House hearing (119th Congress), FIGHTING FRAUD ON THE FRONT LINES: CHALLENGES AND OPPORTUNITIES FOR FINANCIAL INSTITUTIONS (PDF)
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The printed record of a March 5, 2026 hearing of the Subcommittee on Financial Institutions of the House Committee on Financial Services, Serial No. 119–60, titled Fighting Fraud on the Front Lines: Challenges and Opportunities for Financial Institutions. Opening statements come from Subcommittee Chairman Andy Barr of Kentucky and Ranking Member Bill Foster of Illinois, with a statement by full committee Chairman French Hill. Witnesses include Gay Dempsey of the Bank of Lincoln County for the Independent Community Bankers of America, Patrick McDade of Everbank for the Consumer Bankers Association, and Kate McKune of Park Community Credit Union for America's Credit Unions, each with a prepared statement.
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
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FIGHTING FRAUD ON THE FRONT LINES:
CHALLENGES AND OPPORTUNITIES
FOR FINANCIAL INSTITUTIONS
HEARING
BEFORE THE
SUBCOMMITTEE ON FINANCIAL
INSTITUTIONS
OF THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
SECOND SESSION
MARCH 5, 2026
Serial No. 119–60
Printed for the use of the Committee on Financial Services
(
www.govinfo.gov
U.S. GOVERNMENT PUBLISHING OFFICE
63–967 PDF WASHINGTON : 2026
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HOUSE COMMITTEE ON FINANCIAL SERVICES
FRENCH HILL, Arkansas, Chairman
BILL HUIZENGA, Michigan, Vice Chairman MAXINE WATERS, California, Ranking
FRANK D. LUCAS, Oklahoma Member
PETE SESSIONS, Texas SYLVIA R. GARCIA, Texas, Vice Ranking
ANN WAGNER, Missouri Member
ANDY BARR, Kentucky NYDIA M. VELÁZQUEZ, New York
ROGER WILLIAMS, Texas BRAD SHERMAN, California
TOM EMMER, Minnesota GREGORY W. MEEKS, New York
BARRY LOUDERMILK, Georgia DAVID SCOTT, Georgia
WARREN DAVIDSON, Ohio STEPHEN F. LYNCH, Massachusetts
JOHN W. ROSE, Tennessee AL GREEN, Texas
BRYAN STEIL, Wisconsin EMANUEL CLEAVER, Missouri
WILLIAM R. TIMMONS, IV, South Carolina JAMES A. HIMES, Connecticut
MARLIN STUTZMAN, Indiana BILL FOSTER, Illinois
RALPH NORMAN, South Carolina JOYCE BEATTY, Ohio
DANIEL MEUSER, Pennsylvania JUAN VARGAS, California
YOUNG KIM, California JOSH GOTTHEIMER, New Jersey
BYRON DONALDS, Florida VICENTE GONZALEZ, Texas
ANDREW R. GARBARINO, New York SEAN CASTEN, Illinois
SCOTT FITZGERALD, Wisconsin AYANNA PRESSLEY, Massachusetts
MIKE FLOOD, Nebraska RASHIDA TLAIB, Michigan
MICHAEL LAWLER, New York RITCHIE TORRES, New York
MONICA DE LA CRUZ, Texas NIKEMA WILLIAMS, Georgia
ANDREW OGLES, Tennessee BRITTANY PETTERSEN, Colorado
ZACHARY NUNN, Iowa CLEO FIELDS, Louisiana
LISA MCCLAIN, Michigan JANELLE BYNUM, Oregon
MARIA SALAZAR, Florida SAM LICCARDO, California
TROY DOWNING, Montana
MIKE HARIDOPOLOS, Florida
TIM MOORE, North Carolina
Ben Johnson, Staff Director
SUBCOMMITTEE ON FINANCIAL INSTITUTIONS
ANDY BARR, Kentucky, Chairman
BARRY LOUDERMILK, Georgia, BILL FOSTER, Illinois, Ranking Member
Vice Chairman NYDIA M. VELÁZQUEZ, New York
BILL HUIZENGA, Michigan GREGORY W. MEEKS, New York
ROGER WILLIAMS, Texas DAVID SCOTT, Georgia
JOHN W. ROSE, Tennessee BRAD SHERMAN, California
WILLIAM R. TIMMONS IV, South Carolina AL GREEN, Texas
RALPH NORMAN, South Carolina JUAN VARGAS, California
DANIEL MEUSER, Pennsylvania SEAN CASTEN, Illinois
YOUNG KIM, California STEPHEN F. LYNCH, Massachusetts
BYRON DONALDS, Florida JOYCE BEATTY, Ohio
SCOTT FITZGERALD, Wisconsin CLEO FIELDS, Louisiana
MIKE FLOOD, Nebraska
MONICA DE LA CRUZ, Texas
TIM MOORE, North Carolina
(II)
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C O N T E N T S
Thursday, March 5, 2026
OPENING STATEMENTS
Page
Hon. Andy Barr, Chairman of the Subcommittee on Financial Institutions,
a U.S. Representative from Kentucky ................................................................ 1
Hon. Bill Foster, Ranking Member of the Subcommittee on Financial Institu-
tions, a U.S. Representative from Illinois .......................................................... 3
STATEMENTS
Hon. French Hill, Chairman of the Committee on Financial Services, a U.S.
Representative from Arkansas ............................................................................ 4
WITNESSES
Mrs. Gay Dempsey, Chief Executive Officer, Bank of Lincoln County, on
behalf of The Independent Community Bankers Of America (ICBA) ............. 5
Prepared Statement ......................................................................................... 8
Mr. Patrick McDade, Senior Vice President for Fraud and Technology Risk
Management, Everbank, on behalf of The Consumer Bankers Association
(CBA) ..................................................................................................................... 22
Prepared Statement ......................................................................................... 24
Ms. Kate McKune, General Counsel, Park Community Credit Union, on be-
half of America’s Credit Unions (ACU) .............................................................. 42
Prepared Statement ......................................................................................... 44
Mr. Joseph J. Schuster, Partner, Ballard Spahr LLP .......................................... 61
Prepared Statement ......................................................................................... 63
Mr. Adam Rust, Director of Financial Services, Consumer Federation of
America (CFA) ...................................................................................................... 91
Prepared Statement ......................................................................................... 93
APPENDIX
MATERIALS SUBMITTED FOR THE RECORD
Hon. Barry Loudermilk:
American Securities Association ..................................................................... 146
Hon. Young Kim:
American Financial Services Association ....................................................... 150
SIFMA ............................................................................................................... 152
Hon. Al Green:
‘‘Melania Trump’s meme coin architects accused of pump-and-dump fraud
in lawsuit’’ ..................................................................................................... 155
‘‘Trump meme coin down 96% as Bitcoin and meme coins slide’’ ................. 157
‘‘Firm Tied to Kristi Noem Secretly Got Money From $220 Million DHS
Ad Contracts’’ ................................................................................................ 160
Hon. Hon. Andy Barr:
Bank Policy Institute (BPI) ............................................................................. 169
The Responsible Data Alliance (RDA) ............................................................ 172
American Land Title Association (ALTA) ....................................................... 175
(III)
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IV
Page
RESPONSES TO QUESTIONS FOR THE RECORD
Written responses to questions for the record from Representative Rose
Mrs. Gay Dempsey ........................................................................................... 178
Mr. Patrick McDade ......................................................................................... 182
Ms. Kate McKune ............................................................................................. 184
Mr. Joseph J. Schuster ..................................................................................... 185
Written responses to questions for the record from Representative Fitzgerald
Mrs. Gay Dempsey ........................................................................................... 189
Ms. Kate McKune ............................................................................................. 190
Mr. Joseph J. Schuster ..................................................................................... 192
LEGISLATION
H.R.——, the Transaction Risk Analytics and Collaborative Exchange
(TRACE) Act of 2026 ............................................................................................ 195
H.R.——, the Bank Fraud Technology Advancement Act of 2026 ....................... 201
H.R.——, the Scrutinizing Transactions for Overt Payment Fraud (STOP
Fraud) Act ............................................................................................................. 210
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FIGHTING FRAUD ON THE FRONT LINES:
CHALLENGES AND OPPORTUNITIES
FOR FINANCIAL INSTITUTIONS
Thursday, March 5, 2026
U.S. HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON FINANCIAL INSTITUTIONS,
COMMITTEE ON FINANCIAL SERVICES,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:03 a.m., in room
2128, Rayburn House Office Building, Hon. Andy Barr [chairman
of the subcommittee] presiding.
Present: Representatives Barr, Hill, Huizenga, Williams,
Loudermilk, Rose, Timmons, Meuser, Kim, Fitzgerald, Flood, De La
Cruz, Moore, Hill, Foster, Waters, Scott, Sherman, Green, Vargas,
Casten, Lynch, and Beatty.
Chairman BARR. The Subcommittee on Financial Institutions
will come to order.
Without objection, the chair is authorized to declare a recess of
the committee at any time.
Today’s hearing is titled ‘‘Fighting Fraud on the Front Lines:
Challenges and Opportunities For Financial Institutions.’’
Without objection, all members will have five legislative days
within which to submit extraneous materials to the chair for inclu-
sion in the record.
I now recognize myself for 4 minutes for an opening statement.
OPENING STATEMENT OF HON. ANDY BARR, CHAIRMAN OF
THE SUBCOMMITTEE ON FINANCIAL INSTITUTIONS, A U.S.
REPRESENTATIVE FROM KENTUCKY
Good morning.
Today’s hearing continues this committee’s work to combat the
growing threat of financial fraud and scams harming American
families, seniors, and small businesses across our country.
Fraud and scam losses are not abstract statistics. They represent
retirement savings wiped out, college funds drained, and small
business savings accounts emptied overnight.
The scope of the problem is staggering. According to the Federal
Bureau of Investigation (FBI), Americans reported $16.6 billion in
cybercrime losses in 2024, a 33 percent increase over the prior
year.
Criminals are becoming more sophisticated, leveraging artificial
intelligence, voice cloning, spoofed caller IDs, fake investment plat-
forms, and coordinated money mule networks. They are exploiting
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social media platforms, telecommunications infrastructure, and
cross-border networks to deceive Americans at scale.
Yet, even as these schemes often originate outside the financial
system—and frequently outside our borders—banks and credit
unions are often the last lines of defense.
Financial institutions of all sizes are devoting substantial re-
sources to fight fraud and scams. They are investing heavily in
data analytics, machine learning, and artificial intelligence to de-
tect suspicious activity within milliseconds. They are deploying
real-time transaction alerts and customer education campaigns to
encourage their customers to remain vigilant and spot common
flags before funds have left their accounts.
Community banks and credit unions, despite having fewer re-
sources, are stepping up with employee training, enhanced check
verification procedures, and partnerships with local and national
law enforcement.
The Trump Administration has also taken significant steps to ad-
dress this escalating problem. President Trump’s executive order,
‘‘Modernizing Payments to and from Americans’ Bank Accounts,’’
directs Treasury to transition away from paper checks, which are
far more susceptible to theft and alteration, and toward more se-
cure electronic payments. This shift will help safeguard Americans’
tax refunds and benefits while protecting taxpayer dollars from
criminal activity.
President Trump has also removed barriers to American leader-
ship in artificial intelligence, recognizing that innovation is essen-
tial if we are going to outpace technologically savvy criminals but
despite these efforts, serious structural challenges remain.
First, our legal framework for information sharing is outdated.
Fraud today is networked, cross-institutional, and real-time.
Yet privacy statutes, antitrust concerns, and uncertainty under
consumer reporting laws limit the ability of financial institutions
to share data in ways that could identify mule networks and co-
ordinated fraud patterns.
Second, funds availability rules under Regulation CC were writ-
ten for a very different era when the primary risk was banks hold-
ing checks too long, not criminals exploiting mandatory next-day
availability to drain accounts before investigations can detect
fraud.
Third, our financial regulators often lack robust understanding of
artificial intelligence and machine learning, preventing the estab-
lishment of clear guardrails for financial institutions.
With well-defined expectations, financial institutions will be bet-
ter positioned to confidently adopt these technologies or partner
with innovative third parties to more effectively detect and prevent
fraud.
Last, law enforcement faces real constraints, including insuffi-
cient penalties for fraudsters, limited resources, and lack of coordi-
nation between Federal and local officials.
At the same time, we must also guard against proposals that
could unintentionally fuel more scams.
Placing liability on financial institutions when a customer mis-
takenly authorizes a payment or transfer—often referred to as
scams—does not address the underlying root causes of scams and
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could worsen the problem by increasing instances of first-party
criminal activity.
It would also impose significant financial strain on smaller banks
and credit unions which lack substantial profits needed to absorb
large scam-related losses.
Our focus today is straightforward: How do we empower financial
institutions to better deter, detect, and mitigate fraud without cre-
ating perverse incentives or unintended harm?
I look forward to hearing from our witnesses and working with
my colleagues to strengthen our Nation’s defenses against financial
fraud and scams.
With that, I yield back.
Chairman BARR. I now recognize the ranking member of the sub-
committee, Dr. Foster, for 4 minutes for an opening statement.
