Senator Reverend Warnock Chairs First Senate Banking Subcommittee Hearing, Underscores Prevalence of Consumer Scams in the Pandemic Recovery Economy

Senator Warnock holds first hearing as chair of U.S. Senate Banking Subcommittee on Financial Institutions and Consumer Protection
The hearing, titled “Protecting Consumers from Financial Fraud and Scams in the Pandemic Recovery Economy” explored the rise in consumer scams during pandemic, role of Congress to protect against fraud
Georgia Watch Executive Director Liz Coyle testified
Senator Reverend Warnock: “Today’s hearing on frauds and scams is an important step towards protecting consumers during the pandemic recovery economy, and I look forward to working with my colleagues on both sides of the aisle on this issue”
Senator Reverend Warnock: “As Georgians work to move beyond the economic turmoil of this once-in-a-century pandemic, I look forward to leading the subcommittee’s efforts to help ensure stability in the community banks, credit unions, and other financial institutions that families and communities in Georgia rely on, and that we’re protecting hardworking Georgia consumers from scam, abuse, and fraud.” – ICYMI on the AJC
In June, Senator Warnock introduced new, bipartisan legislation to protect Georgia consumers, end misleading subscription practices nationwide

Senator Warnock Chairs First Banking Subcommittee hearing

Washington, D.C. – Today, U.S. Senator Reverend Raphael Warnock (D-GA), chair of the U.S. Senate Banking Subcommittee on Financial Institutions and Consumer Protection, held a hearing to address the rising threat of financial fraud and scams during the pandemic and the economic threat these practices pose to a full recovery. The Senate Banking Subcommittee hearing, entitled “Protecting Consumers from Financial Fraud and Scams in the Pandemic Recovery Economy”, is the first hearing that Senator Warnock has chaired since assuming office. Senator Warnock questioned the hearing witnesses about the effects of financial fraud that plagues families and consumers in the recovery economy.

“This hearing is about helping people,” said Senator Warnock in his opening remarks. “Hardworking American families have already suffered enough from the pandemic, and as their economic situation recovers, we cannot allow their hard-earned dollars to be siphoned off by scams and cons.”

Senator Warnock went on to question a Georgia witness and Executive Director of Georgia Watch, Ms. Liz Coyle, on what can be done to ensure Georgia’s veterans and veterans all across our country, servicemembers, and military families are protected from fraudsters.  

During questioning, Senator Warnock continued: “I’m proud to say that Georgia has long been a national leader in the fight against predatory lending, Georgia imposed a strict ten-percent usury limit on small dollar loans. Almost one in ten Georgians is a veteran. Every one of them deserves protection against predatory mortgage lending markets. Last year, the Consumer Financial Protection Bureau issued a civil penalty against a company that was found to have consumers’ mailers for mortgage loans guaranteed by the Department of Veterans Affairs that contained false, misleading, and inaccurate statements.”

“This is not the first company doing things like this. And sadly it probably won’t be the last. Ms. Coyle, what can be done to ensure Georgia’s veterans and that veterans all across our country, servicemembers, and military families do not fall victim to scams like this who prey on those in uniform?”

See full video of Senator Warnock’s questioning HERE.

Read full transcript of Senator Warnock’s opening remarks below:

I’m deeply honored to chair this subcommittee and work with Ranking Member Tillis to ensure stability in our banks, credit unions, and other financial institutions that serve families and communities in Georgia and all across our country, and to ensure that consumers are protected from unfair, abusive, and deceptive acts and practices in our financial system, including financial scams and fraud.

Which brings me to the topic of our first hearing today, which will examine financial scams following the COVID-19 pandemic and their impact on families and consumers in the recovery economy.

Needless to say that the economic turbulence of the last year has pushed working families to the brink, forcing them to choose sometimes between their health and their livelihoods. According to the Federal Reserve, one in four Americans reported at the end of last year that they were financially worse off than they were the prior year—this is highest level since 2014. 

