US Senator Elizabeth Warren urges greater efforts to stop crypto fraud that harms the elderly

“We must do more to stop these criminal gangs and help the hardworking Americans who lose their entire life savings to these scams every day,” said Senator Warren.

Video from Exchange (YouTube)

September 14, 2024 – Washington, DC – During a hearing of the Senate Banking, Housing and Urban Affairs Committee, Sen. Elizabeth Warren (D-Mass.) highlighted the harms of romance and fake investment fraud targeting older Americans in Massachusetts and across the country and called for greater efforts to stop these crimes. A 2023 FBI report found that Massachusetts residents lost more than $85 million to romance and fake investment fraud, making it one of the most serious financial crimes in the Commonwealth by both the number of victims and the amount of loss.

Ms. Nofziger, director of Fraud Victim Support for the AARP Fraud Watch Network, emphasized the harm these scams cause to seniors, saying, “Unfortunately, what we’ve heard on the helpline is that people don’t realize it until the money is gone.” Ms. Nofziger also emphasized that it’s difficult for lawmakers to recover this money because it’s typically sent overseas via crypto platforms.

“Just last week, the FTC said Sentinel data shows that from 2020 to 2023, crypto scam losses increased TEN-FOLD, to more than $110 million nationwide. Consumers over 60 are three times more likely than other adults to lose money with crypto,” according to testimony from Sheryl Harris, director of Consumer Affairs for Cuyahoga County, Ohio.

Senator Warren highlighted the formulaic scripts these scammers used to trick vulnerable Americans into transferring money into fake “investment” dashboards controlled by the scammers for weeks, and even months.

Senator Warren’s Bipartisan Voice Digital Assets Anti-Money Laundering Act would ensure that digital assets are more compliant with anti-money laundering and counter-terrorist financing requirements and stop crypto scammers.

Transcription: Protecting Americans’ Money: Fighting Scams and Fraud Against Seniors and Savers

Senate Banking Committee

September 12, 2024

Senator Elizabeth Warren: Thank you very much. Thank you for holding this hearing today, and thank you all for being here. So I want to ask about someone later in life, maybe someone whose partner passed away a few years ago and who has recently started spending more time online, maybe a dating app.

They try to meet someone, they talk about food, they talk about work, family, friends. It just feels good to have someone to talk to, and for weeks — maybe even months — the subject of money never comes up. And then one day, the new online friend reveals how much money he just made on this great investment. Now, our senior, very suspicious, not easily fooled, reasonable person, doesn’t send a dime to the online acquaintance. To reassure our senior, the online acquaintance says, you know, you should set up your own trading account and deposit your money directly into it — I certainly wouldn’t want to have access to that. And the online acquaintance says, I’ll just give you some tips on good times to invest and the kinds of investments you want to make. That seems so safe for someone.

So, Ms. Nofziger, you lead the AARP’s victim assistance team. Does this story sound familiar?

Ms. Amy Nofziger, Director of Fraud Victim Support, AARP Fraud Watch Network: Yes. We hear this every day. This sounds like a romance scam/cryptocurrency scam.

Senator Warren: This scam starts, I guess, small. Maybe the scammer starts by saying invest $100. So the senior opens the account, puts in $100. And from what it looks like on the website, within a day, $200 is in the account. They’ve absolutely doubled their money in a day, so they put in another $200, and then $400, and it just keeps growing. Now they have $1,000 in the account, even though they only put in $400. Then they get the message from the online friend, this is the time. This is the time to go big. The investment goes through the roof. So our senior takes money out of his retirement account, puts it into this great new investment, and within a few months, our senior has now invested $300,000 on this website. And it shows them that $300,000 has grown to $3 million. Of course, the senior doesn’t know it yet, but the dashboard is completely fake. There is no $3 million and of course the $300,000 is completely gone.

Ms. Nofziger, when will the victims discover that they have been scammed?

Mrs. Nofziger: It depends. Sometimes they try to take that money out and they say, oh no, you have to pay another $5,000 in fines or taxes. So the victim thinks, oh, well, it’s another $5,000. At this point I’ve got $3 million, why not? So they put that in. Then the doubt starts to creep in, but unfortunately we’ve heard on the helpline that people don’t realize it until every penny is gone.

Senator Warren: Right — and that’s why I think it’s so important to emphasize this. I’m all for getting your money back within 48 hours, and I realize that’s better than no time at all, but we’re talking about money that was gone weeks earlier, sometimes even months earlier. The story I’ve told you isn’t just hypothetical. This is based on countless real-life stories, including one specific story from a victim in Massachusetts. According to the FBI, Massachusetts residents lost $85 million last year alone to romance or fake investment fraud. In the past four years, consumers around the world have lost an estimated $75 billion. So, Ms. Nofziger, is law enforcement able to get victims’ money back once the crime is reported?

Mrs. Nofziger: We definitely encourage every victim to report it to the police, but the police tell me that it is very difficult to get that money back because it is usually sent through a digital currency platform and also sent overseas. And like you said, many times it is not reported in time, but we always encourage to report it anyway.

Senator Warren: What else can the federal government do here?

Mrs. Nofziger: Thank you. I think there’s better coordination, better data sharing, and I think there’s maybe just more resources and education that we need to put into law enforcement to understand how this money is being moved and to understand it, because this is such a new technology. I mean, crypto is pretty new to a lot of people.

Senator Warren: So let me just make sure I understand your last point — this is happening using crypto, is that right? And are you suggesting that better regulation might be helpful here?

Mrs. Nofziger: I’m not sure if I’m suggesting that, but what I’m saying is that I think there’s just a lot of misunderstanding about what crypto is, where it’s going, and how it’s used. I’m sure a lot of people who call our helpline don’t even know, even though they’re investing in it.

Senator Warren: So we need to do more to stop these criminal gangs and help the hardworking Americans who are losing their life savings to scams every day and I appreciate the work that you all do every day. Thank you. Thank you, Madam Speaker.
Source: Senator Elizabeth Warren