OPENING STATEMENT OF HON. BILL FOSTER, RANKING MEM-
BER OF THE SUBCOMMITTEE ON FINANCIAL INSTITUTIONS,
A U.S. REPRESENTATIVE FROM ILLINOIS
Mr. FOSTER. Thank you, Chair Barr, and to our witnesses.
Today’s hearing continues this committee’s bipartisan focus on
solutions to counter the growing threat of fraud and scams facing
American consumers and financial institutions.
Federal agencies, including the FBI and Federal Trade Commis-
sion (FTC), and numerous nongovernmental organizations have in-
creased their focus on frauds and scams in recent years.
In each report, it is made clear that scams and losses from fraud
are growing year after year as scams are moving online and per-
petrators are becoming more sophisticated.
As Chair Barr noted, the FBI’s last Internet Crime Report in
2024 reported losses of a staggering $16.6 billion from cyber-en-
abled scams and fraud. During coronavirus disease (COVID), the
U.S. taxpayer lost well over $100 billion to scams and identity
scams.
When encompassing offline activity like check fraud and informa-
tion from victims that choose not to report their losses, the number
is actually much greater.
Today, we are going to be discussing what can be done to support
community banks and credit unions which often find themselves as
the last line of defense between consumers and scammers. We will
discuss what more financial institutions, and this committee can do
to fight scams and fraud, the role agencies outside of our jurisdic-
tion should play, and actions that can be taken by other industry
sectors to eliminate common vectors for these activities.
Old school fraud persists, like check fraud, while scammers are
quickly adopting new tools, like artificial intelligence and
deepfakes, to more effectively falsify documents, impersonate con-
sumers, or create false pretenses that trick Americans into sending
their hard-earned money to bad actors.
Specifically, I worry about the role of impersonation and identity
fraud in the scam system.
In 2024, the Financial Crimes Enforcement Network, FinCEN,
published a report identifying more than 1.6 million Suspicious Ac-
tivity Reports implicating more than $212 billion in transactions as
linked to concerns with identity verification.
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I would like to thank Congressman Sessions for his partnership
on H.R. 7270, the Stop Identity Fraud and Identity Theft Act of
2026, which would help States build the necessary infrastructure
to offer a voluntary form of digital identification for Americans that
want it.
Digital identity tools are proven to be more secure and privacy
preserving than physical documents in an online environment, and
our bill would make important steps to provide peace of mind to
Americans who worry that the person on the other end of the line
may not be who they claim to be.
It is essential to also recognize the role that the Consumer Fi-
nancial Protection Bureau played in countering fraud and scams,
particularly for our servicemembers and older Americans.
The Consumer Financial Protection Bureau (CFPB) long served
as a resource for Americans affected by these criminals, providing
assistance and operating their Consumer Complaint Data base
which provides important data regarding the types of scams and
other illegal activities facing the public.
This work is important, and this committee should put pressure
to restore the CFPB so that it can continue that important work.
Many members of this committee recognize that congressional ef-
forts to counter fraud and scams cannot stop at the walls of this
committee. Telecom service providers and social media platforms
are common avenues for scammers to reach consumers.
Fighting scams require an all-of-government approach to be suc-
cessful, and we should recognize that. Many times, much of the
damage has been done by the time the consumer contacts the fi-
nancial institution.
Technological solutions, improved information-sharing arrange-
ments, and stronger Federal coordination provide a start to address
these issues.
So I look forward to hearing the views of our witnesses on these
topics.
I yield back.
Chairman BARR. The gentleman yields back.
I now recognize the chairman of the full committee, Mr. Hill, for
1 minute for an opening statement.
STATEMENT OF HON. FRENCH HILL, CHAIRMAN OF THE COM-
MITTEE ON FINANCIAL SERVICES, A U.S. REPRESENTATIVE
FROM ARKANSAS
Chairman HILL. Thank you, Chairman Barr.
This is Consumer Protection Week, and I think I want to com-
mend you and Dr. Foster for holding this important hearing.
Fraud and scams are not a new challenge, but the scale and com-
plexity of the problem, as Bill just outlined, are increasing rapidly,
imposing greater costs on both American families and on the finan-
cial services arena and on our small businesses.
Americans reported losses of $12.5 billion in 2024, a 25 percent
increase. In communities like my own in Little Rock, I hear directly
from bankers, small business owners, and consumers who are grap-
pling with check fraud, wire fraud, and increasingly sophisticated
digital scams. In our family, we have been the victim of check
fraud ourselves.
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Our banks and credit unions serve on the front lines of this fight,
working every day to safeguard their customers, and we need an
all-of-government approach. That is why I commend the work of
this committee.
I yield back.
Chairman BARR. Thank you, Mr. Chairman. I commend your
work as well and your focus on this issue along with Mr. Meuser,
the chairman of our Oversight Subcommittee.
Today, we welcome the testimony of Mrs. Gay Dempsey, the CEO
of the Bank of Lincoln County, Tennessee, here on behalf of the
Independent Community Bankers of America.
Mr. Patrick McDade, the senior vice president for fraud and tech-
nology risk management at EverBank, here on behalf of the Con-
sumer Bankers Association.
Ms. Kate McKune, the general counsel of Park Community Cred-
it Union in the great Commonwealth of Kentucky, here on behalf
of America’s Credit Unions.
Kate and I have been friends for a long time.
So it is great to see you in front of our committee, Kate.
Mr. Joseph Schuster, a partner at Ballard Spahr and Mr. Adam
Rust, the director of financial services at the Consumer Federation
of America.
We thank each of you for taking the time to be here. Each of you
will be recognized for 5 minutes to give an oral presentation of your
testimony. Without objection, your written statements will be made
part of the record.
Mrs. Dempsey, you are now recognized for 5 minutes for your
oral remarks.
STATEMENT OF GAY DEMPSEY, CHIEF EXECUTIVE OFFICER,
BANK OF LINCOLN COUNTY, ON BEHALF OF THE INDE-
PENDENT COMMUNITY BANKERS OF AMERICA (ICBA)
Mrs. DEMPSEY. Chairman Barr, Ranking Member Foster, and
members of the subcommittee, I am Gay Dempsey, the CEO of the
Bank of Lincoln County located in Fayetteville, Tennessee. We are
a $225 million bank in southern-middle Tennessee bordering Ala-
bama.
I am a member of the Board of Directors for ICBA and a member
of the Fraud and Scams Task Force. I am also actively involved in
the Tennessee Bankers Association where I am soon to be chair-
man.
I testify today on behalf of ICBA and thousands of community
banks across our country. Thank you for convening today’s hearing.
I am a lifelong community banker, and I have witnessed first-
hand the impact of fraud on our customers and community and
have seen the financial ruin that fraud can produce.
Community banks like mine are on the front lines, spending sig-
nificant time and resources to educate customers and identify and
mitigate fraud but coordination among financial institutions, law
enforcement, and government at every level is necessary to combat
this urgent problem.
My written statement contains legislative and regulatory rec-
ommendations, but I must stress that additional mandates on com-
munity banks would only harm our ability to fight fraud. I also
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provide a number of stories to illustrate the impact of check fraud,
imposter scams, and other schemes.
In recent years, we have seen a significant rise in check fraud.
A common thread in these cases is a failure of mail security and
a depositing bank that ignored red flags on account opening and
accepting deposits of stolen checks for fake companies.
In some cases, lost funds were recovered after much effort and
delay. In others, we had to absorb the losses.
We have also seen a rise in imposter scams enabled by unregu-
lated social media platforms and bitcoin ATMs.
Our bank had an elderly customer with no family who fell victim
to a romance scam and sold her house for $85,000. Spotting the red
flags, we refused her request to wire the money to the scammer
and tried our best to convince her that she was a victim, even
showing her FBI reports.
In the end, we could not refuse her request to make a cash with-
drawal, which she deposited in a nearby bitcoin ATM and trans-
ferred to the scammer.
This was heartbreaking, a preventable crime enabled by the use
of fake social media accounts.
The Safeguarding Consumers from Advertising Misconduct
(SCAM) Act, introduced by Representatives Meuser and Correa,
would begin to hold social media platforms accountable for fraud
like this.
Fraud losses disproportionately impact community banks relative
to our asset size. For a bank like ours, fraud fundamentally im-
pacts our ability to serve our local community.
Beyond the significant dollar losses, fraud is increasingly absorb-
ing focus and attention, stealing valuable time that we should be
spending with our customers but maybe more dangerous is the in-
tangible impact: the erosion of consumer trust in all banks. This
ironically leads consumers to seek out unregulated nonbank alter-
natives that put them at even greater risk.
Community banks are built on strong relationships. This sets us
apart from larger transaction-oriented banks, and fraud jeopardizes
these critical relationships.
Given these high stakes, how are community banks responding?
First, we are investing significant amounts in technology, includ-
ing AI, to detect fraud. These tools, which are important but not
foolproof, add significant cost for our bank.
One of the draft bills before this committee, the Bank Fraud
Technology Advancement Act, would require a comprehensive
agency study of the use of AI in fraud prevention. This study would
be valuable.
Second, we train our staff to spot fraud and report suspicious ac-
tivity. Our staff are the point of contact and positioned to detect
fraud early and intervene. Their training is critical, but so are the
personal relationships and the knowledge they have. In our close-
knit community, they are truly the first line of defense.
At the industry level, Independent Community Bankers of Amer-
ica (ICBA) created a Fraud and Scams Task Force that shares in-
formation and best practices, meets with regulators, and develops
resources for our peers.
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My statement also contains recommended changes to Fed Regu-
lation CC, which governs check clearance. This, along with the
draft Scrutinizing Transactions for Overt Payment Fraud (STOP
Fraud) Act, would help community banks mitigate check fraud by
providing more flexible hold times.
Finally, a third draft bill before this committee, the Transaction
Risk Analytics and Collaborative Exchange (TRACE) Act, would ex-
pand critical information sharing while providing safe harbors.
Thank you for your work on the draft bills and for convening to-
day’s hearing.
[The prepared statement of Mrs. Dempsey follows:]
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Chairman BARR. Thank you.
I now recognize Patrick McDade for 5 minutes.
STATEMENT OF PATRICK McDADE, SENIOR VICE PRESIDENT
FOR FRAUD AND TECHNOLOGY RISK MANAGEMENT,
EVERBANK, ON BEHALF OF THE CONSUMER BANKERS ASSO-
CIATION (CBA)
Mr. MCDADE. Chairman Barr, Ranking Member Foster, and
members of the subcommittee, thank you for the opportunity to tes-
tify.
My name is Patrick McDade, and I am the senior vice president
for fraud and technology risk management at EverBank.
Before joining EverBank, I spent over a decade as a State and
Federal prosecutor. I also serve as the chair of the Consumer Bank-
ers Association’s Fraud Management Committee.
The CBA’s broad membership has long been raising the alarm
about the rise in fraud and scams that are inflicting deep financial
and emotional harm on American consumers and small businesses.
Banks invest billions of dollars and millions of hours to combat
fraudsters and scammers each year. However, banks cannot face
this growing threat alone.
In 2024, the FBI received more than 850,000 Internet Crime
Complaint Center (IC3) complaints involving losses of over $16 bil-
lion, which was a 33 percent increase over 2023.
However, while consumers expect a meaningful response to these
complaints, Government Accountability Office (GAO) reports have
revealed a lack of coordination among Federal bodies to assist vic-
tims and prevent frauds and scams.
Meanwhile, the criminals behind these frauds and scams are
using AI, social media, and dark web platforms to coordinate with
each other and improve their attacks and techniques.
Historically, fraudsters have attacked the financial services in-
dustry through traditional bank fraud methods: identity theft, forg-
ing or altering checks, wire fraud, et cetera.
More recently, these criminals have focused on emerging digital
bank platforms, fraudulently accessing accounts online and making
unauthorized payments.
Banks hardened their digital controls, developed data-focused
fraud tools, and strengthened digital security to combat these
emerging threats.
In response, today the criminals are focused on a new tactic:
Scams directed at our customers.
Frauds and scams are often conflated, as both use complex
schemes and deceptions to steal. However, it is important to under-
stand the differences between frauds and scams.
The key differences are who is being deceived and who is author-
izing the transactions.
As I described, in bank fraud, the criminals are trying to deceive
the bank and fraudulent transactions are sent.
With scams, however, the criminal is not deceiving the bank—
they are deceiving the customer. The customer believes they ur-
gently need to move money to invest, to help a loved one, or to
avoid a penalty. The customer then contacts the bank and author-
izes a transaction to move money.
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Banks work hard to protect their customers in the Main Street
communities they serve from these scams. Banks monitor unusual
activity, educate customers about fraud and scams, and train their
staff to recognize red flags that indicate a customer may be a scam
victim.
Banks are doing what they can do to stop scams, but there are
several important steps that policymakers can take to help.
First, the Federal Government should establish a national strat-
egy to combat fraud and scams. Because so much of the activity in-
volving scams originates from social media, telecommunications,
and other places outside the financial sector, this strategy must in-
clude cross-industry engagement.
One step toward accomplishing this could be an executive order
that includes unified coordination with the private sector. While
my written testimony provides more detail, such an order could es-
tablish a centralized interagency reporting and data-sharing infra-
structure to streamline complaint intake and response. This would
provide immediate structural alignment across agencies while
longer-term legislative reforms are developed.
