Washington: Artificial intelligence and deepfake technology are accelerating financial scams in the United States, lawmakers were told, as banks and credit unions warned that criminals are using increasingly sophisticated tools to impersonate victims, manipulate consumers, and steal billions of dollars.
During a hearing of the House Financial Services Subcommittee on Financial Institutions, lawmakers examined the growing threat of fraud and scams targeting American families, seniors, and small businesses.
Subcommittee Chairman Andy Barr said the scale of the problem has expanded rapidly as criminals adopt new technologies and operate through global networks.
“Fraud and scam losses are not abstract statistics,” Barr said. “They represent retirement savings, wiped out college funds, drained and small business savings accounts emptied overnight.”
Citing FBI data, Barr said Americans reported $16.6 billion in cybercrime losses in 2024, a 33 per cent increase over the previous year. Criminal groups are increasingly relying on artificial intelligence, voice cloning, spoofed caller IDs, and fake investment platforms to deceive victims.
He said banks and credit unions are often the “last lines of defense”, even though many scams originate outside the financial system and frequently outside US borders.
Ranking member Bill Foster said fraud and scam activity has continued to grow despite increased attention from regulators and law enforcement.
“Scams are moving online, and the perpetrators are becoming more sophisticated,” Foster said. Criminals are using artificial intelligence and deepfakes to falsify documents, impersonate consumers, and create false pretences to trick people into sending money, he added.
Witnesses told lawmakers that community banks and credit unions are confronting the problem directly while trying to protect customers and detect suspicious transactions.
Gaye Dempsey, chief executive of the Bank of Lincoln County in Tennessee, said smaller institutions are spending increasing resources on fraud prevention but cannot tackle the problem alone.
“Community banks like mine are on the front lines,” she said, describing cases involving check fraud, impersonation schemes and online romance scams.
Dempsey told lawmakers about an elderly customer who sold her house for $85,000 after being deceived by an online scammer. Bank staff tried to stop the transfer but could not ultimately prevent the withdrawal. “This was heartbreaking,” she said.
Patrick McDade, senior vice president for fraud and technology risk management at EverBank, said banks are investing billions of dollars and millions of hours to combat fraud each year.
However, he said banks cannot fight the problem alone because many scams begin on social media platforms, telecommunications networks or other digital channels outside the financial sector.
“The criminal is not deceiving the bank. They’re deceiving the customer,” McDade said, explaining that scammers often manipulate victims into authorising payments themselves.
Kate McKune, general counsel of Park Community Credit Union, said credit unions are also dealing with rising fraud threats while trying to balance customer demand for faster and more convenient financial services.
She said scams frequently begin on social media or through online advertising and may involve impersonation, investment fraud or cryptocurrency schemes.
“One of the biggest challenges in combating fraud is that it can come in so many different forms,” McKune said.
Several witnesses urged Congress to improve coordination across federal agencies and allow greater information sharing between financial institutions to detect fraud patterns earlier.
Joseph Schuster, a partner at Ballard Spahr, said fraud detection relies heavily on identifying patterns across institutions and systems.
“Fraud identification is inherently pattern recognition,” he said, adding that legal uncertainty often discourages institutions from sharing information that could expose criminal networks more quickly.
Witnesses also highlighted the need for stronger consumer education and a national strategy to address scams involving digital payments, cryptocurrencies and social media platforms.
(IANS)
