$150 Billion and Counting: The urgent battle against scams

Welcome to this week's episode of What's At Stake. We're your hosts, Bryan DeAngelis, partner and head of the Washington Office here at Penta. And I'm Stephanie Walstrom, managing director at Penta. We're talking today about a growing threat that affects millions of Americans every year, scams and fraud from fake calls and text messages to elaborate online schemes.

Criminals are finding new ways to exploit technology and target consumers. The cost of this problem is more than 150 billion annually for Americans according to the FTC, but the scope we've learned goes far beyond individual losses. It's now a national security and economic issue that undermines a lot of public trust and fuels global criminal networks help address this crisis.

The Aspen Institute's. Financial security program launched [00:01:00] the national task force on fraud and scam prevention last year. The task force brings together leaders from government, law enforcement, private industry, and civil society to strengthen coordination against fraud and scams. Just recently it released United We Stand a national strategy to prevent scams. A comprehensive report developed with input from more than 300 experts across 80 organizations that outlines a coordinated national framework to stop scams before they happen.

Joining me to discuss that work are Kate Griffin and Erin Borg, leaders on the task force and co-authors of the United We Stand report.

Kate's director of the Inclusive Financial System Initiative. At Aspen's financial security program where she focuses on building systems that can deliver financial security for everyone. Erin serves as associate director of the same program, [00:02:00] working to break down barriers to financial inclusion and bring public, private, and nonprofit leaders together to tackle these challenges together.

They've helped guide this national conversation about how the US can move from raising awareness about scams to preventing them at scale. Kate and Aaron, welcome to What's At Stake. Thanks for having us. We're happy to be here. We're excited to get into it. That was probably the longest intro I've ever done, but it's, an important topic and a lot of work's been done, so I feel like it's, it's very justified. But Kate, let's start at the beginning. I want to get into what led you and Aspen to launch the task force back in 2024, and what kind of motivated you to to do that and get into this? Yeah, I think you started at the exact right point, Bryan, which is the sheer amount of money that households are losing.

You talked about $150 billion annually to make that [00:03:00] kind of feel more real for people. That's $400 million a day. Uh, we think that one in five Americans have been affected. So roughly the population of a small town every day. Is losing money to a scam and that has real consequences for people's pocketbooks.

Everything from losing the money that you might need for groceries next week to losing your retirement a life savings is happening to people. And when we realized that at the Aspen Institute Financial Security Program where our focus is to, um, solve for the most critical household financial challenges facing Americans today.

We decided to peel back the onion, if you will, a little bit and understand the problem, and we quickly realized that. This is not an issue that only financial services companies were seeing. But in fact, scams really are, uh, leapfrogging different parts of our society. So it might [00:04:00] start on a social media site or, uh.

A fake advertisement that you see, or the texts that you receive. Um, and the criminals doing this are, are exploiting the fact that all of these different sectors, technology, telecommunications, financial services, are not well connected to one another in, in, in this country. Um, and are able to really get to consumers because of that.

And so the, the gap that we, we wanted to fill was, was there wasn't a space yet today in America where all of those sectors were having a one conversation about how to fight this. There were things happening within sector, um, and 2 0 1 when we talked with them, uh, early on about how to solve this problem.

It was, I just need to sit at a table with the people outside of my sector to understand how they're seeing this problem and how we can solve it together. And then coupled that with engagements with law enforcement. With consumer advocates and victim serving organizations, [00:05:00] um, uh, and with the regulatory agencies.

Um, and so they all came together this 80 plus institutional institution task force to, to address that problem. Yeah, can you talk about that last part a bit? 'cause obviously a ton of work's been done in this space and there's a lot of great advocates trying to get at the root of this problem, if you will.

But to your point, this was really the first time everybody got in a room. So how did you find those folks bring that 80 together? What was that interest and demand like? Yeah. You know, it was interesting because. I think that for so many people, this issue of scams is really kind of surfacing quite a bit right now.

It's everyone's hearing about it from their customers saying this is a problem. And I think for many, um, for many companies, they're also seeing it as an both a reputational and a trust [00:06:00] issue. If my consumers can no longer trust that they can interact safely, uh, on my platform or with my account, what does that mean for my long-term business model?