To that end, CBA strongly supports many bipartisan and bi-
cameral efforts, including the leadership of Representative Nunn
through the Guidelines for User Age-Verification and Responsible
Dialogue (GUARD) Act and the Taskforce for Recognizing and
Averting Payment Scams (TRAPS) Act, Representative Meuser
through the SCAM Act, and other efforts, such as Representative
Kim’s No More Shielding Corruption and Misuse in Spending
(SCAMS) Act. These represent important steps in cross-agency co-
ordination.
Congress should also expand safe harbor protections so financial
institutions can share real-time fraud and scam threat intelligence
without undue legal risk.
Federal regulatory frameworks must also be modernized, includ-
ing Reg CC.
Customer education is equally vital. Banks commit significant re-
sources to educate their customers about fraud and scams, but a
national fraud and scam awareness campaign would make a sub-
stantive difference.
Finally, fraud and scams are currently reported to the govern-
ment through FinCEN’s suspicious activity reporting process.
Transitioning to a modern fraud signal report would lead to more
valuable and actionable data-gathering by the government.
The fraud and scam epidemic confronting American consumers is
not a series of isolated incidents. It is a rapidly evolving, tech-
nology-accelerated global threat that inflicts billions of dollars in
losses each year and affects millions of Americans in every district
and Main Street consumers across the country.
Thank you, and I look forward to your questions.
[The prepared statement of Mr. McDade follows:]
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42
Chairman BARR. Thank you.
Ms. McKune, you are now recognized for 5 minutes.
STATEMENT OF KATE McKUNE, GENERAL COUNSEL, PARK
COMMUNITY CREDIT UNION, ON BEHALF OF AMERICA’S
CREDIT UNIONS (ACU)
Ms. MCKUNE. Good morning, Chairman Barr, Ranking Member
Foster, and members of the subcommittee.
I am Kate McKune, general counsel of Park Community Credit
Union in Louisville, Kentucky. I am pleased to appear before you
today on behalf of America’s Credit Unions, where I serve on the
Fraud Task Force and the association’s Advocacy Policy Com-
mittee.
We applaud the subcommittee for holding this important hearing
today.
Financial institutions operate in an environment where fraud
and scams are becoming increasingly more prevalent.
Fraud encompasses a wide range of criminal tactics. Scams, as
a subset of fraud, often involve an element of impersonation or
trickery.
Both ultimately harm the consumer and the financial institution
and fall under the broader scope of fraud being examined at this
hearing today.
Credit unions like mine must contend with a fraud environment
where a large share of fraud and scams originate outside of the fi-
nancial sector, and criminal sophistication continues to grow.
Credit unions are the original consumer protectors, and that fact
puts us at the forefront of looking out for our members.
At the same time, consumers increasingly demand speed and
convenience as a core part of their banking experience.
Sometimes the only viable defense against fraud is preventing it
before it occurs, a process that can be technologically demanding,
expensive, and dependent on timely information sharing between
law enforcement, Federal regulators, and other payment system
stakeholders.
Despite significant investments in fraud detection tools, con-
sumer education, and data security, credit unions report each year
that fraud remains a top concern.
For smaller credit unions, a significant fraud loss could impact
the financial health of the institution.
As a not-for-profit cooperative, if regulatory standards on liability
for fraud were to shift the costs further to the institution, our
members would ultimately bear the burden.
Credit unions regularly work to adapt, innovate, and educate
their members about the variety of fraud and different scams that
can target them—although, oftentimes, no amount of security in-
vestment or intervention can fully compensate for a consumer’s de-
cision to trust a scammer.
One of the biggest challenges in combating fraud is that it can
come in so many different forms.
Romance scams can be difficult for a credit union to detect and
prevent because manipulation of the victim can take place over a
long period of time. Often, victims of romance scams will genuinely
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believe that their online friend is a person they can trust, and no
amount of circumstantial evidence will change their mind.
Fraudulent advertisements for fake goods and services are an-
other common vector for defrauding consumers.
Unfortunately, financial institutions have minimal control over
how online or social media entities manage their advertising poli-
cies. As a result, we must resort to simply warning consumers that
completely anonymous, online, sight-unseen purchases of goods
could mean losing their money.
Investment scams and business impersonation scams have also
contributed to abnormally high fraud losses among consumers.
Often, these scams can involve cryptocurrencies or impersonators
pretending to work for crypto companies.
Check fraud has also increased in recent years. One way to com-
bat this would be to modernize the funds availability rules under
Regulation CC and create flexibility in the length of time funds
may be held if there are concerns about a check.
While the National Credit Union Administration (NCUA) also
provides resources to assist credit unions and their members in the
fight against fraud, America’s Credit Unions supports greater
interagency coordination, expanded information-sharing authority,
and close collaboration with law enforcement to address fraud.
We believe a national strategy to mitigate fraud should include
several key elements.
First, improving information sharing and coordination. Bills such
as the TRAPS Act and TRACE Act are important steps in this area
that would improve cooperation between public and private sectors
and law enforcement.
Second, a national consumer education campaign and program
from the Federal Government that partners with industry.
Third, modernization of funds availability rules. Legislation such
as the STOP Fraud Act would begin to make improvements in this
area.
Fourth, promotion of the use of technology, including AI, to help
combat fraud. The Bank Fraud Technology Advancement Act is an
important first step. We also support the creation of technical as-
sistance and grant programs to help smaller financial institutions
access best-in-class technology.
In conclusion, there is no magic bullet to stop fraud and scams.
At Park Community, we are on the front lines trying to fight it and
help our members, but the challenges are complex. Often, criminals
seek to manipulate the system and prey on human nature.
There is only so much one institution can do alone. What is need-
ed is a commitment at the Federal level to work with credit unions
and other financial institutions to help combat fraud and scams by
using an all-of-government approach as outlined in my testimony.
Thank you for holding this important hearing and for the oppor-
tunity to appear before you today. I welcome any questions you
may have.
[The prepared statement of Ms. McKune follows:]
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Chairman BARR. Thank you.
Mr. Schuster, you are now recognized for 5 minutes.
STATEMENT OF JOSEPH J. SCHUSTER, PARTNER, BALLARD
SPAHR LLP
Mr. SCHUSTER. Thank you, and good morning. Chairman Barr,
Ranking Member Foster, and members of the subcommittee, thank
you for the opportunity to testify today.
My name is Joseph Schuster, and I am a partner in Ballard
Spahr’s Consumer Financial Services Group, where I advise banks,
credit unions, payment companies, and technology providers on
Federal and State consumer finance laws.
A substantial portion of my practice focuses on fraud-and scam-
related matters, including payment fraud, identity-based fraud, ac-
count takeover, check and wire fraud, scam typologies, loss alloca-
tion, and legal and operational frameworks governing fraud detec-
tion and response.
Throughout my testimony, two themes are going to be pervasive.
The first is the challenge of sharing information effectively to pre-
vent fraud. The second is the constraints financial institutions face
when deploying new tools to combat rapidly evolving fraud
schemes.
Fraud prevention today is inherently collaborative. It depends on
coordination among financial institutions, their service providers,
law enforcement, and in many cases cross-industry information-
sharing networks. Yet, these efforts take place within a layered
legal and supervisory framework.
Fraud mitigation is shaped not only by statutory regimes, such
as the Fair Credit Reporting Act and the Expedited Funds Avail-
ability Act, but also by regulatory guidance, supervisory expecta-
tions, and the practical realities of examinations and investigative
oversight.
Financial institutions must navigate Federal and State compli-
ance expectations and requirements while simultaneously respond-
ing to increasingly sophisticated and fast-moving fraud threats.
The interaction between Federal and State law can create uncer-
tainty in areas such as information sharing, funds availability
practices, fraud-related holds, consumer dispute handling, and the
use of advanced analytics.
Institutions operating nationally must reconcile these overlap-
ping regimes while responding to fraud schemes that do not respect
jurisdictional boundaries.
My testimony today reflects a legal practitioner’s perspective
across institutions of varying sizes and business models.
Fraud has evolved rapidly in recent years. At the same time,
many elements of the legal and supervisory framework were devel-
oped in an era when fraud was slower, more siloed, and certainly
less technologically advanced.
The result is a growing tension between the speed and scale of
emerging fraud trends and the structure of the regulatory architec-
ture governing prevention efforts.
I appreciate the committee’s attention to these issues, and I look
forward to discussing how policymakers can support effective fraud
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mitigation while preserving consumer protections, privacy, and fair
access to financial services.
Thank you.
[The prepared statement of Mr. Schuster follows:]
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Chairman BARR. Thank you. The gentleman yields back.
Last but not least, Mr. Rust, you are now recognized for 5 min-
utes.
STATEMENT OF ADAM RUST, DIRECTOR OF FINANCIAL
SERVICES, CONSUMER FEDERATION OF AMERICA
Mr. RUST. Chairman Barr, Ranking Member Foster, and mem-
bers of the committee, thank you for the opportunity to testify
today.
My name is Adam Rust. I am director of financial services for the
Consumer Federation of America.
CFA is a nonprofit organization dedicated to serving the con-
sumer interests, with 215 nonprofit coalition members across the
country, and we house Veteran Saves and Military Saves to help
approximately 240,000 individuals build wealth.
Today, I want to talk about scams which are among the most se-
rious threats facing consumers today. You have heard about the
large numbers of losses. The numbers are truly much larger be-
cause so many scams are never reported.
Scams affect people in every congressional district, of every age,
young, old, urban, rural, civilian and servicemember.
I want to focus my testimony on five things Congress can do.
First, attacks on the CFPB must end. The CFPB is the primary
Federal agency with the mandate and expertise for consumer fi-
nancial protection and authority for Electronic Fund Transfer Act
(EFTA) and Unfair, Deceptive, or Abusive Acts or Practices
(UDAAP). Its Complaint Data base receives complaints from
harmed consumers. This information can be shared with law en-
forcement and other concerned parties.
When consumers are harmed, the CFPB has sent a clear signal:
When companies offer unsafe products, there will be consequences,
but that signal has been silenced by dropping enforcement, gutting
supervision, and firing staff. The consumers’ champion has been
taken off the beat and Congress overturned the rule requiring su-
pervision of payment apps and digital wallets.
Consumer relief rates have dropped precipitously, from approxi-
mately 50 percent 2 years ago to now less than 1 percent.
Second, EFTA is broken for scam victims. EFTA was written in
1978 when electronic theft meant a stolen ATM card. Today’s
criminals coerce victims into authorizing transfers where there is
little recourse under the law.
CFA supports the Protecting Consumers from Payment Scams
Act, which would expand coverage to wires, call for shared liability,
and create protections against induced transfers. The bill will mod-
ernize EFTA to actually address how scams work now.
Third, every company across the payment journey should be ac-
countable and a part of the solution. For every scam, there is a des-
tination: a bank or a payment app of the criminal. Criminals delib-
erately target FIs with weak fraud detection to help them find
ways to open accounts and receive funds and then later move it on
for funnel accounts.
Suspicious Activity Report (SAR) filings on funnel accounts have
increased fourfold since 2020, and bank fintech partnerships, such
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as the example of the Synapse case, are a critical point of vulner-
ability.
True, send-side FIs do not have the full picture. Receive-side FIs
and payment networks have a unique line of sight with directory
information as well. Let us connect those sight lines.
More use of real-time AI, better information sharing, and pos-
sibly the expulsion of stubbornly risk-leaning FIs would improve
the ecosystem’s safety for everyone. The U.K. has shown that
shared liability works.
The problem has many surfaces, and every actor—banks,
nonbank apps, networks, platforms, telcos—all must have skin in
the game.
Fourth, we must bridge the gap between illicit finance enforce-
ment and consumer protection. The types of criminal organizations
that have historically been the subject of Bank Secrecy Act (BSA)
and anti-money laundering (AML) violations are now open for a
new line of business: scamming Americans.
Yet, BSA enforcement actions and consumer protection work
have been in silos. That should change. The CFPB should be in the
room, and penalties resulting from violations should include rem-
edies for scam victims.
Fifth, we should make efficient use of SARs. Much of the most
useful information in a SAR is buried in narrative fields, where law
enforcement has difficult times to access it at scale.
To help law enforcement, FinCEN should migrate more data to
structured formats and add a scam check box with device and ac-
count identifiers to permit appending and tracking across financial
institutions.
The dark web is not calling for higher reporting thresholds. Nei-
ther should we. It would be blind for law enforcement to many
transactions, including some that affect lower-dollar transactions
such as teen sextortion.
The tools to fix this problem exist. Restoring the Bureau, sharing
liability, removing silos, and making better use of SARs will
strengthen our defenses.
Thank you.
[The prepared statement of Mr. Rust follows:]
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Chairman BARR. The gentleman’s time has expired.
We will now turn to member questions. I recognize myself for 5
minutes for questioning, and I will start with Mrs. Dempsey.
The recommendation of the STOP Fraud Act or updates to Reg
CC to allow for exceptions in terms of holds, allowing more holds
for scrutinizing wire transfers or suspicious checks. We hear a lot
about—especially from community banks—concerns about rewards
in payment stablecoins. This seems to kind of go in the opposite di-
rection but I think banks will always—and credit unions, frankly—
all community financial institutions will always be here, even with
the advent of blockchain technology and stablecoins, because of the
fraud prevention that you all and the trust that you all create and
why you are even more important in the ecosystem with the advent
of stablecoins.
