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ABA: The American Bankers Association
Testimony

Testimony of Paul Benda before the United States Senate Committee on Banking, Housing, and Urban Affairs

  • Published February 1, 2024

Examining Scams and Fraud in the Banking System and Their Impact on Consumers

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Chairman Brown, Ranking Member Scott, and members of the commitee, thank you for the opportunity to testify today for a hearing “Examining Scams and Fraud in the Banking System and Their Impact on Consumers.” My name is Paul Benda, and I serve as Executive Vice President, Risk, Fraud and Cybersecurity for the American Bankers Association (ABA). The American Bankers Association is the voice of the nation’s $23.4 trillion banking industry, which is composed of small, regional, and large banks that together employ approximately 2.1 million people, safeguard $18.6 trillion in deposits, and extend $12.3 trillion in loans. Our members know that fraud takes a financial and emotional toll on their customers and banks of all sizes are making extraordinary efforts to protect and safeguard customer accounts as fraud has become more sophisticated.

Introduction

From using breakthrough technologies such as generative artificial intelligence (AI) to old fashioned the of checks out of mailboxes, criminals are relentlessly pursuing new ways to scam consumers and small businesses and steal money from their bank accounts. Banks have a long history of improving and innovatng to protect their customers—from the adoption of chip-enabled credit cards to multi-factor authentication to protect user accounts to the use of advanced AI tools to warn customers about potentially fraudulent transactions—banks have been on the front lines of innovation and deploying advanced capabilities to protect their customers. Unfortunately, however, the fight against these criminals is one that banks cannot win on their own.

A recent example of widespread fraud efforts occurred when criminals took advantage of the economic devastation of Covid-19 and the unprecedented government response to support small businesses and out-of-work Americans. By the government’s own estimate over $300B was lost, fueling the growth of more organized and sophisticated networks of financial criminals who continue to look for new ways to keep the illicit funds flowing. The criminals are now using the tools and networks they built during the pandemic, along with secure messaging technology, to share tactics, techniques and procedures to expand their reach, finding new people to cash stolen checks and provide “mule” bank accounts to receive and move the funds. They are also becoming more sophisticated, using new advanced deepfake technologies to change their voice and appearance in real-tme video calls to execute romance and impersonaton scams. A significant porton of the $300B that was stolen during the pandemic has been reinvested by these criminals to create a highly advanced and sophisticated adversary who is a far departure from the basic phishing scams of yesteryear. 

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