Americans Being Hit By ‘Tsunami of Fraud’: Former FBI Agent

In an era of digital convenience, America faces an unprecedented surge in fraud, with potential losses reaching a staggering $137 billion annually.

The Federal Trade Commission (FTC) reports that 2.6 million Americans fell victim to fraud in 2022, with losses soaring to $9 billion—a fivefold increase in just three years. However, these figures likely represent only the tip of the iceberg. The Justice Department estimates that a mere 15 percent of victims report their losses, suggesting the true scale of the problem could be far more severe.

Read more: Credit Card Scams and How to Avoid Them

Newsweek contacted the DOJ via online form on Sunday for further comment.

“Nobody is in charge of this problem,” said Kathy Stokes, the director of fraud prevention programs for the AARP, America’s biggest lobby group for seniors. She previously told Newsweek, “Other countries, like the UK, are light years ahead of the United States in understanding the scope of the problem and the need for a whole of society solution.”

The United States’ fragmented approach to combating fraud stands in stark contrast to more coordinated efforts abroad. In May, the British government unveiled a new anti-fraud strategy, declaring the scale of online scams a threat to national and economic security. Their plan involves a massive enforcement push, including 400 new investigators and leveraging the nation’s spy services to pursue fraudsters globally.

Domestically, the challenge of enforcement looms large. Scott Pirrello, a deputy district attorney for San Diego County, California, highlights a frustrating paradox: “For a federal agency to open an investigation, they are typically looking for million-dollar cases. We’re talking about devastating losses to our seniors in often the tens or hundreds of thousands of dollars, but still below that million-dollar threshold.”

This gap in prosecution leaves many victims without recourse, as local authorities lack the resources and jurisdiction to investigate transnational organized fraud effectively.

Read more: Guide to Cryptocurrency Scams: How to Avoid Them

The rise of cryptocurrency has added a new dimension to the fraud landscape. Investment-related schemes, particularly the “Pig Butchering” scam, have seen explosive growth. FTC figures show that losses from such scams increased by over 2,000 percent from 2019 to 2022, reaching $3.9 billion last year alone.

Erin West, a prosecutor from Santa Clara County, California, has pioneered an innovative approach to tackle crypto-based fraud. By tracing cryptocurrency transactions and collaborating with exchanges like Binance, her office has successfully returned over $2.6 million in scammed funds to victims.

However, as the U.S. banking system prepares to introduce instant online payment services, experts warn of potential new vulnerabilities. “The introduction of ubiquitous real-time payments is when people really begin to sit up and pay attention to fraud because it makes it easier and faster for them to lose money,” cautions Steve Frost, a former City of London fraud specialist.

“The question,” said Pirrello, “is are we as a people willing to give up some convenience in our financial decision making in order to secure our money?”

As fraud escalates, the banking industry is ramping up its defenses. At a Senate subcommittee hearing in May, industry leaders outlined their battle plan: significant investments in advanced anti-fraud technologies and a new American Bankers Association initiative for real-time inter-bank communication to quickly flag and halt suspicious activities.

Yet banks recognize they’re fighting an uphill battle alone. They’re calling for a unified national strategy, arguing that current federal efforts are disorganized and ineffective against the rising tide of scams.

Stepping into this breach is Brady Finta, a former FBI agent who’s launched the National Elder Fraud Coordination Center. This nonprofit aims to bridge the gap between law enforcement and corporate giants like Walmart, Amazon, and Google.

“There’s very, very smart people and there’s very powerful, wealthy companies that want this to stop,” Finta said. “So, we do have the ability, I think, to make a greater impact and to help out our brothers and sisters in law enforcement that are struggling with this tsunami of fraud.”