Can you talk about that? Does this—I think it is a good idea to
give you more flexibility on holds, but does that work at cross-pur-
poses in terms of the concern about disintermediation?
Mrs. DEMPSEY. It is a broad question.
On the Reg CC side for holds, yes, definitely giving more leeway
there for the banks.
The language right now is a little vague on if you have a reason-
able cause to place a hold for longer, a longer period of time. So
a lot of banks are not apt to use that to extend their hold times
when they see those fraudulent checks when they come in.
With checks 21 years ago, everybody thought checks were just
going to clear instantly and that you would be able to catch those
fraudulent checks that were presented into the system, but we still
see that it can take several days sometimes for a check to clear.
Also, it takes a lot of time, especially when you are talking about
altered checks that have occurred in the mail, for the small busi-
nesses, that they may have been stolen out of the mail and then
come out of their account.
I would love for them to check those accounts every single day
and to make sure that the payee matches who they sent it to, but,
unfortunately, they just do not.
Even with the education that we provide to those small busi-
nesses—we host small business luncheons to train on fraud and
scams and to show them what to look for—but when you extend
that hold time, it gives that customer even more time to check
their online banking, to look at those accounts, and then for us to
return those. Because that is one of the hardest things, is the mid-
night return that we have with checks and dealing with trying to
mitigate those and to solve those.
Chairman BARR. Well, just to sum up, we are embracing the in-
novation and moving toward a more frictionless payment system,
obviously, with the GENIUS Act, but banks and credit unions will
always be needed, I think, to build in wanted and needed friction
to prevent fraud.
Mr. Schuster, I have heard from financial institutions that when
they implement robust fraud controls, they can face allegations of
unfairness or abusiveness under CFPB’s UDAAP authorities, espe-
cially when interventions might create necessary friction for cus-
tomers.
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My Rectifying UDAAP Act requires the CFPB to provide clear
standards for what constitutes a UDAAP violation, giving financial
institutions the clarity they need to serve customers, including pro-
tecting them from fraud and scams.
From a legal perspective, how does UDAAP risk currently influ-
ence institutions’ willingness to deploy proactive risk-based fraud
controls and do you think that greater clarity in the form of my
bill, the Rectifying UDAAP Act, would reduce hesitation around
reasonable, good-faith fraud interventions?
Mr. SCHUSTER. Thank you. It is a great question. Yes, your act
would certainly help financial institutions.
They right now face the decision of am I going to address this
fraud or scam as it currently exists under existing statutory law
but risk being criticized from an unfairness or an abusive perspec-
tive from their regulators and supervisors, and they will many
times look at the potential financial impact to them of a compliance
rating versus providing money to an individual who has been taken
advantage of by a scam.
When they are implementing tools, it is the same thing, that reg-
ulators are not looking at how artificial intelligence works, ad-
vanced technologies work. They have an aversion to doing that, and
there is a belief that is unfair, that is abusive. They need to look
at that, and your bill would certainly help.
Chairman BARR. Ms. McKune, your testimony was that Park
Community Credit Union prevented more than a million in fraud
losses for your members. That is fantastic.
Can you describe in more detail what those fraud attempts look
like on a day-to-day basis and the staff time, compliance oversight,
and technology investment that is required to manage all of this?
Ms. MCKUNE. Thank you, Chairman.
We work every day to run investigations quickly. We have full-
time fraud staff. We have deployed technology to catch and alert
and indicate to us where there might be suspicious activity.
We have, obviously, a compliance team that works hand in hand
with the fraud team to ensure that we are meeting our compliance
and regulatory obligations in that regard.
There is a sign in our fraud department that says: How many
days since the last fraud incident? It never leaves zero because
what we do every day is keep vigil and work to investigate to see
whether we are having an individual problem, whether we are see-
ing multiple members affected by a scam. So we are very conscien-
tious about balancing their needs with the burden on our side to
ensure we are protecting them.
Chairman BARR. Thank you. I know it is a very costly enterprise.
My time has expired. Dr. Foster is recognized for 5 minutes.
Mr. FOSTER. Thank you, Mr. Chair.
Mr. McDade or Mr. Rust, as I mentioned in my testimony, iden-
tity fraud and impersonations are crucial to every one of these
scams and they are becoming a greater threat to American con-
sumers, particularly with the proliferation of artificial intelligence
and deepfakes.
Not only are the scammers able to reach more potential victims
by automating these, but their scams are much more sophisticated.
The old schemes of having typo-ridden emails claiming you are the
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beneficiary from a distant relative have sort of been replaced by
very sophisticated impersonations, which can be online videos,
things like that.
It is only going to get worse. The rise of agentic AI is going to
generate a huge new wave of these frauds where, when my agent
starts talking to your agent to do a business deal or to just commu-
nicate, the very first question is going to be: How do I know you
are who you say you are and not some scammer?
So I think that having a secure digital identity for Americans
that want to be able to prove they are who they say they are is
going to be a crucial tool.
I worry that America is falling behind the rest of the world in
this because, by the end of this year, every citizen of the EU, if
they wish, will have a tool to get out their cell phone, smile at it,
do the biometric log-in, present an identity app that proves they
are who they say they are.
In the absence of any action by the Federal Government, States
are rolling out digital driver’s licenses. Sort of ironically, it is the
National Institute of Standards and Technology—the U.S. stand-
ards—that are being deployed all around the world. They are on
every iPhone and every Android, but we are not using them feder-
ally to prevent identity scams. So I think that is a real missed op-
portunity that we would like to.
Also, Mrs. Dempsey, you highlighted bitcoin ATMs. I would urge
every member of this committee to just go look at their hometown,
do it on Google Maps, and then go do a search for bitcoin ATMs.
Then maybe do a search for where all the nearby fentanyl deaths
have been and see if the maps look kind of similar. These are tools
by drug dealers, they are tools by scammers, and we have to do
something about that.
During the previous Trump Administration, actually, Secretary
Mnuchin had the simple suggestion that why do not we have man-
datory Know Your Customer (KYC) on all crypto wallets, which I
think would solve a big part of this problem anyway.
So any thoughts you have on that, Mrs. Dempsey? What should
we do about the bitcoin ATMs? Because they are not a small prob-
lem.
Mrs. DEMPSEY. Yes. The bitcoin ATMs, in my opinion, are just
nefarious, and there is nothing good in our community taking place
at a bitcoin ATM. There is no need for them.
To your point, once they enter that, they are gone. There is no
tracking. From where we stand, there is no getting that back.
So I know there are several States that have enacted laws. Our
State is currently entertaining some laws dealing with bitcoin
ATMs and placing limits on them and placing warnings on them
to help educate the consumers and to protect them.
Mr. FOSTER. Yes, but that is not going to help someone who has
been scammed, a romance scam. I know, I am familiar with a bar
owner who was given a couple hundred bucks a week to put a
bitcoin ATM in their bar, and after a couple weeks he said, ‘‘Get
this the heck out of my bar’’ because he was sick and tired of see-
ing elderly people pouring their life savings down the bitcoin ATM
crying as they did it.
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Mrs. DEMPSEY. Yes. If there were regulations, even if they did
put it in the ATM, where they had a certain amount of time to get
it back, even things of that nature could help protect them when
they fall victim to those scams.
Mr. FOSTER. Mr. Rust, how would you generally rate the position
of U.S. citizens in terms of being able to prove they are who they
say they are, to know that the person they are talking to is a real
person in an online environment? How does that——
Mr. RUST. So this problem is not working now and getting worse.
You can imagine with deepfakes and voice cloning that fraudsters
are going to gain new advantages to harm people. That seems inev-
itable.
Probably the best—Michael Hsu made the point that the best
way to fight AI fraud is with AI technology, supervisory tech but
we need to invest in that. We need to be able to buy those from
regulators to have the tools that the fraudsters have.
Mr. FOSTER. Does anyone know—have comments on where AI—
the thing that interests me are these personal AI assistants that
everyone is going to use, which could be the last and best line of
defense. So when you get that first phishing scam mail, you have
your personal AI assistant say ‘‘warning,’’ warn you so that your
elderly parents will never even receive that scam communication.
Are there efforts ongoing to make personal assistants that will
filter that stuff properly, or is that another missed opportunity?
Mr. RUST. I mean, this is about having bots to stop bots, and
with more platform involvement it will be more urgent.
Mr. FOSTER. Thank you. Yield back.
Mr. MEUSER [presiding]. The gentleman yields back.
The gentleman from Arkansas, the chairman of the full Financial
Services Committee, Chairman Hill, is now recognized for 5 min-
utes.
Chairman HILL. Thank you, Mr. Meuser. Appreciate that.
Let me start with you, Mr. Schuster.
This has been a good discussion so far, but I wanted to get into
this idea of collaborating to fight fraud.
Under the Fair Credit Reporting Act, entities that aggregate con-
sumer information and provide outputs used to make eligibility de-
terminants are often deemed consumer reporting agencies, which
carries a lot of compliance regulations and compliance burden,
which is probably right, including responsibility for accuracy and
dispute resolution and things of that nature but we also are seeing
a lot of financial institutions explore this kind of consortium-based
fraud fighting.
When I was a banker, we had a phone call every Wednesday in
my hometown, and it was an off-the-record phone call that prob-
ably does not comply with Federal law or regulation, but it was es-
sentially the ops people in every bank in town saying, ‘‘Have you
seen somebody wander into the lobby that is doing this?’’
It is an early warning system, and it is, like, classic American
protecting the community, working with each other in a consortium
basis but were we to do that in an analytic way using some sort
of a more formal system, do you see that people are afraid to do
that because of falling under the—that shared information falls
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under that consumer reporting agency designation? What could we
do about that?
Mr. SCHUSTER. It is a great question.
Fraud identification is inherently pattern recognition. The more
information and data that you have, the easier it is to identify pat-
terns that are abnormal, where there is fraudulent activity hap-
pening.
Currently, the Fair Credit Reporting Act has very broad defini-
tions, and financial institutions, their service providers, technology
providers are hesitant to share data that they have that could be
used for that pattern recognition, the fraud identification, earlier.
If there were clarity or a safe harbor under the Fair Credit Re-
porting Act about sharing data for fraud or how that data could be
shared, it would vastly improve financial institutions’ and all these
other companies’ ability to share that data and have it available to
prevent fraud.
Chairman HILL. Thank you. That is helpful. If you have got spe-
cific ideas of how one might craft a safe harbor like that, I hope
you will share those with the committee.
Ms. McKune, let me turn to you from an institution point of
view.
We know that scamming, as we have all heard today, has become
more sophisticated, using AI and deepfakes and forged documents,
and we have got people wandering in courthouses and wandering
in bitcoin ATMs and wandering into banks. We know all that, and
we are all trying to come up with the best whole-of-government ap-
proach to fighting that, but a lot of it falls right back to those fi-
nancial institutions.
Are you trying to use these promising technologies to fight
against the scammers that are using technology and do you have
comfort with that? Do you have a lack of training? Do you have a
lack of talent in your institutions? Tell me a little bit about that.
Ms. MCKUNE. Thank you for your question, Mr. Chairman.
We certainly are trying to use technology prudently, cautiously,
thoughtfully. We want to make sure that we are at least trying to
keep pace with the fraudsters.
There is always a question in small financial institutions of the
cost and of the adoption and of the relative sophistication of both
our members and the fraud community in which we sit but we do
want to be able to respond faster and all of those tools—the all-of-
government approach, the regulatory reforms, possibly safe har-
bors—would play into our layered approach.
Technology is a piece of it, but one of the things that we try to
pride ourselves on as credit unions is our ongoing member-to-mem-
ber—our relationship with our members and our ability to see
them and see what is an aberrant transaction, and try to use our
judgment.
Chairman HILL. On a share draft—passing a check that has been
washed, for example—are you seeing good cooperation for filing a
police report in your area? Are you seeing postal inspectors being
helpful or local Secret Service? Tell me about that.
Ms. MCKUNE. We are always grateful for the law enforcement
engagement that we have. We often run up against law enforce-
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ment’s limitations in terms of resources and their ability to drill in
on the harm that we are seeing.
One of the things I think is really important to note is that the
number of resources that law enforcement can invest often is tied
to the amount of the loss, and the amount of the loss could be abso-
lutely ruinous and devastating for our individual members and not
be of a size or of a frequency that law enforcement can really lean
in.
Chairman HILL. Thank you very much.
I yield back, Mr. Chairman.
Mr. MEUSER. The gentleman yields back.
The gentlewoman from California, the ranking member of the
full committee, Ms. Waters, is now recognized for 5 minutes.
Ms. WATERS. Thank you very much. Absolutely delighted to be
here at this hearing. I am so surprised that the opposite side of the
aisle have decided to talk about fraud and abuse.
Since Trump and his return to the White House, Trump and his
family have made billions thanks to their growing meme coin
schemes. At the same time, families are more vulnerable than ever
to financial abuse as Trump pushes a reckless deregulatory agen-
da.
He has dismantled the CFPB—that is the Consumer Financial
Protection Bureau—rolled back consumer protections, and dropped
lawsuits against big banks and crypto scammers, making it easier
to cheat everyone—from retirees, students, and working families—
while he and his family cash in.