And so that's, that's one I think motivating factor. And two because, you know. The American public is becoming kind of more aware of these scams and, and, and asking for solutions. I think there is some public pressure, um, on trying to find a solution to this that also motivated people. Um, and we didn't have a lot of trouble recruiting institutions to be a part of the task force.

In fact, uh, we had overwhelming demand from folks that, that really wanted to be a part of a solutions oriented conversation. This can feel like such an overwhelming problem to solve. So I'd like to get into some of the Strat, uh, the strategy recommendations, uh, a little bit. So you released this national strategy on how to prevent scams, the culmination of all this work of the task force.

Maybe starting with Aaron can you summarize for our listeners what were the main recommendations in that strategy? [00:07:00] Yeah. So as, as you heard Kate say, I mean really tackling this problem involves. A huge ecosystem of players who all have very different business practices, regulatory environments and constraints and opportunities to play a role in scam prevention.

So that's really where we started from. The premise was what is a, from. Framework for scam prevention that is really cross-sector look like. All the way from strengthening our defenses to detecting when scams are happening well before a scammer ever. Entices a victim to part with their money. So starting from developing that sort of framework that we got lots and lots of input from.

We developed this whole of government whole of society strategy recommendations, but, and it has, I don't know, probably over a hundred unique individual recommendations by [00:08:00] sector for specific government agencies. Um. Really at a high level, what we're talking about and what we're calling both public and private sector leaders to do as a, as a first step is to declare fraud and scam prevention as a national priority, both within government and.

C-suite leaders across the largest and, and smallest companies that are headquartered in the US to really declare this a national priority and start coordinating efforts both within companies, within sector and across. So if you take nothing else from the report, that's a concrete first step is to talk about this as a national priority and start to deploy resources against it.

You touched a little bit on like the role of government and government collaborating with law enforcement and, and with the private sector. You know, we're, we're already seeing some of that coordination take shape. Uh, I know just last week the Justice Department launched, [00:09:00] uh, a new strike force on cryptocurrency scams, and they worked across the FBI secret surface.

Treasury State Department and, and others. Can you speak a little bit more to kind of your take on, on that task force and then in, in general, is that the, is that kind of exactly the type of response that you're hoping to see more of? Yeah, we would love to see more and more of that. We've been really encouraged by not just the announcement of the strike force, but also the ways in which we are seeing federal agencies want to expand their collaboration and engagement with private sector.

I think that's going to be a huge part of. This work on the strike force going forward is how do we leverage the deep insights and actionable information that only private sector companies have to be able to take down some of these scam po scam compounds to be able to go after some of these transnational criminal organizations in [00:10:00] a way that they have not been resourced or prioritized or elevated as.

A really huge issue. So we've been really encouraged to see not just action from the federal government, but what reactions from private sector, how excited they are to be able to plug into this effort and to be able to help both public and private sector collaborate more effectively to get upstream on tackling this as an issue.

So one thing I think is so interesting, and you touched on that a little bit in your answer, talking about like the transnational criminal organizations. You know, I, you guys really tried to frame this as a national security issue and not only a personal finance issue or a, or consumer protection concern.

So, I mean, Kate, I'd love you to speak a little bit about why did you feel like it was important to frame it that way? Because of where the money goes and what it's being used for. Uh, it's, I think, really important for people to [00:11:00] understand. I think we have an an age old idea of a scam being maybe some guy in a basement.

Some poor grandma. Uh, and in fact, uh, it is sophisticated networks of criminals largely operating overseas. And the people that they're spamming are young and old, urban and rural, rich and poor. There's not a clear demographic difference in terms of, of who is affected. The money is flowing to transnational organized criminal enterprises who are using that money to fuel other illicit crimes.

We think it rivals the drug trade in size. We have evidence that it's flowing to Mexican drug cartels, Russian, Russian State, advent adversaries, the North Korean Missile Program, um, and to actors that are tied to the Chinese Communist Party. We know that those are all threat actors affecting the national security of the United States.

And so to tie this consumer harm to [00:12:00] this broader set of actions is critically important to how we mount a response to this, right? Taking it out of solely a consumer protection issue. And it is one as well. There are consumer protection issues that are at stake are really important. And it helps actually unlock a set of government actions that are needed in this response.

