WASHINGTON – U.S. Senator Jerry Moran (R-Kan.) – Chairman of the Senate Consumer Protection, Product Safety, Insurance and Data Security Subcommittee – yesterday convened the subcommittee’s first hearing of the 115th Congress to examine the damage of scams on American consumers and the economy. The hearing also focused on state and federal law enforcement efforts to combat consumer scams, and the implementation of consumer outreach and education programs.

“With technology becoming more and more sophisticated, the complexity of scams has continued to progress,” said Sen. Moran. “From fake charity donation solicitation calls to ‘phishing’ email scams that lead to identity theft, a wide variety of scams that harm Americans continue to bypass consumer protection enforcement measures at the federal, state and local levels. Consumers need protection from those who seek to defraud them through scams, and today’s hearing helps us evaluate the best possible ways we can prevent American consumers from being scammed out of billions of dollars each year.”

Witnesses included Federal Trade Commission Acting Chairman Maureen K. Ohlhausen; Federal Trade Commission Commissioner Terrell McSweeny; Ohio Attorney General Mike DeWine; Abagnale & Associates Consultant Frank W. Abagnale, Jr.; and KWCH-12 Eyewitness News Reporter Mike Schwanke.

Sen. Moran invited KWCH’s Mike Schwanke to testify and share with the committee examples of the more common scams impacting Kansas consumers. Three examples mentioned: grandparent scams, when someone calls claiming that a consumer’s grandchild is in danger and needs immediate financial assistance; IRS scams, in which consumers receive a phone call from someone claiming to represent the IRS and threatening jail time for failure to pay taxes; and most recently, a scam taking advantage of those impacted by the state’s wildfires, in which Kansans received phone calls claiming that, if they paid an application fee, they would be issued a government grant to help them recover.

Highlights of Sen. Moran’s questions for the witnesses may be found below, along with a link to the video:

Sen. Moran (0:01): “Let me start with Chairwoman Ohlhausen. Is there a reliable financial macro cost to scams in the United States? … What does this cost the economy?”

Chairwoman Ohlhausen (0:18): “Based on the redress that the FTC has been able to get for consumers, even just last year, it costs billions and billions of dollars.”

Sen. Moran (1:23): “[Mr. Schwanke] you indicated something that was discouraging to me because one of the conversations we’ve had already just in this hearing is the value of information but you indicated that a particular instance, the victim had seen the similar identical fraud being talked about on your program but still felt necessary to respond to the cries of a grandchild. Do you have evidence that this consumer awareness actually makes a difference?”

Mr. Schwanke (2:03): “That’s one example. Oftentimes we do hear from victims who say, ‘I knew better,’ and when they see these stories of victims they sit back in their home and think, ‘how in the world could I ever fall for something like that?’ In that case, she saw our story and she explained it as ‘tunnel vision,’ and I think that’s what these scammers depend on… once she thought that her granddaughter was in trouble, she said, ‘it was almost like I had blinders on’… You’re not going to be thinking clearly when someone calls for a grandparent scam or someone calls claiming to be with the IRS saying that they’re going to haul you off to jail if you don’t pay your taxes. Once you hear that your mind shuts off oftentimes. That’s what we try to get across in our education.”

Sen. Moran (3:07): “General, you’ve been involved in public service announcements. Is there evidence that they’re useful, successful, and prevent additional fraud?”

Attorney General DeWine (3:14): “We do get calls, Mr. Chairman… sometimes I’ll actually see people who say, ‘I saw you on TV talking about the grandparent scam’ or ‘I saw you on TV talking about the IRS scam.’ So while we are successful in some prosecutions, the ones that are over the internet, the ones that are long distance, are very very difficult… frankly we think that our prime job in this case is to really warn people… The public sometimes thinks, ‘I wouldn’t do that,’ or they think, ‘these are people who aren’t very smart.’ And that’s not true. These are smart people.”

Sen. Moran (4:33): “Mr. Abagnale, the perpetrator of a fraud, what is it about them that allows them to be able to elicit that response from somebody who is apparently smart and has seen information about the potential scam and still falls for it? What’s the way to capture somebody?”

Mr. Abagnale (4:47): “First of all, thank God that the majority of Americans are honest. Because they’re honest, they don’t think in a deceptive way. So when the phone rings and the caller ID says it’s the Internal Revenue Service or United States government or their local police department, they believe that to be true. They’re not aware that caller ID is easily manipulated.”

Mr. Abagnale (7:47): “I always teach FBI agents to follow the money and have for four decades. So what we find is that most of these crimes that are committed by people living in Russia, India, China that are making these calls in their pajamas or on their laptop from their kitchen, are stealing money from the American consumer. It is leaving our economy. But it will come back. It always comes back because it will tend to boomerang and return to our country but in the form of drug trafficking, human trafficking, child pornography and much more hideous crimes. So it is very important that we try to prevent that money from getting in the wrong hands of people who are going to commit a lot worse crimes with that money.”  

Click here to watch Sen. Moran’s questions on YouTube.

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