Mr. Barr’s bill would weaken UDAAP—that is U-D-A-A-P—au-
thority to the detriment of consumers. Of course, we need stronger
protections, not less and I just want to raise a question about all
of this that we see coming at the very top of government.
Mr. Rust, we have been getting mixed messages from President
Trump where, on one hand, he claims to care about the afford-
ability crisis and says Congress should enact a law to cap excessive
credit card interest rates at 10 percent, but on the other hand, he
says it is a hoax and has worked with congressional Republicans
to slash the budget of the Consumer Financial Protection Bureau,
the Federal watchdog for consumers in the financial marketplace.
They have also blocked rules like curbing excessive credit card fees.
So, Mr. Rust, when the CFPB issued its larger participant rule
to supervise Big Tech payment apps, banking groups were sup-
portive of the effort as a way to level the playing field.
Should Congress revisit this issue and require the CFPB to im-
mediately begin examining the large payment apps and mobile
wallets provided by Big Tech? Could this help identify payment
scams happening on these apps sooner?
Mr. RUST. Thank you for the question.
Yes, absolutely, Congress should restore the CFPB’s authority to
supervise payment apps and digital wallets. This is sort of the
baseline way to address scams. Access to looking at the activity on
these networks is how regulators can spot things, how law enforce-
ment can spot things.
UDAAP is the tool we have if EFTA is not restored to protect
consumers. UDAAP was the tool used for the Zelle enforcement ac-
tion. Again, the CFPB needs to be back in the game.
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Ms. WATERS. Well, thank you very much.
I am going to go back to the CFPB because many of us have
worked so hard. In Dodd-Frank, we gave the CFPB authority to
stop unfair, deceptive, and abusive acts and practices by bad ac-
tors.
So if the Congress of the United States wanted to do something
about fraud, unfair, deceptive, and abusive acts, why do not we just
make sure that the CFPB can do what we organized it to do rather
than being attacked constantly by the opposite side of the aisle and
the President of the United States of America? Would it not be just
simple to allow them to do what we organized them to do?
Mr. RUST. We should immediately restore full funding for the
CFPB.
Ms. WATERS. Are you aware of the CFPB and how much money
they have returned to consumers?
Mr. RUST. The CFPB has returned over $19 billion to consumers.
That is a direct way to benefit consumers. I cannot think of some-
thing that makes a greater difference than when you have been
harmed and an agency is responsive the way that CFPB is.
Ms. WATERS. I consider this one of the most dangerous things
that have been done by the President of the United States of Amer-
ica, with a clear message to consumers to say that he cares about
the big boys who are ripping off and who are creating this fraud
and does not care about the consumers whom we, on this side of
the aisle, have tried to protect. We have worked very, very hard.
I am so pleased that you are here today, that everybody is here
today. Let the truth come out. Let the truth come out and people
know where the fraud is really coming from and that the opposite
side of the aisle is not doing a darn thing about it.
Chairman BARR [presiding]. Well, reforming UDAAP would be
helpful.
The gentleman from Texas, Mr. Williams, is now recognized.
Mr. WILLIAMS of Texas. Thank you, Mr. Chairman.
I thank all of you for being here today.
I am a small business owner in Texas, and for 57 years commu-
nity banks and credit unions have kept me going every single day.
Many scams targeting small businesses involve criminals imper-
sonating vendors, bankers, or contractors, and these scams often
start through spoofed phone calls, email promises, and PR social
media messaging before the transaction even reaches the banking
system.
Once the payment is sent through wires or peer-to-peer trans-
fers, it can be extremely difficult, as we have heard already, to re-
cover these funds.
So, Mr. McDade, how frequently are banks seeing this type of
fraud against their small business clients, like myself, and what
warning signs would small businesses look out for?
Mr. MCDADE. Thank you for the question.
Banks are, unfortunately, seeing this very often, and it is only
increasing.
Recently, we have seen very specific impersonation scams that
are related, unfortunately, to the Paycheck Protection Program
(PPP) loans that were taken out to help small businesses during
COVID.
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A lot of that information is posted publicly in many places, and
so the scammers are able to go out on the web and locate where
these small businesses bank through their PPP loans.
They can even go so far as to get who the individuals are, in
many cases, working at these small businesses, their information.
They can then call the banks representing that they are that per-
son and learn who their relationship manager is.
They will then spoof the banks’ phone numbers and try to con-
tact these small businesspeople to perpetrate fraud. They will get
a text message saying: Did you send this wire to another company?
Yes or no? They will respond no, and they will immediately get a
call from somebody representing that they are the very bank that
they bank with.
Unfortunately, they are talking to a scammer and this scammer
then will tell them: To make sure you are who you say you are,
please read back the code that I am sending you. That code will
be, unfortunately, a one-time pass code as the scammer is trying
to access the person’s account online and do an account takeover.
This sort of activity is becoming rampant, and these imperson-
ation scams are especially dangerous because they are also eroding
the trust between the financial institutions and our own customers.
What banks are doing in response is we are educating our cus-
tomers. Our specific bank reached out to all of our PPP customers
and let them know about this scam. We encouraged them, if you
ever get a call or a text from our bank that does not seem correct,
call your relationship manager back directly and talk to that per-
son.
I can tell you, from my experience on the CBA’s Fraud Manage-
ment Committee, it is not just our bank. It is all the banks on the
committee who have small business relationships are seeing this
exactly same thing, and the collaboration that the CBA brings be-
tween us is really helpful.
Mr. WILLIAMS of Texas. Okay. Thank you.
Community banks play an important role in protecting your cus-
tomers from fraud, but they are also dealing with a growing wave
of check fraud, including checks stolen from the mail, altered
checks, and counterfeit cashier’s checks.
When fraud occurs, smaller institutions often have to spend sig-
nificant time and resources investigating claims, navigating liabil-
ity disputes between financial institutions, and attempting to re-
cover funds, and that puts people like me on the back burner to
get a loan that we may need.
So, Mrs. Dempsey, when a community bank spends time and re-
sources dealing with check fraud disputes, what does that mean for
their ability to focus on serving customers, like our small
businesspeople across this country, and lending in their commu-
nities?
Mrs. DEMPSEY. Thank you for the question.
You are correct. Check fraud, especially in a small bank like
mine, takes a tremendous amount of time and the majority of the
check, as Ms. McKune referred to, so many times the checks are
of an amount that it is not going to engage law enforcement, and
it is also not going to warrant us fighting legal battles to try and
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get that money back. So it is taking all that time to work through
that process.
I will say, for our bank, if you had a check stolen out of the mail,
we give you money or give you credit back immediately to your ac-
count when you identify that. So we work really closely with our
customers to not put them in a position of not having access to
those funds but you are correct; it takes a tremendous amount of
my time, from the CEO down to all of our operations department
to our front line, in dealing with that daily and then working with
those customers to do that, and that is time that we could use
working with our small business owners, showing them new AI,
new things that they can use, new payment systems that they can
use to help them be more efficient and to grow their businesses.
Mr. WILLIAMS of Texas. Thank you.
Ms. McKune, I have a short time to go here, but in your testi-
mony you highlighted the importance of consumer education.
What types of outreach have credit unions found most effective
in helping members recognize fraud attempts?
Ms. MCKUNE. Thank you, Congressman.
We have tried to use multiple approaches to ensure that different
messages are getting through and that the most important mes-
sages do not get lost in a lot of communications. So we often will
put information in our social media, we will put information about
active scams as banners on our website, as landing pages on our
online banking but we also do a lot of work. We are a community
development financial institution, and we do a tremendous amount
of work in our communities to try to ensure that folks understand
what risks are out there and how their accounts really work.
Mr. WILLIAMS of Texas. Thank you. My time has expired.
Chairman BARR. The gentleman yields.
The gentleman from Georgia, Mr. Scott, is now recognized for 5
minutes.
Mr. SCOTT. Yes. Thank you, Chairman.
Mr. Rust, let us get to the heart of the matter.
In your opinion, what is the level of damage this is doing to our
overall economy?
You mention a lot of this rests in what you refer to as this crit-
ical gap. What do you mean by that? What is the level of economic
damage that our failure to address this critical gap that you talk
about?
Mr. RUST. Thank you for the question.
Mr. SCOTT. What is the damage? Go ahead.
Mr. RUST. We see reports of $16 billion in fraud losses, but re-
search suggests that is possibly even 20 times less than the actual
number because people feel shame, people do not know where to
go, so they do not report it. The impact on their household is desta-
bilizing, possibly crushing, so that affects our economy.
The critical gap? I see a critical gap between the work that is oc-
curring to stop some of these overseas criminal organizations that
are already working to move money, money laundering, human
trafficking, they are also doing scams. That is their new line of
business, and we should be eliminating silos between consumer
protection agencies and those agencies, and possibly we should also
be thinking about when there are enforcement penalties for BSA/
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AML violations, that if there are scam victims involved, that
should be a way that they receive a remedy.
Mr. SCOTT. What do you feel we here in Congress can do about
this? I mean, are we doing enough? Do we address this critical gap
through legislation or is this a money problem of us not punishing
these persons who are doing this wrongness?
Mr. RUST. So, yes, sir, I believe this is a bipartisan solution. I
believe there is bipartisan interest to fix this.
Congress can do a number of things. They should refund the
CFPB to begin with. They should restore the payment app rule,
that would make a big difference. I think they should look at many
of the solutions you have heard about, information sharing and giv-
ing more line of sight between institutions.
Because all of this involves networks. This never is just the send
side. It is always receive side as well. So we can make changes.
Congress can do a lot.
Mr. SCOTT. Yes. So you feel there is nothing more that we need
to do as far as dealing with the Bank Secrecy Act itself? Are there
things we need to do to make it stronger, or do you feel that the
act is doing enough?
Mr. RUST. Well, there is plenty that could be done on that side
because that is where law enforcement, where those organizations
are sharing information, receiving SARs, assessing problems, and
highlighting it for other organizations.
So, for example, the conversation about SARs is really central
here, and providing ways for that information to highlight scams
I think is critical.
Mr. SCOTT. Well, thank you very much.
I think we need to really focus on what we can do about this, be-
cause if we cannot deal with this, the critical gaps that you are
talking about here, there are things we have got to do here in Con-
gress to address this.
So I appreciate your comments. Thank you.
Mr. RUST. Thank you, sir.
Chairman BARR. The gentleman yields.
The gentleman from Michigan, the vice chair of the committee,
Mr. Huizenga, is now recognized.
Mr. HUIZENGA. Thank you, Chairman Barr.
With readily available information and images that are out in
the general public on the internet and other places, there are
many, many people who are victims as both scam targets and as
vehicles to go after those victims.
A couple of years ago our office heard from someone whose moth-
er was in an online relationship with an individual. I will call that
individual Individual A. While using AI, the scammers put Indi-
vidual A’s face on a decorated military officer’s body, put that face
on someone who was being cared for in a hospital, and it is amaz-
ing, really, truly unbelievable how authentic the images looked, be-
cause I was Individual A.
To be clear, there was no online relationship. It was someone
who had taken my readily available information and my images
and had used AI. I think it just demonstrates that, frankly, no one
is above being caught up in those scams that are going on right
now.
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Sadly, the individual’s mother had sent thousands of dollars to
someone in Vietnam. We worked with Facebook where the images
had appeared to have them removed, but they kept reappearing.
Mr. Schuster, I am curious, how much fraud originates actually
outside the banking system entirely, such as with social media,
telecom networks, or overseas criminal operations?
Mr. SCHUSTER. It is a great question. I think the majority of it.
Financial institutions at the end of the day are just where the
funds ultimately derive for the scams, for the fraud, that originates
elsewhere.
What used to be in a physical place that somebody was obtaining
money is now all digital. Payments are faster than they have ever
been.
Those technologies that you are talking about are what are used
to start fraud, and financial institutions need the abilities to do
that pattern recognition. They need clear guidance.
Their regulators need to permit them to use these technologies
from a UDAAP perspective and other things, so that if there is
something that is happening that happened upstream from the fi-
nancial institution—which is where it originates—they can address
it.
Mr. HUIZENGA. If most scams originate outside of financial insti-
tutions and payment networks, is it fair to place the majority of
regulatory burden on those banks and payment providers?
Mr. SCHUSTER. I think it would be great if we gave those finan-
cial institutions and payment providers more tools even before we
think about liability.
I think that we are thinking about liability after a fraud or a
scam has occurred. If there is something that they can do to help
people prevent these types of things, that would be great.
I also think that looking at some of those other areas that you
have been discussing, social media and elsewhere, that is where
there should be focus, too.
Mr. HUIZENGA. I do want to hear from our bankers, as well. Very
quickly, how do you think we can improve consumer education and
outreach on fraud and scams?
Mr. SCHUSTER. I think that it is something that if financial insti-
tutions are given the tools, or less restraints with respect to how
they can look at these items and what they can do to communicate
with their customers from data that they have from other institu-
tions, from their service providers, from financial institutions, they
will be able to share more specific information and education with
consumers that will be extremely helpful.
Mr. HUIZENGA. How about Mrs. Dempsey and Ms. McKune?
By the way, Ms. McKune, I am going to take point of personal
pride here. My future daughter-in-law happens to be from Danville,
Kentucky.
For those of you not aware, Danville is quite a small town, as
I understand. So I am looking forward to having her in the family
soon, but what is your experience with your customers?
