AI and deepfakes fueling surge in financial scams across the United States, lawmakers told

Washington — Artificial intelligence and deepfake technology are accelerating financial scams across the United States, lawmakers were told during a congressional hearing, as banks and credit unions warned that criminals are using increasingly advanced tools to impersonate victims and steal billions of dollars.

The issue was examined during a hearing of the House Financial Services Subcommittee on Financial Institutions, where lawmakers and industry leaders discussed the growing scale of fraud targeting American families, seniors and small businesses.

Subcommittee Chairman Andy Barr said the financial and emotional toll of scams is rising as criminal networks adopt sophisticated technologies and operate across international borders.

“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, representing a 33 percent increase compared with the previous year. He said criminal groups are increasingly using artificial intelligence, voice cloning technology, spoofed caller IDs and fake investment platforms to deceive victims.

Barr added that banks and credit unions often serve as the final barrier against fraud even though many scams originate outside the financial system and frequently outside the United States.

Ranking member Bill Foster said fraud schemes continue to evolve despite increased regulatory scrutiny and law enforcement attention.

“Scams are moving online, and the perpetrators are becoming more sophisticated,” Foster said, noting that criminals are using artificial intelligence and deepfakes to falsify documents, impersonate consumers and create convincing false identities to persuade victims to send money.

Witnesses told lawmakers that community banks and credit unions are increasingly investing time and resources in fraud prevention but face significant challenges detecting scams that originate through digital platforms.

Gaye Dempsey, chief executive of the Bank of Lincoln County in Tennessee, said smaller financial institutions are on the front lines of protecting customers from fraud.

“Community banks like mine are on the front lines,” she said, describing cases involving check fraud, impersonation schemes and online romance scams.

Dempsey recounted the case of an elderly customer who sold her home for $85,000 after being manipulated by an online scammer. Bank employees attempted to stop the transfer but were ultimately unable to prevent the withdrawal.

“This was heartbreaking,” she said.

Patrick McDade, senior vice president for fraud and technology risk management at EverBank, said financial institutions are spending billions of dollars and dedicating millions of staff hours annually to combat fraud.

However, he noted that banks cannot tackle the problem alone because many scams originate on social media platforms, telecommunications networks and other digital services outside the financial sector.

“The criminal is not deceiving the bank. They’re deceiving the customer,” McDade said, explaining that victims are often manipulated into authorizing the payments themselves.

Kate McKune, general counsel at Park Community Credit Union, said credit unions face similar challenges as they work to balance fraud prevention with customer demand for faster and more convenient digital services.

She said many scams begin on social media platforms or through online advertisements and often involve impersonation schemes, fraudulent investments or cryptocurrency-related fraud.

“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 among federal agencies and allow greater information sharing between financial institutions to help detect fraud patterns earlier.

Joseph Schuster, a partner at Ballard Spahr, said identifying scams often depends on recognizing patterns across multiple institutions and systems.

“Fraud identification is inherently pattern recognition,” he said, adding that legal uncertainty sometimes discourages institutions from sharing information that could help expose criminal networks more quickly.

Witnesses also emphasized the need for stronger consumer education and a coordinated national strategy to address scams linked to digital payments, cryptocurrency and social media platforms. (Source: IANS)