Compounding these economic setbacks has been the rise of scammers shamelessly seeking to take advantage of working families trying to navigate the pandemic, including already vulnerable populations like senior citizens, communities of color, our servicemembers, and veterans. For instance, when I held a tele-townhall a few weeks ago with AARP last month, one woman in Georgia told me that she was receiving 3 to 5 scam callers per day.

Scammers target these populations because they know that families are desperate, clawing their way back from a pandemic. Despite the help provided by the American Rescue Plan Act, many families still face limited economic opportunities during this recovery as they watch their debt pile up. Naturally they are looking for help. And here are just a couple of examples of how scammers are stepping in to take advantage of these vulnerable moments of economic uncertainty:

Just a month ago, the CFPB and the Georgia Attorney General’s office took action against the Burlington Financial Group, a company that falsely promised its services would eliminate credit-card debt and improve credit scores. The company charged monthly fees that amounted to as much as 40% of the debt owed, collecting thousands in fees from desperate Georgians trying to grapple with mounting credit card debt.

And what did consumers get in return for all those fees? They only got generic form letters to send to their creditors—thousands of dollars in fees for a useless piece of paper. Many customers never got a dollar of their debt reduced, and in some cases, they ended up in a worse financial position than before.

In another case from just two weeks ago, the CFPB took on a Georgia-based corporation, GreenSky, that took advantage of families trying to make necessary repairs to their homes. This phone app was supposed to help families access loans for home repair services.

Instead, it allowed businesses to take out loans on behalf of customers without their permission or knowledge. GreenSky was operating before the pandemic took place, but the group of consumers that they exploited—who lacked access to traditional credit markets and relied on digital tools to conduct financial transactions—was a population that grew dramatically during the pandemic.

Additionally, we know federal benefits are often prime targets for crooks. And scammers have set their sights on struggling families receiving federal help from the American Rescue Plan.

One scam we’ve seen frequently in the last year occurs when scammers impersonate government officials and claim that consumers need to hand over personal information to access federal support like their COVID-19 relief check or child tax credit. These scammers sometimes falsely claim that consumers need to “refund” the government for their benefits.

And, coupled with these increased opportunities for scamming are new tools and financial platforms that enable these scams. Due to the pandemic, more and more Americans are engaging in financial transactions on new, peer-to-peer online payment platforms like CashApp or Venmo, whose terms are often unclear and lack critical protections for consumers.

Unlike traditional debit or credit cards, many of these platforms offer only limited protections against scams, leaving many users caught unaware that they’re defrauded. These platforms make it easier for scammers to swindle consumers out of thousands of dollars with little to no mechanism to hold their scammers accountable. In some cases, a consumer puts in one wrong number or hits one wrong button and their money is gone forever. 

Collectively, these frauds swindle countless dollars from the most vulnerable members of our society, seniors, marginalized communities, our veterans, members of the military. And most heartbreaking of all, many individuals who fall prey to these sophisticated criminals face barriers in reporting these crimes and holding the perpetrators accountable.

Not only are consumers often embarrassed to admit that they have been victimized, but they may also not know what resources are available to remedy their losses. And even then, investigations can take years to deliver justice.

Here is what I believe. I believe Congress, and this subcommittee in particular, has a role to play in protecting these consumers and preventing scammers from taking advantage of more Americans. And so I’m looking forward to hearing from our witnesses today to learn more about today’s financial fraud and scams and how financial institutions, Congress, and federal regulators, including the Consumer Financial Protection Bureau, can take action to curb financial fraud and scams, particularly those involving companies, payment platforms, and other financial institutions under this subcommittee’s jurisdiction.

That what this hearing is about. This hearing is about helping people. Hardworking American families have already suffered enough from the pandemic, and as their economic situation recovers, we cannot allow their hard-earned dollars to be siphoned off by scams and cons.