Ms. MCKUNE. One of the things that we think is really key is
the ability to share information more broadly. When we are con-
strained, even in just dealing with our respective counterparts in
the banking realm and financial institutions, the information we
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can share is limited and the information that would be helpful is
often out of our reach.
We are talking about a very time-sensitive exercise, and we are
talking about something that happens really quickly, and with reg-
ulatory constraints on how long we can find a pause, that is dif-
ficult.
I think it is worth exploring information sharing that goes be-
yond thinking about financial institutions because so much fraud
originates in spaces for which we do not have a vantage point.
Mr. HUIZENGA. Mrs. Dempsey, 10 seconds.
Mrs. DEMPSEY. I would just concur. More information sharing is
critical between banks.
We have had experiences with banks where we call and they will
not give us any information just because of fear of the sharing in-
formation, even though it should fall under the current regs now
that they are able to share with us and they do not and then just
she mentioned consumer education. We are constantly educating,
whether it is through in-person, whether it is through luncheons,
online, face-to-face. I have been on the radio. We have weekly arti-
cles in our local newspapers.
So we are doing everything that we can to make consumers
aware of the frauds and scams that are out there, but they change
every day.
Mr. HUIZENGA. Thank you. I yield back.
Chairman BARR. The gentleman from California, Mr. Sherman,
is now recognized.
Mr. SHERMAN. Consumers face two kinds of rip-offs: those from
big institutions that do provide a useful service but sometimes en-
gage in misleading and confusing practices.
The chief defense here was the CFPB, which provided almost $20
billion in returned money, $5 billion in civil penalties, $363 million
back to veterans and that is just the retribution part. Think of the
deterrence. Think of all the scams that never happened. Think of
all the corporations that said, ‘‘We will never get away with that.’’
So we should not defund those who police our streets. We cannot
defund those who police the suites, the corporate suites but today’s
hearing tends to focus on the full-time criminals who provide no
useful services at all, just rip people off.
Mr. Rust, thank you, first, for the work of the Consumer Federa-
tion of America over the many decades. You have talked about the
Suspicious Activity Reports that financial institutions file and the
need to allow law enforcement to see patterns, to look not at just
one item, but what is happening across the country.
We could provide that the Suspicious Activity Report includes at
least two identifiers, both a driver’s license number and a Social
Security number or a passport number.
We could reduce the importance of the narrative portion of the
report that cannot be correlated with other reports and go more to
structured fields.
What can we do to make sure that a Suspicious Activity Report
does not just tell you about one instance, but allows you to link it
with what is happening elsewhere?
Mr. RUST. So this is about appending data and being able to see
patterns. Structured information is great for searching. If you are
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familiar with the Home Mortgage Disclosure Act, that database,
everything in it is searchable. It is all structured.
If you are a local law enforcement agency working in a State, the
ability to search for where that scam occurred is very valuable.
The ability to see where funds have transferred across financial
institutions, you need to be able to track account numbers, device
IDs, things like that. Those are tools that law enforcement needs
to build cases against these kinds of situations.
So SARs are a tool where the underlying facts can lead to sub-
poenas that can lead to stopping the problems.
Mr. SHERMAN. Thank you.
I want to commend our ranking member for his idea that we
need Know Your Customer to apply to all of the wallets, crypto
wallets.
One issue comes up where an entity impersonates a financial in-
stitution. Reuters claimed that Meta had 10 percent of its revenue,
roughly $16 billion, derive from advertisements for scams and
banned goods.
Credit unions came to my office and identified a system where
a scammer pretends to be your credit union or your bank, so you
trust them, and all of a sudden you are wiring $500, you are giving
out information. A lot of this comes from advertisements where
Meta will let you pretend to be a financial institution when you are
really not.
Mr. McDade, what can be done to make sure that Meta and simi-
lar organizations are not running ads in the name of a financial in-
stitution when it is really a criminal?
Mr. MCDADE. Well, I would first point to the SCAM Act spon-
sored by Representative Meuser. The reality is we are absolutely
correct that one of the largest threats that we have is banks, the
misinformation that happens outside of our control environment.
Most of the scams——
Mr. SHERMAN. And you live with Know Your Customer and Meta
does not know anything about its advertiser.
Mr. MCDADE. Well, that is correct. The study that you cited spe-
cifically notes that it is a situation where Meta is putting forth
knowingly fraud information into the ecosystem.
Mr. SHERMAN. Got you.
I want to get one other thing, and that is we need payee match-
ing so that when you wire money to account number 12345, be-
cause it is supposed to go to Santa Barbara escrow, that is an ac-
count of Santa Barbara escrow.
Because we have seen again and again people lose their down
payments, somebody is impersonating the escrow company, the
title company, and all they have to do is scam you into their num-
bered account.
Britain has payee matching. We need it, too. Several chairs of
the Fed have said they would work on it and still have not.
Chairman BARR. The gentleman’s time has expired.
The gentleman from Georgia, Mr. Loudermilk, the vice chair of
the subcommittee, is now recognized.
Mr. LOUDERMILK. Thank you, Mr. Chair.
Before my remarks, I would like to submit this letter from the
American Securities Association into the record. The letter stresses
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the importance of closer collaboration between financial institutions
and law enforcement to combat fraud and scams. I would like to
submit that for the record.
Chairman BARR. Without objection.
[The information referred to can be found in the appendix on
page 147.]
Mr. LOUDERMILK. Thank you, Mr. Chairman.
I would be amiss if I did not bring up something that this com-
mittee has already done to help reduce fraud by removing the noise
of nonapplicable data when it comes to looking for suspicious ac-
tivities, and that was my Financial Thresholds Modernization Act,
which modernizes the CTR and SAR process to reduce the burden
on financial institutions so you can focus on what is actually sus-
picious activity versus what you identify as normal activity, and it
reduces the proverbial haystack within the government so we can
actually find the needle.
So I encourage my colleagues on the other side to get on board
and help us move through the House this important piece of legis-
lation that I think will go a long way to help identify fraud.
I have heard a lot about data sharing here today, and that is ex-
tremely important when it comes to collaboration between financial
institutions and law enforcement and other entities, especially
when we live in a day and age that the amount of data is unprece-
dented that is available and out there.
When I worked in IT and security and in intelligence, it was not
the thought of if the data was going to be hacked or disclosed, it
was when. The idea is to just make sure that your data is more
secure than the other data so they will go after the other person
and so I think we have to be extremely vigilant.
Mr. McDade, how can we strike the right balance between pro-
moting necessary data sharing and avoiding excessive centraliza-
tion of sensitive information, which could actually amplify the
amount of sensitive data compromised in a breach?
Mr. MCDADE. Thank you for the question.
First, I would echo some of my colleagues saying a safe harbor
for banks to share this essential information.
When banks are interacting in the fraud space, we are on the
same team, and our fraud fighters are all working together to try
and stop a fraud or scam from happening.
If we are prevented due to the amalgam of privacy laws that are
being promulgated at the State level instead of the Federal level,
it really creates a difficult situation for us to be able to commu-
nicate with each other.
Additionally, one of the recommendations I made in my brief was
to—and I believe Mr. Rust spoke to this as well—revise the SAR
policy so we have a fraud signal report and this would not be some-
thing that is a lagging indicator, but as soon as we are aware a
fraud happened, have a concise way to get the metadata associated
with that fraud reported to law enforcement.
If all the banks did that in the same fashion, they could imme-
diately cross-reference that essential data and see the patterns and
actually reach out and warn other banks that they might have
fraudulent accounts, or even go upstream to the telecoms and so-
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cial media accounts and let them know: We are seeing fraud on
this phone number, or on this account, please take it down.
Mr. LOUDERMILK. Well, thank you.
One thing that I learned throughout my time in information
technology and security is you do not have to protect data that you
do not have and so only collect and hold that which you actually
need, which, again, goes back to the modernization of CTRs and
SARs.
What role can technology, such as anonymizing or otherwise pro-
tecting sensitive data, play to help mitigate concerns over informa-
tion sharing?
Mr. MCDADE. I think it is essential to be able to anonymize the
data in a way that protects the consumers while still giving the key
data that is what we call in the industry fraud signals.
These signals are pieces of information that if they are shared
across can show a pattern of fraudulent activity and point back to
the source where that fraudulent or scam activity is coming from.
So while anonymizing our consumers’ data is very important, the
IP address, MAC address, and some of the other data coming from
a fraudster’s computer attacking our resources is something that
we should be able to share with law enforcement at least, if not
other banks.
Mr. LOUDERMILK. All right. Thank you.
I do not think I have time for my other question. So, Mr. Chair-
man, I will deposit my remaining time and hope that maybe I will
earn interest for a future hearing.
Chairman BARR. So deposited.
The gentleman from Illinois, Mr. Casten, is now recognized for
5 minutes.
Mr. CASTEN. We may have to apply a Howey test to that deposit.
Thank you, Mr. Chairman.
Thanks to all the witnesses for being here.
I want to follow up on some questions that Dr. Foster raised at
the start about bitcoin ATMs.
The FBI has reported that Americans lost a third of a billion dol-
lars in crypt scams—crypto ATM scams—in 2025. That was a 33
percent increase from the year before. The scams, as I think many
of us know, particularly target seniors.
I actually—this became personal—I got a call from a constituent
earlier this month whose brother had lost $190,000, essentially all
of their wealth, to one of these pig butchering scams.
I do not know the details of theirs, but for people who are watch-
ing, it is more or less as you described, Mr. Schuster. It starts on
a social media, maybe it is a dating app, maybe it is your Facebook
page. ‘‘I want to be friends. I am really attractive. You should talk
to me. I have an investment plan.’’
You build these relationships and then pretty soon you need a
little help to get out of a jam, or you have got an investment oppor-
tunity. ‘‘Please go to the local crypto ATM and transfer me some
money now that you trust me.’’
It has really, I think, taken advantage of the fact that social
media is almost perfectly designed to make people believe impos-
sible things, and crypto ATMs are almost perfectly designed to
monetize that lie, because once you put it in there, the transaction
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is immediate, it is irreversible, it can use the ecology of the crypto
system through mixers, through chain hopping, through anony-
mous wallets to make it untraceable.
The stories are painful. I do not know, Mrs. Dempsey and Ms.
McKune, I will let the two of you argue it out who wants to take
this. I am curious how your members are dealing with this, be-
cause presumably they have to come to one of your banks to with-
draw real money in the first instance.
Any of you want to comment?
Mrs. DEMPSEY. Yes. Thank you for the question.
As I mentioned in my written testimony and today, it is ramp-
ant. We deal with it on the front lines. Like I mentioned, we have
had multiple experiences where we have sat down with a customer
and we pulled up, we literally pulled up Facebook and showed
them the photo and they have told us, ‘‘Oh, they told us you were
going to do that.’’
We have shown them FBI reports. We do everything that we can
from our end when we identify those to stop it and to inform them.
As I mentioned, they are changing every week. I know every one
of us could tell story after story of whether it is a pig butchering,
an investment, whether it is romance, whether it is your child,
your grandchild is in jail. All the things. We see it every single day.
Mr. CASTEN. I do not want this to sound the wrong way; I am
sure you do that for good and ethical reasons. You also would do
that because you are bound by Know Your Customer rules, right?
So if they are going to withdraw the money, you need to know
something about who is the identity, what is the—all the registra-
tion and reporting requirements.
Would you be supportive of rules that said let us apply those
same rules to crypto ATMs, make them go through the same KYC
rules so this is not all on you and your local bankers?
Mrs. DEMPSEY. Personally, yes, I think everyone should have to
know their customers because I think if you know your customers,
there is a lot of fraud that could be stopped at the point of origina-
tion.
Mr. CASTEN. Okay.
I want to just point out that the Trump Administration has made
some positive noises about this, but everything that they have done
so far has been voluntary, and I think it is pretty clear that the
voluntary standards are not working.
We are seeing evidence that if one State has good rules and the
other State has bad rules, the scammers will say,‘‘ Hey, do not do
this in Illinois, but drive across to Hammond, Indiana, and maybe
use the crypto ATM over there.’’
So I would agree we need some policies, some Federal policies.
Mr. McDade, if you will forgive me, I was looking on your
website before we got here and I saw that at EverBank you do not
allow people to do ATM withdrawals of more than $2,000 a day;
I think a bit more if it is a PIN-based transaction.
Is there any reason we should not employ those same standards
for crypto ATMs?
Mr. MCDADE. Every institution has their own risk tolerances and
sets those risk tolerances appropriately for their institution.
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In my view, it would be similar to what was just said as far as
the crypto ATMs. The difficulty is us being able to inform our cus-
tomers that they are sending money to the right place and the
right account, and the KYC rules assist with that, so on the other
end we can see that this is going to a legitimate place.
Mr. CASTEN. Well, I will just close with one last story, and I
would welcome any of your input. We are trying to work on some
legislative fixes, and if you have good ideas, please share them.
One of the smaller towns that I represent does not have a super
strong local economy. The mayor struggles to come up with enough
money to pave the roads and most of their tax revenue comes from
a very small set of convenience stores.
One of the convenience store owners, his primary source of—his
biggest source of revenue was a bitcoin ATM, and he took it out
in spite of its importance to that community because he just kept
watching seniors come in every day and make deposits and then
come back later and ask how to get it out.
