via cash or check with-
drawals. Because the disbursement of funds from the fraudulent
accounts tend to occur so quickly, it is often difficult or impossible
for the payment to be canceled or for lost funds to be recovered
when the fraud is discovered. 5
Q.2. What can financial institutions do to alert their customers to
suspicious transactions?
A.2. Consumer education at the beginning and repeated warnings
throughout the closing process can help increase consumer aware-
ness of this scam. For example, financial institutions should pro-
vide alerts to borrowers to educate them about the warning signs
of real estate wire fraud at multiple points during the home-buying
process. Financial institutions should also work with borrowers,
title agents and other participants in the real estate closing process
to verify that wire transfers are not being sent to fraudulent ac-
counts. Resources such as the American Land Title Association’s
‘‘Outgoing Wire Preparation Checklist’’ and ‘‘Rapid Response Plan
for Wire Fraud Incidents’’ are valuable resources for helping par-
ticipants in real estate transactions reduce their risk of wire
fraud. 6
Q.3. How can financial institutions help people get their stolen
funds returned?
A.3. Financial institutions should make consumer education about
what do when wire fraud is suspected a regular part of their inter-
  2 American Land Title Association. ‘‘Survey: Title Professionals Targeted for Wire Fraud in
a Third of all Transactions’’. April 20, 2021. Online: https://blog.alta.org/2021/04/survey-title-
professionals-targeted-for-wire-fraud-in-a-third-of-all-transactions.html.
  3 National Credit Union Administration. ‘‘Wire Transfer Scams Involving Real Estate Trans-
actions Are Increasing’’. 2018. Online: https://www.ncua.gov/newsroom/ncua-report/2018/
wire-transfer-scams-involving-real-estate-transactions-are-increasing.
  4 Bay National Title Company. ‘‘Real Estate Wire Fraud: How To Stay Protected When Buy-
ing a Home’’. Online: https://www.bntc.com/wire-fraud/.
  5 Federal Bureau of Investigation. ‘‘Public Service Announcement: Business E-mail Com-
promise the 12 Billion Dollar Scam’’. July 12, 2018. Online: https://www.ic3.gov/Media/Y2018/
PSA180712.
  6 American Land Title Association. ‘‘Protect Your Money’’. Online: https://www.alta.org/busi-
ness-tools/wirefraud.cfm.
                                 44

actions with borrowers. Acting quickly when wire fraud occurs is
a key factor in increasing the chances that funds sent via fraudu-
lent wire transfers can be recovered. Congress should also consider
legislation that would redefine the Federal Reserve’s definition of
‘‘unauthorized transactions’’ to cover incidents where consumers
are induced to send money for fraudulent purposes.
Q.4. How can financial institutions monitor accounts for suspicious
activities?
A.4. Financial institutions should ensure that their fraud detection
systems are as up to date as possible. While no system is foolproof
when it comes to detecting and preventing wire fraud, financial in-
stitutions must make it a priority to invest in antifraud controls
that reduce the risk of wire fraud.
Q.5. Financial institutions know that multiple transactions under
$10,000 may be suspicious; should multiple transactions of smaller
amounts also be flagged for fraud if they seem suspicious?
A.5. Yes. Multiple multithousand-dollar transactions over a short
period of time, particularly if the source is an account that does not
typically engage in such transactions, should be a signal of poten-
tial fraud. While transactions smaller than $10,000 may not be in-
dicative of wire fraud associated with real estate closing, fraudsters
are known to request payment via wire transfer for many other
types of fraud. Such transactions may also indicate that the send-
ing account in engaged in activity consistent with ‘‘money mules’’
or other accomplices (witting or otherwise) in fraud.
Q.6. What are the responsibilities for financial institutions to ques-
tion their customers on suspicious withdrawals?
A.6. Financial institutions often train their frontline employees to
question customers when the customer makes suspicious with-
drawals. However, fraudsters are known to quickly adapt to such
tactics, even coaching victims on what to say in response to ques-
tioning by financial institution employees. We would also encour-
age financial institutions to consider whether certain customers are
at high risk of engaging (knowingly or not) in fraudulent trans-
actions and develop systems to appropriately challenge suspicious
transactions by those who are at high risk.
Q.7. Are there transactions where a second person, like a spouse
or adult child, should be contacted to verify withdrawals?
A.7. For customers who are at high risk of being victims of fraud,
we believe it is appropriate for financial institutions to contact
trusted parties such as spouses or adult children to verify with-
drawals before such withdrawals are processed.
Q.8. Do financial institutions flag overseas withdrawals for ac-
counts that do not typically have them, especially for people over
65 years of age?
A.8. I am not aware of specific financial institutions that do this
or regulations that would require financial institutions to flag such
withdrawals. However, I believe that this is an area that would be
ripe for further investigation by the Committee and regulatory
agencies.
                                 45

Q.9. What kind of holds should financial institutions have for over-
seas transactions that seem unusual?
A.9. A key benefit for fraudsters engaged in wire fraud is that re-
ceived funds can often be obtained quickly, with little recourse for
the sending party if fraud is discovered or suspected after the fact.
For high-risk accounts, we believe that controls should be put in
place that would place holds on overseas transactions that have in-
dices of potential fraud. This would give customers and sending in-
stitutions additional time to investigate and verify suspicious
transactions before fraudsters are able to obtain the funds.
Q.10. How can financial institutions flag fraud where the scammer
has misled the victim and the victim thinks the transactions are
legitimate?
A.10. Financial institutions should be willing to place holds on
transactions that have indices of fraud, even if the customer thinks
that the transaction is legitimate. However, we believe that a com-
prehensive solution should also include new protections that would
place more liability on financial institutions when account holders
are induced to authorize sending money to fraudsters. Such liabil-
ity shifting would not only make it more likely that defrauded con-
sumers can be made whole, it would also create a powerful incen-
tive for financial institutions to invest in systems that would re-
duce the risk of fraud occurring in the first place.
Q.11. What legal assistance is available for victims of fraud? How
do victims know they can—and should—file complaints with local
governments, legal aid, the Federal Trade Commission, the Con-
sumer Financial Protection Bureau, etc.?
A.11. It is too often incumbent on fraud victims themselves to seek
out legal assistance. Fortunately, agencies like local police depart-
ments, State Attorneys General, legal aid service providers, and
Federal resources from the Federal Trade Commission and the
Consumer Financial Protection Bureau do a relatively good job at
making their services findable online. However, given the signifi-
cant number of consumers who either lack access to the Internet
or who are uncomfortable with or unable to use technology, there
is always the need for providers of legal assistance for fraud vic-
tims to proactively reach out to victims and potential victims of
fraud.


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