America Can Fix Its Scam Problem. But We Keep Gifting Billions to Transnational Criminals Because It Feels Too Hard.

Nick Bourke is a senior policy advisor at the Aspen Institute and an independent consultant. He helps mission-driven and commercial clients use research to drive policy and business innovation. With over 20 years of experience in law, policy, and program management across banking, housing, and tech, he previously led consumer finance and housing programs at The Pew Charitable Trusts, contributing to major reforms like payday loan legislation. Earlier in his career, he worked as a product manager and consultant for firms including Visa, supporting global regulatory strategy. He has served on advisory panels, earned an ABA Consumer Protection Fellowship, and currently focuses on housing, fraud prevention, privacy, and AI policy. Bourke holds a BA from Stanford and a JD from UC Davis.

One of the great insights of behavioral economics is that multitasking makes us functionally stupid. Or as Richard Thaler said, more optimistically: “People aren’t dumb. The world is hard.” I reflected on this recently when I nearly got scammed. 

A text message warned that my delivery would be canceled unless I gave more information. I needed that package, dammit! And I had so many other things going on (a family member in the hospital, work deadlines, choosing the concerts I’d see at the upcoming music festival). Also, I was hungry. This parcel problem needed to disappear pronto. 

And so, I clicked. Or nearly: I pressed the link on my phone and froze, suddenly aware that it was a scam. I was expecting a delivery that day, but not from those fraudsters! As I slid my finger off the link, I congratulated myself for being savvy (this time at least).

Trust No One

Considering the dire news about the large number of Americans affected by scams and the threat scams pose to national security, it’s perhaps reassuring to know that people have raised their defenses. Nearly 9 in 10 U.S. adults reported taking measures to protect themselves from scams in the past year. More than 80 private- and public-sector organizations recently joined – and devoted serious staff time to – a national task force on fraud and scam prevention hosted by The Aspen Institute (Disclosure: I am a lead consultant on that project). A lot of people are acknowledging the need to get better at combating scams against consumers and businesses.

But knowing, as they say, is only half the battle. Americans continue to lose billions of dollars to scammers every month – not to mention facing unfathomable frustration and pain. Corporate America spends many billions of dollars employing thousands of antifraud professionals, but they continue to lose ground. 

The reason why is obvious. Transnational criminal organizations (TCOs) figured out that the scams business model is very good for them. It offers low overhead (many staff are slave laborers operating from overseas call centers), low risk (the threat of harm or criminal penalties is light compared to violent crime and drug smuggling), and huge ROI (typical victims lose a few thousand dollars but many victims lose hundreds of thousands of dollars – every day). The Economist found that the scams industry now rivals the size of the illicit drug trade and is growing fast.

The United States economy is… dare I say, a sitting duck? Scammers operate easily across industrial and international boundaries, and they innovate quickly. They can move money overseas almost instantly. They can hide with ease. Meanwhile, American defenses are siloed, starved of information, and technologically inadequate. 

Thus we – the individuals whom scammers target – suffer the corruption of the systems of commerce and communication that we rely on. We build little defenses, like having better passwords and distrusting unknown links or numbers. We’re learning to trust no one. But how long will this go on before it becomes standard practice to distrust our banks, phone companies, social media platforms (or anything online), and even government agencies…? And what is the cost of that loss of trust?

Build It Better

Obviously, trusting no one is not an option. What’s more, per behavioral economics, even the most careful among us will inevitably make mistakes. The actual – and only – solution is to strengthen the system against scam communications and to reduce the harm scammers can cause if they break through. 

After helping groups like the Consumer Bankers Association and The Aspen Institute’s fraud and scams task force make progress on this issue, I can report that the solution is conceptually straightforward. But it will require a response from the highest levels of government and corporate America that is as clear-eyed and serious as the scammers are.

A top priority is to prevent deceptive communications and slow victims’ responses to scammers’ stimuli. Today, there are many ways that malicious actors can pretend to be people and businesses they are not, but there are practical ways to address that. Through rules or technology, for example, we can block more spoofed texts and stop fake advertisements. The better we get at disrupting scam communications, the more we starve scammers of profit and motivation. 

Information sharing is also critical to preventing, detecting, and disrupting scams. Companies need to collaborate more to share information that improves their anti-scam capabilities. It is not easy to send signals and data across industry lines, but experimentation with standards and governance is underway at several information exchanges, and some stakeholders are evaluating how to make sector-specific databases more accessible in the fight against scams.

It is also important to improve how victims and companies exchange information about scams with law enforcement agencies. Federal agencies have powerful tools for combating scams, including the capacity to prosecute criminal networks, disrupt or reverse fraudulent electronic payments, and collaborate with overseas counterparts (many of whom are increasingly focused on combating scams in their own right). But today, federal law enforcement agencies lack sufficient information to identify the biggest scammers or the most critical trends; and the companies, victims, and local police officials that have that information lack efficient ways of providing it to them. A promising approach to address this problem is to create a national front door for reporting. Sometimes called a national anti-scam center, one of its key functions is to provide a single, nationwide user interface for victims and platforms to report scams or malicious communications to law enforcement agencies (think: “scams.usa.gov”). Another key function is analytical: to improve the government’s technological capacity to identify the most prolific sources of scams and bundle information so law enforcement can focus its resources and pursue meaningful convictions. (This would also benefit the private sector by enabling law enforcement to publish trends data that helps prevent and detect future scams.) A national reporting mechanism must be built in a technology-first way that allows for high-volume data reporting and analysis: a standard that no U.S. government resource meets today. Once functional, it can become a simple focal point for law enforcement training and public awareness campaigns, too. Though it would take real resources to achieve such a national reporting and analysis mechanism, I’ve talked with many stakeholders who believe that improving the efficiency of how government resources are targeted to combat scams would be worth the investment. 

In my view, the strongest legal framework for enabling these kinds of information sharing does two things well. First, it establishes clear duties for banking, telecommunications, and online platforms to protect customers / users when scammers try to exploit these platforms. This is especially important in cases where the company is not directly threatened (e.g., when a scammer does not impersonate the company’s brand or website). 

The second, equally essential component of a strong legal framework is a pretty clear set of rights and privileges (safe harbors) that allow companies or platforms to take reasonable steps to pursue their duties and protect themselves without taking on undue legal or compliance risk with respect to privacy and secrecy laws or civil liability claims.

We Can’t Do That in America?

It’s true: What I just described does not exist in the United States today, and it will not exist without real effort. There are just too many legal, compliance, bureaucratic, and technological challenges for companies and law enforcement agencies to overcome without decisive government action. (I recently witnessed a senior law enforcement official tell a frustrated bank executive to “call me” whenever he or any of his bank’s 4,000 branch managers didn’t know which government agency to contact to report or follow up on a scam; I have no doubt that all of them are dead serious about fighting scams, but they are doomed to fail until the system gets much, much better.)

But stop saying we can’t do that in America. Government agencies can become more technologically capable and improve their efficacy. The major industry players can work better together and with law enforcement to combat scams. It’s time for the federal government to make combatting scams an urgent national priority, based on a smart national strategy and backed by funding, legal reforms, and technological capacity building that unleashes the power of America’s corporations and law enforcement agencies.

The opinions shared in this article are the author’s own and do not reflect the views of any organization they are affiliated with.

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