I do not know how the people who do that look at their kids at
the end of the day and say, ‘‘You can be proud of what Dad did
today’’ but as our former colleague, Elijah Cummings, was fond of
saying, ‘‘We are better than this.’’
Thank you. Yield back.
Chairman BARR. The gentleman from Pennsylvania, Chairman
Meuser, who has done a lot of great work on this issue, is now rec-
ognized for 5 minutes.
Mr. MEUSER. Thank you, Chairman, very much.
Thank you, certainly, to our witnesses.
The FTC reported $12.5 billion which was reported in fraud
losses last year. We, of course, know the real number is far higher.
By the way, between 2021 and 2024, Congressional Budget Office
(CBO) reported scams and fraud were up 110 percent under the
CFPB’s oversight. So doubling down on failure is pretty much the
last thing that we are going to do to solve this crisis.
Fraud and scam roundtables have been held by our committees,
telecom companies have been invited in, tech platforms, hosting
tele-town halls with community banks, working with us, with our
U.S. Attorney General’s Office, as well as State Attorney General’s
offices.
We have been working at it since the beginning of this Congress,
and we are making progress, and we are as determined to fight
this crisis situation as you folks clearly are.
To Ms. McKune, I would like to start the questioning with you.
By the way, great testimony. I really appreciated what you had to
say.
From your experience, how effective is consumer education in
preventing scams before money ever leaves a customer’s account?
Ms. MCKUNE. Thank you for the question.
We see this as an essential piece of how we are protecting our
consumers. We absolutely have to have educated consumers be-
cause many times, as Mr. Rust has noted, there is so much shame
involved in admitting that you have been scammed. That is one
layer of the problem.
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The other is that these are—they call it social engineering for a
reason. These are manipulations of people’s vulnerabilities and the
things that they worry most about.
If we are in a position where they are not going to answer our
questions, they are not going to tell us what is happening, the best
tool we have, really, the very first tool has to be fundamental un-
derstanding and sophistication in consumers about the risks of
fraud. It is why we are really supportive of an all-of-government
approach and a top-down consumer education movement, because
we do really see it as the essential first step.
Mr. MEUSER. So all of government, all of private sector are very
holistic, and that is definitely the strategic plan.
Mrs. Dempsey as well, great opening testimony. Thank you so
much.
When a customer walks into one of your branches after they
have been deceived online, what options do you and other commu-
nity banks realistically have to stop loss at that point?
Mrs. DEMPSEY. Well, if they have already sent it there is not a
lot that we can do at that point, if it has been outside our bank
and what we have done.
Ms. McKune as well, just education, the ongoing education of try-
ing to inform them before of when they are coming in to get the
money, of being bold enough—like I mentioned, we have got really
strong relationships with our customers, so we know them. Our
tellers do an incredible job of really just asking questions—‘‘What
are you doing with this? Why do you need to take this much out
of the bank?’’—and things of that nature.
I know we have talked, too, about just an overall approach. So
I want to highlight like with the ICBA, one thing we did with the
U.S. Postal Inspection Service was to come up with an in-branch
handout to give to consumers to educate them and to start a con-
versation on fraud and scams. So hundreds of thousands of those
have been given out at almost a thousand banks and so anything
that we can do to bring attention to it and to stop it before it hap-
pens.
Mr. MEUSER. Thank you very much.
Mr. McDade as well, excellent testimony.
How important would it be if social media platforms were re-
quired to verify advertisers and quickly remove scam ads once they
have been reported?
A number of you have referenced the SCAM Act. The SCAM Act
will certainly be requiring this of social media companies with pen-
alties that are appropriate.
Go ahead, please.
Mr. MCDADE. I would say it is essential. The reality is these
scams originate outside of our bank’s control environment, they,
most of them—I believe there is a study out of Britain that said
80 percent of the scams that they were seeing in that country they
alleged came from Meta as a platform.
So when you take a look at that, we need to do something in
order to have correct accountability in those places.
Mr. MEUSER. Okay. Excellent.
You know, I was in New York City, we visited BNY Mellon and
JPMorgan’s fraud and scam prevention centers. They are spending
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millions, if not, with a ‘‘B,’’ billions, on tracking and preventing
scams.
Do you believe telecom providers and social media platforms are
making the same level of investment to stop scams?
Mr. MCDADE. Unfortunately, they are not. While we do try to
partner as well as we can with the telecoms and the social media,
the reality is since they do not bear any of the liability, they do not
bear the responsibility as far as they are concerned.
We have actually reached out to telecoms and asked them to
have a ‘‘this is a scam email alert’’ on the phone just like you get
‘‘this is spam.’’ The truth of the matter is they are regulated for
spam, they are not regulated for scams, and so we have not gotten
the response that we need.
Mr. MEUSER. Thank you.
I am almost out of time. Mr. Schuster, I had a question for you
on what else, regarding preventing scam calls and texts from
reaching consumers in the first place, but I am out of time. Per-
haps we can talk about that offline.
I yield back, Mr. Chair.
Chairman BARR. The gentleman from Massachusetts, Mr. Lynch,
is recognized.
Mr. LYNCH. Thank you very much, Mr. Chairman.
First of all, I want to thank the panelists. You have all been ter-
rific and thank you for your work on this issue.
Honestly, I feel, though, that if this is Consumer Protection
Week, we should probably drape the Capitol in black crepe because
consumer protection is dead, it really is, based on what has been
happening here lately.
I honestly think that President Trump is ushering in the golden
age of fraud with all the actions that he has done.
Since January 2025—this is just his second term. We are not
going to touch the stuff in his first term—the Trump Administra-
tion has undertaken unprecedented efforts to undermine the Con-
sumer Financial Protection Bureau through systematic disman-
tling—the one agency that is charged with protecting the con-
sumer.
This is the one agency that Congress has identified and struc-
tured to protect the consumer. Yet the administration moved imme-
diately to effectively shut down CFPB by declaring its funding
structure unconstitutional, unlawful, in November 2025, and it re-
fused to seek additional funding from the Federal Reserve, which
just would have starved the agency.
On February 10, 2025, Acting Director Russell Vought issued a
stop-work order instructing all CFPB employees to stop protecting
American consumers and to not perform their work tasks as the
agency announced it would run out of money by early 2026.
The administration also moved to terminate nearly all CFPB
staff. This is during the Department of Government Efficiency
(DOGE) scourge. They canceled—the administration canceled about
$100 million in employment contracts for those employees whose
job it was to protect consumers.
Although a Federal judge eventually ordered a pause of those ac-
tions in February, many of those employees, who were very valu-
able, very capable and qualified employees, were placed on admin-
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istrative leave and were unable to perform their duties, and even-
tually many of them left because they felt they had such uncer-
tainty.
Remember, this is the agency that CFPB returned $19.7 billion
from people who had scammed consumers, put that money back in
Americans’ pockets, $5 billion, the amount of money that CFPB
had imposed on civil penalties on companies and individuals that
violate the law.
Especially, and this is key, we do a lot of work at Fort Hood and
some of these big bases, they recovered $363 million in monetary
relief resulting from 30 million public enforcement actions that in-
volved harm to servicemembers.
They are not being paid enough to begin with, and these are a
lot of young families that are barely making it; and also veterans,
including six enforcement actions for violation of the Military Lend-
ing Act.
So that is what Trump is eliminating, that ability.
This is all—I am not even going to get into what the Trump fam-
ily themselves are doing. This is the same time—so the Trump
family launched Liberty Financial. This is Trump’s sons, all of
them, also Zach Witkoff, who is Steve Witkoff’s son. They launched
that at the same time that the Trump Administration eliminated
the crypto crimes enforcement unit.
So he goes into business in crypto, and then he eliminates the
crypto crimes enforcement unit. Tell me that is not connected and
he dropped enforcement on a ton of actions at the SEC and the
CFPB. He rolled back a bunch of rules curbing scams at payday
lenders. He delayed the implementation of the fiduciary duty rule.
So he has done all of this to, as I say, to launch the golden age
of fraud, removing enforcement.
So, Mr. Rust, what do you think about our ability to conduct cur-
rent enforcement actions and guardrails in order to protect con-
sumers? Where do we stand right now given all that I have said?
Mr. RUST. Well, it is true, it has been gutted, in so many ways.
I think in the brief amount of time I want to highlight how they
are not helping servicemembers, which is one of the things the Bu-
reau has always done. There has not been a visit to a military in-
stallation. There have been no monitoring reports to prevent scams
targeting servicemembers and veterans. No annual report to under-
stand priorities or complaint trends. The dropping of the Navy Fed-
eral Credit Union enforcement action, and the MoneyLion settle-
ment pennies on the dollar. The most recent Reduction in Force
(RIF) plan would have left the Office of Servicemember Affairs with
no staff.
Mr. LYNCH. Thank you.
Thank you, Mr. Chairman. I yield back.
Chairman BARR. The gentleman’s time has expired.
The gentlewoman from California, Mrs. Kim, is now recognized
for 5 minutes.
Mrs. KIM. Thank you. Thank you, Chairman, for holding this
hearing and I want to thank our witnesses for joining us today.
You know, in California, we are in the golden age of fraud with
more types of fraud than Baskin-Robbins has flavors of ice cream.
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Sadly, our Governor, Gavin Newsom, has done little to stop this
crisis.
That is why I introduced the No More SCAMS Act that would
create a Federal strike force dedicated to investigating fraud in-
volving Federal dollars, bringing fraudsters to justice, and clawing
back stolen taxpayer dollars for the American people.
I believe that we can learn a lot from the private sector and the
great tools that you have deployed to combat fraud and scams to
put the consumers first.
So I going to ask the first question to you Mr. McDade.
How do banks leverage third-party fraud tools to work across fi-
nancial institutions and prevent scams and fraud?
Mr. MCDADE. Thank you for the question.
Banks the size of EverBank, we are a mid-sized regional bank,
we do have a national presence, and we do have a presence specifi-
cally in California.
When we look at it; we do not necessarily have the resources to
build our own AI constructs. We do not have the data scientists,
necessarily, to do that.
So we depend on groups like LexisNexis, Early Warning Services
(EWS), and other consortium-based tools to help us find the fraud
signals out in the environments that they touch, report those sig-
nals to us so we can collaborate back and forth, and risk rate trans-
actions and risk rate potentially fraudulent customers that are try-
ing to break into the fraud ecosystem, and they are essential part-
ners for us.
Mrs. KIM. That is exactly why we need to do something similar
at the Federal level to streamline those efforts, right?
Then there are third-party fraud fighters who are successful be-
cause they can dialog with different financial institutions and con-
nect it from pieces of puzzle.
Similarly, the task force that I envision through this legislation,
the No More SCAMS Act, will be able to utilize the resources of
the different Federal agencies and combine both the manpower and
the information to track down those frauds.
Mr. McDade, how does improved coordination across agencies can
stop scams in the banking system?
Mr. MCDADE. So we are calling for a national task force on fraud,
and we think that one of the things we need is alignment across
all the different agencies and all the different law enforcement en-
tities.
The reality is, as I talked about in my testimony, when a fraud
report is made by a consumer there is not necessarily a specific
agency that they can point to pick it up because different agencies
have different mandates, and then you have the local law enforce-
ment.
I would say something to be done in that direction would be the
GUARD Act that is being talked about, which is similar to the
High Intensity Drug Trafficking Areas (HIDTA) program that I
worked with as a prosecutor where we allow the Federal resources
to partner with the State resources for these $20,000 to $50,000
scams that are hitting our banks that do not rise to the level of
Federal prosecution, but are multi-jurisdictional, and so there is a
difficulty with law enforcement approaching them.
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Mrs. KIM. Thank you. Thank you.
You know, one type of financial fraud that I particularly focus on
is the credit repair scams. I serve as the co-chair of the Financial
Literacy and Wealth Creation Caucus, and I have seen the damage
of those scams on consumers who are exploited by false promises
involving their credit scores.
To that end, I am co-leading the Ending Scam Credit Repair Act
to help end those types of scams and prevent bad actors from steal-
ing money from hardworking American families.
So, Mr. Chairman, I would like to ask for unanimous consent to
submit this letter that I got from the American Financial Services
Association emphasizing the need to end—the need for this type of
legislation.
Chairman BARR. Without objection.
[The information referred to can be found in the appendix on
page 150.]
Mrs. KIM. I also have another letter from SIFMA to also——
Chairman BARR. Without objection.
[The information referred to can be found in the appendix on
page 152.]
Mrs. KIM. Thank you very much.
Let me shift gears now. I want to also focus on romance scams
and the work that is being done to cracking down on them.
I was proud to lead the effort to have the Treasury Department
identify romance scam facilitators in Cambodia as money laun-
dering entities. While that was a great step in the right direction
to crack down on bad actors, we must also focus on ways to prevent
those scams at the point of attack as well.
So, Ms. McKune, how are credit unions like Park Community
using methods such as consumer education to prevent romance
scams before—before—the money gets taken?
Ms. MCKUNE. This is part of our broad consumer education ef-
forts. We are aware that romance scams are a problem.
Not to make light in any way of the ways our members are vic-
timized, but Keanu Reeves might need to come before the com-
mittee. Keanu Reeves is someone who gets pulled out as people
posing as Mr. Reeves, and we have had multiple members who be-
lieved that they were in a relationship with Mr. Reeves.
