Law Experts Inform Congress: Banking Institutions Require Consensus to Combat Financial Deceit
The House Financial Services Committee recently held a hearing titled "Fraud in Focus: Exposing Financial Threats to American Families." During the session, various experts shared insights on the escalating issue of cybercrime, emphasizing the need for a collaborative and multi-faceted strategy to combat fraud.
Ian Bednowitz, General Manager of LifeLock, highlighted that cybercrime originates primarily from scams and social engineering, with fraud escalating at an exponential pace. He also noted that artificial intelligence (AI) serves as a "dual-edged sword," as it is used by both fraudsters and banks to bolster their defenses.
Paul Benda, Executive Vice President of Risk, Fraud, and Cybersecurity for the American Bankers Association (ABA), described fraudsters working in concert to target banks and their customers. They utilize technologies like generative AI and old-fashioned methods like theft of checks. Benda also warned that check fraud is an area of significant concern.
Benda further advocated for a "whole of ecosystem approach" to combat scams, extending beyond banks to include government, technology companies, and consumers. He testified before the House Financial Services Committee on behalf of the FBI, stating that criminals are shifting their tactics from brutal attacks and account takeover scams to methods like lone wolf fraud.
Kate Griffin, Director of the National Task Force on Fraud and Scam Prevention at The Aspen Institute Financial Security Program, emphasized that crypto scams are growing, with overall losses tied to various scams at $16.6 billion in 2024, a 33% increase over 2023. She advocates for a private/public sector collaboration and for streamlined data collection and analysis through a single reporting portal.
Mobile and banking channels pose a significant risk for fraud, according to Carla Sanchez-Adams. She recommended that consumers should be protected from liability when defrauded into initiating a transfer and that consumers should be reimbursed by the financial institution that allowed the criminal fraudster to receive the fraudulent payment. Sanchez-Adams also highlighted concerns about debit scams, particularly those tied to fuel pumps at gas stations.
Rep. Dan Meuser stressed that to truly protect families, collaboration across all stakeholders, including federal, state, and local government, the financial sector, technology platforms, and telecom companies, is necessary. He reiterated Benda's sentiment that banks cannot win the fight against fraud on their own.
Coordination among law enforcement is beneficial in detecting skimming efforts, according to Kate Griffin. She identified investment scams, business email compromise, and tech support fraud as the largest financial tolls in crypto scams. Additionally, she pointed out that call center, imposter, and AI-generated scams are scaling fast in crypto scams.
In summary, the experts agreed that a comprehensive, collaborative, and multi-faceted strategy is needed to combat fraud, extending beyond banks to include government, technology companies, and consumers. The fight against cybercrime requires a united effort from all stakeholders to protect American families.
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