You mentioned the Strikeforce and. That kind of response that's really unlocking coordination not just in terms of a set of law enforcement actions, but then at the same time, treasury state department and commerce sanctions against known actors participating in these crime rings.

Those are powerful, powerful things to be done. Um, and it's those kinds of responses that we need and then only get unlocked by talking about this and naming it as a national security issue. It's a, it's a great point, and we've talked about this a lot, but you, even if you flip that around to the victim side, you said it a minute ago, there.

There is no defined set of [00:13:00] victims. It's, it's all Americans. It doesn't know borders, it doesn't care about industries. Um, I almost fell for scam right in the middle of working on this with you all. Where it got to like the last phone call and the alarm bells went off in my head. But, you know, that was cross industry.

That was text message like it's. And we need to think of it that way of anything else that affected or harmed that many Americans that broadly would naturally be a national security issue that we'd mobilize around. Yeah. You know, Bryan, it's interesting that you, you bring this up because one of the issues we talked a lot about in the task force too is when this happens to you, people naturally feel some sense of shame.

Right or even blame that they should have known better or should have done something differently. I think it's the other issue or the other important element about talking about this as a national security issue as a set of [00:14:00] sophisticated criminal actors actually helps to start to take away some of that shame or blame people might feel because how could you not potentially fall for this against such a sophisticated set of criminals and don't we need better defense mechanisms as a country?

Um, and, and not just make it the consumer's job to to protect themselves. Absolutely. I was just gonna, I mean, you used the word sophisticated criminals. The, the techniques are more sophisticated too. The very elaborate deep fakes and, and things, you know, just the, even just the way scams look, um, can be harder and harder to spot.

Yeah. This is not unlike other. Types of crime. My sort of walking around metaphor in this space is as a consumer, if you're traveling in a new city, there are some reasonable steps. You could take to try to minimize the chance that you might be pickpocketed, for example, not having your phone out carrying lots of cash, but if you're a tourist in a new city, there's not a reasonable [00:15:00] expectation if you walk into a gift shop to understand or know that it's part of a money laundering.

Front. And I think that's really the level of sophistication that we are seeing. There's really strong evidence coming out of law enforcement, our federal government, and what private sector companies are seeing and being able to connect those dots. And so we come from a position that yes, there's really important consumer awareness and education and.

Americans should be seeing so many fewer attempts and interactions with these types of criminals in the first place. Yeah, it's a, it's a great point. And Erin, I'd love for you to dig in there a little more. We talked a few times about the whole of ecosystem approach and we covered the enforcement side of it, but you just mentioned something there a second ago that brings in the prevention side of it.

So what, what's coming out of this. Task force that gets us, you know, more on [00:16:00] the education side and ahead of some of these scams. Yeah, I think that's really part of the framing of this full of ecosystem approach, where if you are sitting from within your company or within law enforcement, within a local police department, you can only see what's in your line of sight.

So let's say you're a telecoms company, you have great information about. Phone numbers, but there's no way for you to connect that to the multi-sector, multi-platform efforts that these criminals are using. And so you can really only see the one 40th of an elephant from where you sit. And it's really only by combining that.

Intelligence and information with other sectors that you can start to put all of these pieces together. And so I think that's been really encouraging in this process is just how much buy-in for that cross [00:17:00] sector work and that cross sector information sharing and trends, and what are we seeing, how are tactics evolving that if you sit within your own lane, you just really don't have a line of sight into what's happening, and it's only by.

Combining all of these pieces of disparate information, can we start to see these patterns and take down these larger players who are acting across five different social media platforms across different retailers? And that's really only possible when you can see the whole picture.

Kate I think many of our listeners will be curious to know what this is gonna mean for them as, as ordinary consumers, you know, if the recommendations in your strategy take hold. What do you think or, or hope are some of the tangible changes people could expect to see or feel in their everyday lives?

And most importantly, am I personally gonna stop getting spam texts with big job offers? Stephanie, I certainly don't want you to take any of those [00:18:00] jobs. It's been a delight to work with you and the team at Penta on this project. Um, please don't respond to those texts in particular. I've down on that.