We know about them, we try to educate our members, and we
move as quickly as we can when we see the signs of those.
Chairman BARR. The gentlelady’s time has expired.
The gentleman from Texas, Mr. Green, is now recognized.
Mr. GREEN. Thank you, Mr. Chairman.
Mr. Chairman, the better name or better title for this hearing
would be ‘‘Fighting Fraud on the Front Lines: Challenges and Op-
portunities for Trump and the Trump Administration to Engage in
Corruption.’’
Let me start by asking unanimous consent that certain articles
be introduced into the record.
The first is styled ‘‘Melania Trump’s meme coin architects ac-
cused of pump-and-dump fraud in lawsuit.’’
The second one is styled ‘‘Trump meme coin down 96% as Bitcoin
and meme coins slide,’’ and I have a third. The third one has to
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do with Kristi Noem. ‘‘Firm Tied to Kristi Noem Secretly Got
Money From $220 Million DHS Ad Contracts.’’
Allow me to go through these articles very quickly. I think they
paint a picture of corruption.
The first is in The Guardian, the one styled—did I get unani-
mous consent, Mr. Chair, to introduce my articles? Mr. Chairman?
Mr. Chairman?
Chairman BARR. Without objection.
[The information referred to can be found in the appendix on
pages 155–168.]
Mr. GREEN. Thank you.
The article from The Guardian styled ‘‘Melania Trump’s meme
coin architects accused of pump-and-dump fraud in lawsuit,’’ read-
ing it in various portions we find the language: The $MELANIA
coins were released for just a few cents each on 19 January, the
day before Donald Trump was inaugurated. I am paraphrasing,
and then it goes on to say: Within hours, this coin’s price soared
to $13.73.
Then it goes on to read: However, it then collapsed almost as
quickly and is now worth about 10 cents, less than 1 percent of its
peak price. It goes on to add that at its peak it was worth $45.47.
It goes down to $5.79.
The article goes on to indicate: The Trump family has pocketed
more than $1 billion—more than $1 billion—in pretax profits from
several cryptocurrency-related products over the past 12 months.
Then we have the second one, ‘‘Trump meme coin down 96 per-
cent as Bitcoin and meme coins slide.’’ Reading in part from the ar-
ticle: ‘‘Last February, the coin’s market capitalization stood at $3.5
billion, already well below its $14.5 billion peak on the eve of his
second inauguration. Today, it has fallen to $1.78 billion.’’
Then it reads, in part, that the scale—they are talking about a
pump-and-dump scheme here, it talks about the scale of this pump-
and-dump scheme involving at least 15 cryptocurrencies, included
the $MELANIA currency. It indicates that, of course, the coin is
down 96 percent in this scam.
Now, let us move over to Secretary Noem. Secretary Noem, the
article is styled: ‘‘Firm Tied to Kristi Noem Secretly Got Money
From $220 Million DHS Ad Contracts.’’ $143 million has gone to
a mysterious LLC Delaware company created just days before it
was awarded a deal.
The corruption that this administration has imposed upon the
public, pocketing big money from pump-and-dump schemes, is un-
believable. When you read it, it is almost like reading a corruption
story in some magazine.
I am going to yield back the balance of my time, Mr. Chairman,
but I think that these things have to be further investigated.
Chairman BARR. The gentleman’s time has expired.
The gentleman from South Carolina, Mr. Timmons, is now recog-
nized.
Mr. TIMMONS. Thank you, Mr. Chairman and thank you to the
witnesses for being with us today.
Financial fraud and scams are becoming one of the fastest-grow-
ing financial crimes facing Americans. Increasingly, these schemes
are carried out by large-scale criminal networks operating over-
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seas, often using sophisticated technology, coordinated infrastruc-
ture, and social engineering tactics that target Americans at scale.
As these operations evolve, financial institutions are often the
first line of defense. Banks and credit unions are responsible for de-
tecting suspicious activity, protecting their customers, and coordi-
nating with law enforcement.
As fraud networks grow more complex and increasingly operate
across borders, it raises serious questions about whether our cur-
rent legal and regulatory frameworks are fully equipped to support
the institutions working to stop these crimes.
Mr. McDade, in your testimony you noted that the FBI received
more than 850,000 IC3 complaints involving over $16 billion in
losses last year alone.
Based on your experience, both in the banking sector and as a
former prosecutor handling complex fraud cases, would you agree
that a significant portion of these modern scams are being con-
ducted by large organized criminal operations operating in foreign
jurisdictions?
Mr. MCDADE. Yes. The evidence is very clear that is happening.
We get phone spoofs that are coming from overseas phones. Our
bank is a primary digital bank, and we are able to often detect
whether or not things are coming from overseas, and a large num-
ber of the fraud accounts that we see attempting to be open are
from overseas.
There has been some very strong media coverage about that, The
New York Times and The Economist showing scam compounds as
massive, organized crimes larger than, in some cases, the drug
trade in Southeast Asia and Africa.
Mr. TIMMONS. Thank you for that.
How do these operations differ from the more traditional fraud
schemes we saw a decade or two ago?
Mr. MCDADE. Well, the reality is they are able to leverage at
scale some of the techniques that used to be done piecemeal. They
are gathering data from data breaches, they are gathering data
from, as I said earlier, publicly available resources, such as the
PPP lending site, and they are cross-referencing those, we believe,
using artificial intelligence and machine learning, in order to create
profiles that they are able to know a great deal about the indi-
vidual customers they are approaching and take a focused effort
with knowledge of how that customer normally transacts in order
to fool them into believing that they are a trusted source as they
approach them.
Mr. TIMMONS. So technology is largely to blame for the more so-
phisticated version of scams and frauds?
Mr. MCDADE. The scammers and fraudsters are using technology
at scale is what we are observing.
Mr. TIMMONS. Is it fair to say that 20, 30 years ago, if you were
to engage in this, it is going to be on a small scale, and you are
going to have a higher propensity of getting caught by law enforce-
ment?
Mr. MCDADE. I would say that it is much easier for them to
avoid law enforcement because they can have anonymity online as
they are doing this work.
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Mr. TIMMONS. Well, it is not that they have anonymity. It is that
we do not have the jurisdiction to pursue criminal charges and hold
them accountable. Is that fair?
Mr. MCDADE. That is fair to say. When they are multinational,
it is much more difficult to have prosecution.
Mr. TIMMONS. We can use the resources that we have to address
attribution. It is not easy, but we have the ability to figure out who
is engaging in certain scams. Is that correct?
Mr. MCDADE. At times it is possible that we can point to specific
areas and specific individuals overseas.
Mr. TIMMONS. Do you know of any other area of crime that the
U.S. Government just does not enforce? I mean, we have the ability
to hold these people accountable in foreign jurisdictions, we just do
not do it.
I mean, is that fair to say? I mean, we could figure out who is
engaging in $16 billion worth of fraud, and we could hold them ac-
countable, but we choose not to.
Mr. MCDADE. I cannot really speak to the specific efforts that are
happening there, but I would agree that everybody agrees that
more attention to fraud and scams in a more significant approach
is absolutely necessary.
Mr. TIMMONS. Obviously education to make Americans protect
themselves better is huge. I mean, everyone is susceptible to a cer-
tain degree. I just feel like the Federal policies should address that
and should say, if you are engaging in organized crime, we are
going to attempt to arrest you. If you are in a nonextradition coun-
try, we are going to use other tools in our toolbox.
The President’s favorite word is tariffs, and he could say: All
right, we are going to make the victims whole, and then we are
going to impose tariffs to recoup our losses, or you can just give us
the person that committed the crime.
I mean, so we do have the ability to hold these people account-
able and to make the victims whole, but we choose not to do that.
I mean, we could hold organized crime accountable in Eastern Eu-
rope and Southeast Asia, but we choose not to. Is that fair?
Mr. MCDADE. I would just say that banks would welcome any re-
sources the Federal Government wanted to bring to bear to help
stop this epidemic of fraud and scams.
Mr. TIMMONS. Well, I could not agree—we need to get our act to-
gether.
I appreciate you all being here today.
With that, I yield back.
Mr. MCDADE. Thank you.
Chairman BARR. The gentleman yields.
The gentleman from Wisconsin, Mr. Fitzgerald, is recognized.
Mr. FITZGERALD. Thank you, Chairman.
Thank you for being here today. I know it has been a couple
hours, so I appreciate that.
So I was at a bank in my district last week, a prominent bank
in southeastern Wisconsin, and we had a very good discussion with
staff at that bank about fraud and then we had credit unions this
week in DC. So I talked to a number of people about it.
I do not think this topic came up. Maybe it did. Maybe it touched
on it this morning. I have got Judiciary going on as well but in
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both of those instances there was a component of this which is re-
lated to family members that actually are part of the fraud, or
sometimes bilking, for the most part the targets are adults, and it
is another family member is having a discussion about one of their
accounts. It is not until kind of the front line, which is oftentimes
the person working at the credit union or the bank that is in a tell-
er position, that kind of realizes something is not right.
So I was just wondering if I could just get a thought on the fam-
ily aspect of this, and certainly law enforcement. I mean, they do
not want to get involved in any of these fraud-related scams that
are nationwide, but when it includes a family member it is even
more hands-off, is what I am being told. I am wondering if you be-
lieve that is the case.
Mrs. Dempsey?
Mrs. DEMPSEY. Not in our community and that falls, for us, it
sounds like, more under Adult Protective Services when we see
family members that are taking advantage of an elderly grand-
parent or aunt or uncle or things of that nature. I am not sure if
that is what you are implying.
Mr. FITZGERALD. Yes. That is what the discussion is about.
Mrs. DEMPSEY. Yes, or a caregiver that has gotten control as an
authorized signer on their account or something of that nature.
So for us in Tennessee we have also got very good laws to help
us with elder abuse and prevention and protection. So we have a
good relationship with our law enforcement and Adult Protective
Services when we recognize that and see it happening.
Mr. FITZGERALD. Very good.
Mr. McDade?
Mr. MCDADE. I would echo the fact that we would approach
adult and family services within our eldercare program when we
do detect something that could indicate someone is being taken ad-
vantage of by somebody close to them.
There are processes to do that. It is usually through the State’s
Attorney General’s Office in the various States that we do business
in, and we regularly make those reach-outs when it is appropriate.
Mr. FITZGERALD. Very good.
Ms. McKune?
Ms. MCKUNE. I want to note that one of the things that I think
can give law enforcement some trepidation is how very complex
these situations are.
They rely heavily on us to try to unwind and figure out what is
going on. We lean into our tellers in our branches when they have
good relationships and know some of the dynamics, but it is un-
questionably true that vulnerable folks are vulnerable, and that
can be family members, that can be people they have designated
as powers of attorney, et cetera.
So we do as much as we can to package the information to say
this is why we believe this is what is going on.
Mr. FITZGERALD. Very good.
Mr. Schuster?
Mr. SCHUSTER. Thank you.
It is a great question. I think you are hearing that financial in-
stitutions are doing a lot to identify these frauds. They are many
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times, on the front lines, identifying where there are family fraud,
potential elder abuse, and reporting that, and that helps.
This is not something that the CFPB is doing. This is financial
institutions themselves and having laws that restrict their ability
to stop these types of things are where there are impediments to
continuing to help consumers.
Mr. FITZGERALD. Very good.
Mr. Rust, I do not know if you have a comment on that topic.
Mr. RUST. I agree with much of what has been said, but I also
want to emphasize the size of reporting. If the amount is only
$2,000 or $3,000, which is still plenty, that needs to be routed up
to law enforcement.
I think a whole-of-government approach to public infrastructure
surrounding complaints. People should not have to know which
agency they should complain to. That information should be, if it
ends up in the wrong agency, shared with the correct agency with
the kind of customer service relationship work that the Bureau has
always shown.
Mr. FITZGERALD. Very good.
Thank you so much. I yield back, Chairman.
Chairman BARR. The gentleman yields back.
I would like to thank all of our witnesses for their testimony
today. We have come to the end of this hearing.
Without objection, all members will have 5 legislative days to
submit additional written questions for the witnesses to the chair.
The questions will be forwarded to the witnesses for their response.
Witnesses, if you could please respond no later than April 9 if
you do get such written questions.
Again, I want to thank all of our witnesses for your excellent tes-
timony and contributions. I think we heard a lot of good rec-
ommendations here to deal with this multi-billion-dollar problem
for the American people and hopefully we can make progress.
Thanks for all the great work that you all do protecting your cus-
tomers and the American people.
This hearing is now adjourned.
[Whereupon, at 12:02 p.m., the subcommittee was adjourned.]
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APPENDIX
MATERIALS SUBMITTED FOR THE RECORD
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FSR-FORD-FORD with DISTILLER
Insert offset folio 170 here 63967.170
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Æ
FSR-FORD-FORD with DISTILLER
Insert offset folio 171 here 63967.171
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File and source
- File
- CHRG-119hhrg63967.pdf
- Size
- 29,742,976 bytes
- SHA-256
- 84c1f418242b4b529a7c2ad612c6cc54d4994e61ddd85a1d6597d16bb153d169
- Our copy
- CHRG-119hhrg63967.pdf
- Original
- www.govinfo.gov