Consumer Reports calls for stronger safeguards to protect defrauded consumers
YONKERS, NY — A new Consumer Reports investigation found that sophisticated wire transfer scams targeting bank customers are becoming more common and that victims are rarely reimbursed by banks for their losses. Consumer Reports launched a petition today calling on the Consumer Financial Protection Bureau under the incoming Trump Administration to investigate these scams and support reforms that would better protect consumers.
“Scammers are using high tech cyber tools and hacked personal data to exploit gaps in banks’ security protocols and stealing billions of dollars from unsuspecting consumers,” said Chuck Bell, advocacy program director at Consumer Reports. “Unfortunately, when scam victims report the fraud and try to get their money back, banks refuse to reimburse them most of the time. The CFPB should investigate these increasingly common scams and support new safeguards to protect consumers from losing their hard-earned savings to these costly cyber-crimes.”
CR’s investigation highlights how increasing numbers of consumers are conned into wiring thousands of dollars to crooks. In many cases, the cybercriminals are buying so-called “phishing-as-a-service” kits and subscriptions – a one-stop shop of tools, templates, and services made specifically for scammers so they can more quickly and easily lure bank customers and steal their money. The kits, available on the messaging app Telegram and on the Dark Web, can be purchased as a subscription for as little as $150 a month.
Phishing schemes, which typically involve criminals sending texts and emails pretending to be a bank or government agency, are proliferating. Since 2019, the number of phishing complaints to the FBI has more than doubled, to nearly 300,000 reports last year, according to the agency’s Internet Crime Report.
In 2023, three of the country’s largest banks—JP Morgan Chase, Wells Fargo, and Bank of America—reimbursed their customers for scams at relatively low rates: 2 percent, 4 percent, and 24 percent respectively. Banks are denying wire fraud scam claims by citing a provision of the Electronic Funds Transfer Act, which doesn’t require banks to reimburse customers who are tricked and end up authorizing money to be sent to scammers. The law requires banks to reimburse customers only in limited circumstances, such as when a cybercriminal gains unauthorized access to their accounts after finding or stealing someone’s phone.
CR’s petition calls on the CFPB to investigate wire-transfer scams and support a number of common-sense reforms, such as requiring banks to strengthen account authentication and security to prevent unauthorized account takeovers by scammers; more security verification for large and unusual wire transfers; and putting a temporary hold on the funds for one or two days to give customers and the bank time to identify fraud and reverse the wire transfer.
CR is also supporting the Protecting Consumers From Payment Scams Act in Congress, which would protect consumers from being held liable when they are defrauded into sending money to scammers. Instead, the bill requires banks to share the financial liability when customers are “induced” into sending money to criminals.
Contact: Michael McCauley, michael.mccauley@consumer.org