Statement for the Record before the Joint Economic Committee on "The Rising Global Scam Economy: Modernizing Federal Approaches to Protect Americans from Foreign Fraudsters"

Chairman Schweikert, Ranking Member Hassan, Members of the Committee, the American Bankers Association (ABA) appreciates the opportunity to provide a Statement for the Record for this hearing, "The Rising Global Scam Economy: Modernizing Federal Approaches to Protect Americans from Foreign Fraudsters." The ABA is the voice of the nation's $25.3 trillion banking industry, which is composed of small, regional and large banks that together employ over 2 million people, safeguard $20.1 trillion in deposits and extend $13.5 trillion in loans.

Introduction

From using breakthrough technologies such as generative artificial intelligence (AI) to old fashioned theft of checks out of mailboxes, criminals are relentlessly pursuing new ways to scam consumers and small businesses and steal money from their bank accounts. Banks have a long history of improving and innovating to protect their customers—from the adoption of chip-enabled credit cards to multi-factor authentication to protect user accounts to the use of advanced AI tools to warn customers about potentially fraudulent transactions—banks have been on the front lines of innovation and deploying advanced capabilities to protect their customers. Unfortunately, however, the fight against these criminals is one that banks cannot win on their own.

An example of widespread fraud efforts occurred when criminals took advantage of the economic devastation of Covid-19 and the unprecedented government response to support small businesses and out-of-work Americans. By the government's own estimate over $300B was lost, fueling the growth of more organized and sophisticated networks of financial criminals who continue to look for new ways to keep the illicit funds flowing. The criminals are now using the identities and personal information they stole, along with the tools and networks they built during the pandemic, to share tactics, techniques and procedures to expand their reach, finding new people to scam or to cash stolen checks for them or to provide "mule" bank accounts to receive and move illicit funds. They are also becoming more sophisticated, using advanced deepfake technologies to change their voice and appearance in real-time video calls to execute romance and impersonation scams. A significant portion of the $300B that was stolen during the pandemic has been reinvested by these criminals to create a highly advanced and sophisticated adversary who is a far departure from the basic phishing scams of yesteryear.

These criminals cannot be stopped by banks alone, and we support law enforcement as they combat this scourge. While banks need to have the technology and infrastructure in place to defend themselves and their customers, they can only provide the leads necessary for law enforcement to track down the perpetrators. Banks also need the telecom companies and their regulators to close regulatory loopholes that allow criminals to spoof legitimate names and phone numbers to convince customers they are speaking with a bank.

Banks need social media companies to proactively root out accounts pretending to be bank employees or financial advisors to convince people to put their money into their investment scams. Banks need the postal service to improve the security of the mail system so that when someone mails a check, it will not be intercepted, stolen, altered, and cashed by the criminal.

Additionally, banks need strong partnerships with law enforcement, so the resources to combat these crimes match the amount of money being stolen from consumers. And when these criminals are caught, the punishment must match the crime, so these offenders will not continue to steal from American consumers and businesses. Banks also welcome the chance to partner with community-based organizations that are doing critical work in this area, as they are trusted voices in many underrepresented communities.

Banks clearly play a key role in fighting fraud, but unless every player in the ecosystem joins the fight, criminals will continue to steal at a scale we’ve never witnessed before.

Download the statement for the record to read the full text.