ICYMI: At Hearing, Warren Pushes For Increased Efforts to Shut Down Crypto Scams Hurting Seniors
“We need to do more to shut down these criminal gangs and help the hardworking Americans who are losing their life savings to the scams every day.”
Washington, D.C. – At a hearing of the Senate Committee on Banking, Housing, and Urban Affairs, Senator Elizabeth Warren (D-Mass.) highlighted the harms of romance and fake investment scams targeting older Americans in Massachusetts and across the country and called for increased efforts to shut down these crimes. A 2023 report from the FBI showed that Massachusetts residents lost over $85 million to romance and fake investment scams, which are some of the most serious financial crimes in the Commonwealth, both by victim count and loss amount.
Ms. Nofziger, Director Of Fraud Victim Support for the AARP Fraud Watch Network, underscored the damage these scams inflict on seniors, stating: “unfortunately, we have heard on the help line, people don’t realize it until every single penny is gone.” Ms. Nofziger also emphasized that it is difficult for lawmakers to claw back this money as it is typically sent overseas using crypto platforms.
“Just last week, the FTC said Sentinel data shows that from 2020 to 2023, scam losses involving crypto increased TENFOLD, to over $110 million nationwide. Consumers over 60 are three times more likely than other adults to lose money in crypto,” according to testimony by Sheryl Harris, Director of Consumer Affairs for Cuyahoga County, Ohio.
Senator Warren highlighted the formulaic scripts used by these scammers to goad vulnerable Americans into transferring funds to fake “investment” dashboards controlled by the scammers over weeks—and even months.
Senator Warren’s bipartisan Digital Asset Anti-Money Laundering Act would bring digital assets into greater compliance with anti-money laundering and anti-terrorism financing requirements and shut down crypto scammers.
Transcript: Protecting Americans’ Money: Combatting Scams and Frauds 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 spouse passed away a few years ago who’s 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 be able to interact with, 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 they have just made in this amazing investment. Now, our senior, very suspicious, not easily tricked, quite reasonable person, they don’t send a dime to the online acquaintance. In fact, to reassure our senior, the online acquaintance says, you know, you should set up your own trading account and load your money directly into it — I certainly wouldn’t want any access to that. And the online acquaintance says, all I’ll do is just give you some tips on good times to invest and the kind of investments you want to make. That seems so safe to someone.
So Ms. Nofziger, you lead the AARP’s victim support team. Does this story sound familiar to you?
Ms. Amy Nofziger, Director Of Fraud Victim Support, AARP Fraud Watch Network: Yes. We hear this every day. This sounds like a romance scam slash cryptocurrency scam.
Sen. Warren: This scam, I assume, starts small. Maybe the scammer starts out saying invest $100. So the senior sets up the account, deposits $100. And from what it looks like on the website, within a day, there is $200 in the account. Absolutely doubled their money in a day, so they load another $200 in, and then $400 and it just keeps growing. Now they’ve got $1000 in the account even though they only put $400 into it. Then they get the message from the online friend: this is the moment. This is the moment to go big. The investment is about to go through the roof. So our senior withdraws money from their retirement account, puts it in this great new investment, and over a few months time, our senior has now invested $300,000 on this website. And it shows them that the $300,000 has ballooned to $3 million. Of course, the senior doesn’t know it yet, but the dashboard is entirely fake. There is no $3 million and, of course, the $300,000 has completely disappeared.
So, Ms. Nofziger, when do the victims discover that they have been defrauded?
Ms. Nofziger: It depends. Sometimes they will try to withdraw that money and they will say, oh no, you have to pay another $5,000 penalty fee or taxes. So the victim thinks oh, well, it’s another $5,000. At this point, I already have $3 million, why not? So they will put that in. That is when doubt starts to seep in, but unfortunately, we have heard on the help line, people don’t realize it until every single penny is gone.
Sen. Warren: Right — and this is why I think it’s so important to underscore this. I am all for being able to get your money back in 48 hours, recognizing that’s better than no time at all, but we are talking about the money that has disappeared weeks earlier, sometimes maybe even months earlier. The story I have told is not just a hypothetical. This is based on countless true stories, including one specifically from a victim in Massachusetts. According to the FBI, Massachusetts residents lost $85 million to romance or fake investment scams last year alone. In the last four years, consumers around the globe are estimated to have lost $75 billion. So, Ms. Nofziger, once the crime has been reported, is law enforcement able to get the money back for victims?
Ms. Nofziger: We certainly encourage every victim to report to law enforcement, but law enforcement tells me it’s very difficult to claw that money back, because usually it’s sent on a digital currency platform and it is also sent overseas. And as you said, oftentimes, it is not reported in a timely manner, but we still always encourage to report.
Sen. Warren: So what more can the federal government do here?
Ms. Nofziger: Thank you. I think there is better coordination, better datasharing, and I think there is just maybe more resources and education that we need to put into law enforcement to understand how this money is being sent and to understand it, because this is such new technology. I mean, crypto is fairly new to a lot of people.
Sen. Warren: So let me just make sure I’m understanding your last point there — these happen using crypto, is thatright? And so are you suggesting that maybe better regulation here would be useful?
Ms. Nofziger: I'm not sure if I'm suggesting that but what I’m saying is I think there is just a lot of misunderstanding about what crypto is, where it’s going, and how it is being used. I certainly know that a lot of people who call our helpline don’t even know it, even though they are investing in it.
Sen. Warren: So we need to do more to shut down these criminal gangs and help the hardworking Americans who are losing their life savings to the scams every day and I appreciate the work that all of you are doing every day. Thank you. Thank you, Madam Chair.
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