Americans lose billions as expert says median fraud losses double

Fraud and fraud in the banking system will cost Americans billions of dollars in 2022, experts told a Senate committee Thursday. And that number will continue to grow unless Congress issues the necessary updates and holds companies more accountable.

The median loss from fraud more than doubled from 2020 to 2022, from $311 to $650, and total losses increased from $3.3 billion to $8.8 billion over the same period. said John Brehaud, vice president of public policy, telecommunications and fraud at the Consumer Federation of America.

Blayault said Congress “can and should” play a bigger role in changing laws and creating incentives for companies to prevent fraud.

“[Companies]bear very little of the cost of fraud that occurs on their systems. Rather, the responsibility for fraud falls on those who can least afford to absorb the losses: individual consumers,” Blayault said. Ta. “Voluntary consumer education, improved disclosures, and adding friction to the flow of payments will not solve this problem. We believe there needs to be greater financial incentives for this.”

Tim Scott, R.S.C., ranking member of the Senate Banking, Housing, and Urban Affairs Committee, primarily championed education. He said the current Consumer Financial Protection Bureau is too busy creating “Washington red tape” instead of “focusing on real crimes.”

“Unfounded bureaucratic regulations take resources away from financial innovation and education, both of which can help uplift underserved and underrepresented communities,” Scott said. .

But Chairman Sherrod Brown (D-Ohio) said it’s time to empower the Consumer Financial Protection Bureau and hold companies more accountable for repaying customers for fraud.

He said people should not rely on financial education to avoid falling victim to fraud.

“Americans don’t have that kind of time,” Brown said. “They have jobs, kids, and bills to worry about. That’s not on them. It’s the companies’ fault for allowing fraud.”

Carla Sanchez Adams, senior attorney at the National Consumer Law Center, said current policies are outdated and have loopholes, leaving many Americans unprotected.

She pointed out that there are two types of fraud: fraudulent transactions and fraudulently induced transactions. Criminals conduct fraudulent transactions by obtaining information and conducting transactions without the customer’s knowledge. Fraudulent transactions occur by tricking individuals into making false payments.

While most unauthorized transactions are protected, most fraudulently induced transactions are not.

If someone were to become the victim of a fraudulently induced transaction, “we would hear, ‘Oh, we’re so sad,’ because there are currently no clear protections in federal or state law.” said Sanchez-Adams.

Sánchez-Adams said fraud particularly affects vulnerable people. Older people often lose the most money, but young people are most likely to be scammed.

“The impact of payment fraud is being felt more strongly in certain low-income areas, older Americans, and communities of color,” Sanchez-Adams said. “These communities, which already face hardship and are often excluded from traditional banking systems, can minimize losses from payment fraud and errors.”

Being scammed has nothing to do with knowledge or education, Brown said.

“When these incidents happen, people lose their hard-earned money,” Brown said. “They are often made to feel ashamed and embarrassed. Victims of home hold-ups and break-ins are told things like, ‘We were stupid,’ and ‘We should have known better that we were wrong.’ There’s no one to say. That’s exactly what consumers who have been scammed often hear. ”

Blayault urged senators to take the lead in strengthening the organization. Electronic Funds Transfer Act This is to ensure that Americans are more protected from fraud cases and to allow new legislation like Sen. Elizabeth Warren (D-Mass.) to pass. Digital Asset Money Laundering Prevention Actwhich makes tracking cryptocurrency fraud easier.

Cryptocurrency has become a popular payment method for international fraudsters, and costs have increased significantly between 2020 and 2022, Blayault said. Losses related to cryptocurrencies increased from $129 million to $1.59 billion in two years.

“We cannot make it easier for criminals and countries like North Korea to defraud Americans of their hard-earned money,” Warren said.