Perpetrators of scams, identity theft and other forms of fraud swindle Americans out of more than $10 billion a year, and efforts to deter them sometimes seem as futile as a game of whack-a-mole.
“These fraudsters are nimble. They’re constantly adjusting to what’s going on in the world,” Benjamin Davidson, an attorney in the Federal Trade Commission’s Bureau of Consumer Protection, told a session at NCSL’s Base Camp 2024.
“The reality is that technology has made it incredibly easy for bad actors to harass and defraud consumers using our communications networks, and the various ways they can do it have skyrocketed,” says Peter Hyun, enforcement chief of staff for the Federal Communications Commission.
Discussing ways to fight consumer fraud at NCSL’s Base Camp were, clockwise from top left, NCSL’s Barrie Tabin and Sanam Hooshidary, and federal fraud investigators Benjamin Davidson, Peter Hyun and Brad Lipton.
In addition to outright theft of data through hacking and security breaches, fraudsters trick millions of Americans into disclosing their Social Security numbers, passwords and other personal information by impersonating representatives of everything from government agencies to banks to package-delivery companies. Add to that a host of con games that have been around for generations: investment scams, phony sweepstakes and lotteries, and bait-and-switch schemes.
Not that long ago, the most common method of finding victims was robocalls, automated phone calls that deliver pre-recorded messages to many recipients simultaneously. Today’s scammers have added to their arsenal email, text messages, online chatbots and social media.
“In a nutshell, consumer fraud is changing,” Davidson says. “These are not just indiscriminate ways of initiating contact with people. They’re much more targeted.”
In response, consumer protection agencies are finding ways to be “much more strategic and forward-looking in the use of our resources,” Hyun says. “We’re looking at things that lead to real results.”
That includes a stronger emphasis on consumer outreach and education, major initiatives targeting types of fraud, and closer collaboration with attorneys general, financial regulators and other state officials on investigations and enforcement actions.
“Whatever we can do to assist or work with states, we’re happy to do,” Davidson says. “It’s always great to have more cops on the beat.”
The FTC, FCC and a third federal agency—the Consumer Financial Protection Bureau, or CFPB—have all made headway on some fronts over the past couple of years.
For example, the FTC has put in place a new rule that gives the agency stronger tools to combat and deter scammers who impersonate government agencies and businesses, enabling the agency to file federal court cases seeking to get money back to injured consumers and impose civil penalties on rule violators.
As for the FCC, it recently announced a settlement with T-Mobile for a series of major data breaches, the first-ever such enforcement action for violating privacy laws. T-Mobile was required to pay a $15 million fine and spend another $15 million to improve its security practices.
And the CFPB has had some success with its initiative on medical debt, CFPB senior counsel Brad Lipton says. “As many as 100 million Americans have debt from medical and dental bills, so this is a big, big issue,” he says. People fall victim to things such as poorly designed hospital financial assistance programs, shoddy billing practices and “being chased after by debt collectors for inaccurate or inflated bills, or bills they don’t really owe or have already paid.”
Lipton says several states have passed or are working on reforms, ranging from establishing standards for financial assistance programs, to prohibiting the inclusion of medical debt on credit reports, to cracking down on debt collectors.
Another key focus of both Lipton’s agency and the FTC: the financial exploitation of older Americans. The median loss for fraud victims in their 70s or 80s is $800 and $1,450, respectively. Another particularly vulnerable group is military veterans, for whom the median loss is $600.
CFPB has created an Office of Financial Protection for Older Americans that offers, through its website, a suite of resources designed for seniors, families and caregivers.
Davidson says that the Stop Senior Scams Act, passed by Congress in 2021, mandates the FTC “to take the initiative on this issue, so we have a number of investigations underway, some of them running in parallel with state investigations.” The agency is also working on a report to Congress, including recommended next steps, that will be released in a few months.
Suzanne Weiss is a Denver-based freelance writer.