Bipartisan Efforts are Underway to Tackle Financial Fraud and Scam
Whether directly or through a loved one, most Americans have dealt with financial fraud and scams. In fact, $12.5 billion in fraud losses were reported in 2024 alone, representing a 25 percent increase year over year. Interestingly, the total number of incidents has remained relatively steady, indicative of an increase in total loss per incident—driven mainly by investment scams, at $5.7 billion.
A leading challenge in dealing with financial scams is the level of technological advancement underpinning many of them—whether that be artificial intelligence (AI), cryptocurrency, or something else entirely. This complexity and sophistication warrant a whole-of-government approach, and recently filed bipartisan legislation attempts just that.
Sens. Mike Crapo (R-Idaho) and Mark Warner (D-Va.) have teamed up on legislation titled “Task Force for Recognizing and Averting Payment Scams (TRAPS) Act.” Sens. Jerry Moran (R-Kan.) and Raphael Warnock (D-Ga.) are co-sponsors of the bill, which would create a task force made up representatives from the U.S. Department of the Treasury, the Consumer Financial Protection Bureau (CFPB), the Federal Communications Commission, the Federal Trade Commission, and the U.S. Department of Justice, as well as prudential regulators and industry representatives.
The international nature of many types of scams and fraud means law enforcement rarely has jurisdiction to prosecute any crimes, and tracking down the culprit can be exceedingly difficult. However, the proposed task force would bring federal agencies and law enforcement together, giving full weight and force to combat the issue. Just as important is ensuring consumers, law enforcement, and financial institutions have clearly defined recourse and an action plan. The bill would not only convene a task force, it would also compile a report of regulatory and legislative changes necessary to restrict the rise of scams and fraud.
The TRAPS Act joins a variety of other government-led efforts to combat fraud and scams, including President Donald J. Trump’s executive order to cease federal government use of paper checks in an attempt to reduce check fraud and the “Guarding Unprotected Aging Retirees from Deception (GUARD) Act.” The GUARD Act would use federal funds to investigate elder fraud while leveraging technologies like blockchain to fight fraud and scams. Additionally, the Federal Reserve Board posted a press release last month requesting comments on potential actions to diminish payment and check fraud.
Banks are also doing their part by stepping up investments in AI and introducing stronger authentication and identity verification methods, among other efforts.
A forthcoming R Street Institute policy short will examine reform measures for the CFPB, including a proposal for the agency to take a stronger stance in combating financial scams and fraud.