Fraud Fighters Are Working to Keep Scam 'Epidemic' at Bay

In Santa Clara County, California, the district attorney’s office put together a high-tech task force to trace money stolen in scams involving bitcoin and other cybercurrencies. It turns out that currency can be tracked to an identifiable location and — more importantly — retrieved. By December, the task force had recovered $1 million.

“It was super successful and great timing, because we were able to get money back to victims right before Christmas,” says Erin West, prosecutor for the task force.

Federal fraud-fighting initiatives

The federal government has an important weapon against fraud that states lack: regulatory agencies that can establish nationwide rules for businesses — and enforce them. Here’s some of the activity taking place:

As usage of peer-to-peer (P2P) money-transfer apps such as Venmo, PayPal and Zelle rises, “scammers are increasingly targeting older Americans on P2P platforms,” said Sen. Bob Casey (D-Pa.), chairman of the Senate aging committee. The Consumer Financial Protection Bureau (CFPB) wants to force financial institutions to ensure consumers who are defrauded are repaid.

The Federal Communications Commission has proposed rules that instruct mobile wireless providers to apply caller ID authentication to text messaging. The rules require wireless providers to block suspicious numbers from sending texts.

In the investment area, a regulatory rule that took effect last year allows financial brokers who suspect that an older client is being manipulated by a scammer to pause the transaction so firms and state authorities can investigate potential wrongdoing. That temporary hold is important because “once the money has left the account, it’s very difficult to recover,” notes Gerri Walsh, senior vice president of investor education at FINRA, the organization that oversees U.S. broker-dealers and that implemented the changes.

Regulatory agencies also can get results through the courts. Nearly 40,000 victims of fraud who used MoneyGram have been granted more than $115 million in compensation — the full amount of money lost, the U.S. Postal Inspection Service announced in February. MoneyGram, a Dallas-based money-transfer company, paid the funds to settle a federal suit accusing it of, among other things, failing to protect consumers from fraud when crooks would request payment be sent via MoneyGram.

Technology innovations to combat fraud

Impressive new technology to fight fraud is emerging from private businesses.

Eric Adolphe, 56, a tech entrepreneur from San Antonio, turned anger over yet another bogus text message into an app called Gabriel that blocks suspected fraud calls and texts while alerting authorities.

The tech industry association called the FIDO Alliance is working toward replacing passwords — a key vulnerability — with more secure technologies, including biometrics. Executive Director Andrew Shikiar says this could be done for most online passwords within five years. Businesses such as BioCatch, a behavioral biometrics company, are going beyond facial recognition and fingerprints for new ways to secure identity, including age analysis that might provide special protection for older Americans. “Anyone over the age of 40 starts to slow down,” says Erin Englund, BioCatch’s threat analytics lead for North America. “The cadence of your tap and swipe patterns starts to change.” That insight can be important. If an applicant claims to be in their 60s or 70s, but BioCatch’s system identifies them as being decades younger, it could trigger a red flag to the credit card company.

Mastercard’s biometric program uses machine learning and artificial intelligence (AI) to help merchants decide if the person using the card is who they’re supposed to be. “We’re looking for anomalies,” says Chris Reid, executive vice president. “We convert that into a score and provide that to the retailer in milliseconds.”

Some retailers are developing their own safeguards against fraud. Walmart has developed technology that helped identify and freeze nearly $4 million in gift cards that its system had deduced were bought at the direction of scammers.

To guard against the surge in fake reviews common on many popular retail and review-aggregation websites, The Transparency Company has developed a sophisticated algorithm that examines reviews and determines with high accuracy which are fake. “One out of 10 doctors in private practice have fake reviews,” says founder Curtis Boyd. “We use AI to look at reviewer content and reviewer behavior to make very accurate predictions.”

Nomorobo is a phone-screening service that uses AI to weed out scam calls. Its developer, Telephone Science Corp., has a bank of 350,000 phone lines that use AI answer bots to analyze millions of calls, then works with law enforcement to help shut phone scammers down. “This is real people losing real money, and you need real technology to stop it,” says Aaron Foss, the company’s founder and CEO.

Stephen Voss

How AARP Is Helping You Detect and Prevent Fraud

By Kathy Stokes

​​AARP works every day to educate older Americans and their families about how to spot and avoid scams. But education is not enough. Fraud has reached epidemic proportions, and we must change how our country responds to it.​​

Fraud today is largely committed by sophisticated crime rings. Our law enforcement response must be as sophisticated as the criminals. AARP is sounding the alarm that it is time to mount a national effort to disrupt this multibillion-dollar industry.​

AARP will continue to advocate for laws that better protect consumers from fraud and provide restitution to victims. And we will continue to support older Americans with our AARP Fraud Watch Network.​

• Our website offers the latest on the fraud landscape, tip sheets on the most common frauds today, and a map where you can see what’s being reported in your area.
• AARP Fraud Watch Network Helpline: This line (877-908-3360) is free; trained fraud specialists provide support and guidance for victims and their families on what to do next and how to avoid scams.
• Victim support sessions: This online program (aarp.org/VictimSupport) provides a safe place for victims and their families to address the emotional impact of fraud.​ 
• The Perfect Scam: Our award-winning podcast explores real scams from the viewpoints of both victims and law ​enforcement.​
• Community ­education: We hold events across the country, in person and virtually, many led by our thousands of passionate fraud-fighter volunteers in the states.​
• Gift card payment campaign: “We aim to grow awareness that it is always a scam when someone asks you to purchase gift cards and share the numbers to pay for something.​

We ask that you join the fight by sharing what you learn about preventing fraud with loved ones and friends. Education alone will not solve this challenge. But spreading your knowledge is critical to help others avoid scams.​​

Kathy Stokes is AARP’s director of fraud prevention programs.