Yeah. Uh, I'll, I'll say this in terms of of course the goal, I think when we set out as like a key principle for this task force was to focus on prevention. One of the elements of that is to say, how do you actually drive down the number of attacks, right? How do we actually have fewer of those texts fewer emails, fewer potential fake ads, fewer phone calls, all of those things.

We'd like to see that a reduction in, in sort of, of what you might call it, the attack. I think the other thing that we're also seeing play out in real time is for each of those companies to get better at the kind of messaging that makes consumers more alert, Hey, we think that this might be a potential scam.

Proceed with caution, right? When the company doesn't have enough information yet to take it down, [00:19:00] but has reasonable suspicion, what's the warning that you get? That's another kind of area where consumers might start to see more of those, of those kinds of warnings. Similarly, in the financial services space, what's the ability for, um, a financial services company, a a, a bank or a FinTech to put some speed bumps in place?

I don't mean going back to the days of checks that take four days to process because you're, you know, waiting for things to clear. But is there a reasonable amount of time where, uh, a transaction might be held? For example for. 10 minutes for them to go through all of the checks that they need to do.

Right. What are some of the reasonable kind of, of, um, stops that we can put in place to sort of slow some things down a little bit and make sure that um, transactions are legitimate? All of this, I think is, is sort of the future where we'll need to be going. Um, that helps I think to ultimately get at under an undermining of the scams business model.

Right [00:20:00] now it is a sort of, um, high reward, low risk business for criminals to be in. Um, and the more that we can have these deterrents and these speed bumps and et cetera, the more costly it is and the less effective it is as a crime. And that will help.

Aaron, maybe one final question before we wrap up. I always like to end the show looking forward, thinking about the future. You all have done a tremendous amount of work bringing all these different sectors together, but as, as you think about the next few years what does progress look like to you?

Yeah, I think, I mean, to echo what Kate was just saying about disrupting the business model of scammers, I think long term, that's really what we are hoping to see, and we think sort of what we've set out in our recommendations, but also just what leaders are doing and taking action on their own are all taking steps toward making.[00:21:00]

This as a crime. More risky, less lucrative, and just less appealing. And so I think in the near term there are, you know, there's a laundry list of things that everyone within sector and within government can do, and we've tried to give some practical ideas of things you could do tomorrow alongside some aspirational recommendations that we'll take.

Coordination of public and private sector and might take new laws in Congress to provide safe harbor so we can do, and so, private sector actors can do the sorts of flagging and taking of down of. Accounts and potential bad actors that Kate was just talking about. And I think in, in the near term, I'm hoping that we can continue to see momentum in this sort of building our whole of system collective, not just defense, but offense in starting to prevent [00:22:00] more scams from reaching Americans and that will be in big and small ways and investments in scam.

Prevention from private sector leaders, which we're already seeing quite a lot of, but also in, in small ways and thinking about answering some key questions that have allowed some of these type of activities to take place online. Being able to have more confidence that someone is. Who they say they are online.

And what does that mean across different realms in the internet where we're not suggesting everyone upload their driver's license to a dating app, but what are the advances in being able to remove some bad actors and, and give consumers more trust that they are in fact interacting with real people, whether they're buying something from.

An ad on social media or starting a relationship. So we think there's a lot of near term opportunities and we've been really encouraged by the momentum we've seen [00:23:00] across the whole ecosystem of, of sectors that scammers are targeting. I really like that framing you had there in the middle of the best defense is a good offense.

So kind of shifting momentum that way to protect Americans. Makes a lot of sense. But Caden, Aaron, this is critically important work that you're leading to protect Americans from scams and fraud and, and rebuild trust. So we're gonna let you get back. To doing that, that awesome work. But really appreciate you joining us today, sharing a little bit about the paper.

And for all of our listeners, you can download the full report. United. We stand a national strategy to prevent scams on the Aspen Institute Financial Security programs website. We'll post it in the show notes as well and make sure you can all access it there. But, uh, appreciate you all joining us today.

Thank you Kate and Erin. We appreciate the work that [00:24:00] we've all done together with, with you and the team at Penta. Thank you. Thanks so much. Thank you. As always, to our listeners, remember to like and subscribe wherever you listen to your podcasts. You can follow us on X at Penta grp and on LinkedIn at Penta Group.

We're your hosts, Bryan and Stephanie. Thanks for tuning in to What's at Stake.