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82–193 2014

FRAUD ON THE ELDERLY: A GROWING CONCERN 

FOR A GROWING POPULATION 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COMMERCE, MANUFACTURING, 

AND TRADE 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

MAY 16, 2013 

Serial No. 113–41 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

(II) 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

RALPH M. HALL, Texas 

JOE BARTON, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Missouri 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

BEN RAY LUJAN, New Mexico 

PAUL TONKO, New York 

(III) 

SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE

LEE TERRY, Nebraska 

Chairman 

LEONARD LANCE, New Jersey 

Vice Chairman 

MARSHA BLACKBURN, Tennessee 

GREGG HARPER, Mississippi 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVE B. MCKINLEY, West Virginia 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Missouri 

BILLY LONG, Missouri 

JOE BARTON, Texas 

FRED UPTON, Michigan, ex officio 

JANICE D. SCHAKOWSKY, Illinois 

Ranking Member 

G.K. BUTTERFIELD, North Carolina 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

PETER WELCH, Vermont 

JOHN D. DINGELL, Michigan 

BOBBY L. RUSH, Illinois 

JIM MATHESON, Utah 

JOHN BARROW, Georgia 

DONNA M. CHRISTENSEN, Virgin Islands 

HENRY A. WAXMAN, California, ex officio 

(V) 

C O N T E N T S 

Page 

Hon. Lee Terry, a Representative in Congress from the State of Nebraska, 

opening statement ................................................................................................ 1 

Prepared statement .......................................................................................... 2 

Hon. Janice D. Schakowsky, a Representative in Congress from the State 

of Illinois, opening statement .............................................................................. 3 

Hon. Marsha Blackburn, a Representative in Congress from the State of 

Tennessee, opening statement ............................................................................ 5 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, opening statement ............................................................................. 6 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

prepared statement .............................................................................................. 87 

WITNESSES

Kay Brown, Director, Education, Workforce, and Income Security, U.S. Government Accountability Office ............................................................................. 8 

Prepared statement .......................................................................................... 11 

Answers to submitted questions ...................................................................... 92 

Joseph S. Campbell, Deputy Assistant Director, Criminal Investigation Division, Federal Bureau of Investigation ................................................................ 28 

Prepared statement .......................................................................................... 30 

Charles Harwood, Acting Director, Bureau of Consumer Protection, Federal 

Trade Commission ............................................................................................... 37 

Prepared statement .......................................................................................... 39 

Answers to submitted questions ...................................................................... 97 

Gail Hillebrand, Associate Director, Consumer Education and Engagement, 

Consumer Financial Protection Bureau ............................................................. 52 

Prepared statement .......................................................................................... 54 

Answers to submitted questions ...................................................................... 108 

William H. Sorrell, Attorney General, State of Vermont ..................................... 58 

Prepared statement .......................................................................................... 60 

SUBMITTED MATERIAL

Letter of May 16, 2013, from the National Consumers League to the subcommittee, submitted by Mr. Terry .................................................................... 89 

(1) 

FRAUD ON THE ELDERLY: A GROWING 

CONCERN FOR A GROWING POPULATION 

THURSDAY, MAY 16, 2013 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND

TRADE, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 9:47 a.m., in room 

2322, Rayburn House Office Building, Hon. Lee Terry (chairman of 

the subcommittee) presiding. 

Present: Representatives Terry, Lance, Blackburn, Harper, Guthrie, Olson, McKinley, Bilirakis, Johnson, Long, Schakowsky, 

Butterfield, Sarbanes, Welch, Barrow, Christensen, and Waxman 

(ex officio). 

Staff Present: Kirby Howard, Legislative Clerk; Nick Magallanes, 

Policy Coordinator, Commerce, Manufacturing and Trade; Brian 

McCullough, Senior Professional Staff Member, Commerce, Manufacturing and Trade; Gib Mullan, Chief Counsel, Commerce, Manufacturing and Trade; Shannon Weinberg Taylor, Counsel, Commerce, Manufacturing and Trade; Michelle Ash, Minority Chief 

Counsel, Commerce, Manufacturing and Trade; and Will Wallace, 

Minority Professional Staff Member. 

OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEBRASKA 

Mr. TERRY. So good morning. Welcome to the Commerce, Manufacturing, and Trade Subcommittee on elderly fraud. I am pleased 

to have a distinguished panel of witnesses before us today, including representatives of four separate Federal entities, and a State 

attorney general. By the way, nice timing. 

The hearing title today goes a long way to explaining why we are 

here. It is absolutely a growing concern for an expanding population. The fact is America’s population is growing older. According 

to the Census Bureau, from 2000 to 2010, the percentage of Nebraskans over age 65 rose 6.2 percent and the percentage of those 

over the age 85 jumped by 15.8 percent. 

The trend is set to continue and accelerate. By 2050, the number 

of Americans over age 65 is expected to double. Thanks to medical 

innovation and better standards of living, folks are living longer. 

And this population tends to be a little wealthier and have better 

credit than the average American. According to the 2010 Census 

data, the median net worth of households of those 65 years or older 

2 

was 4.9 times that of households age 35 to 44, and 25.5 times the 

net of those under age 35. 

This fact is not lost on many of the people in this room here 

today. Unfortunately, neither is it lost on those seeking to take advantage of our seniors, who tend to be more vulnerable and susceptible to some of the many different types of frauds that are being 

perpetrated. 

The testimony submitted for today’s hearing only scratch the surface in describing the multitude of fraud schemes out there. The 

threat is very real and does not appear to be just small-time 

crooks. Everything from home equity theft, letter fraud originating 

in foreign countries seems to be occurring. Clearly there is no 

shortage of individuals or perhaps organized crime groups working 

to trick, abuse and steal from our American senior citizens. 

One of the reasons we are here today, besides to shed light on 

this awful trend, is to conduct oversight on the agencies sitting before us and make sure they are doing their best to protect seniors 

as effectively and efficiently as possible. When reviewing the testimonies, I counted at least five separate task forces spread out 

amongst DOJ, FTC, CFPB alone, some agencies specific and other 

intra agency. My concern is whether or not we are using our resources as effectively as possible, and not duplicating them when 

several agencies have separate working groups set up that may duplicate the work being done at another agency. 

Additionally, there—are all the agencies communicating with 

each other? For example, what happens when a phone company 

sends over a list of numbers that have been connected to fraudulent phone calls like in the widely reported 876 Jamaica phone 

scam? Does the FBI share this list with the FTC? Does FTC share 

this with private companies within its jurisdiction? 

Stealing from individuals who have worked and saved their entire lives so that they may live in dignity during their golden years 

is nothing less than appalling, and we need to make sure government is doing everything it can as efficiently as possible to protect 

the most vulnerable adults. 

[The prepared statement of Mr. Terry follows:] 

PREPARED STATEMENT OF HON. LEE TERRY

Welcome to the Commerce, Manufacturing, and Trade Subcommittee’s hearing on 

elderly fraud. I am pleased to have a distinguished panel of witnesses before us 

today, including representatives of four separate federal entities and a state attorney general. 

The hearing title today goes a long way to explaining why we here. This is absolutely a growing concern for a growing population. The fact is, America’s population 

is growing older. According to the Census Bureau, from 2000 to 2010 the percentage 

of Nebraskans over age 65 rose 6.2% and the percentage of those over age 85 

jumped by 15.8 percent. This trend is set to continue and accelerate. By 2050, the 

number of Americans over age 65 is expected to double. Thanks to medical innovation and better standards of living, folks are living longer. 

And this population tends to be wealthier and have better credit than the average 

American. According to the 2010 census data, the median net worth of households 

of those 65 years and older was 4.9 times that of households aged 35–44 and 25.5 

times than that of those under age 35. This fact is not lost on many of the people 

in this room today. 

Unfortunately, neither is it lost on those seeking to take advantage of our seniors 

who tend to be more vulnerable and susceptible to some of the many different types 

of frauds that are being perpetrated. 

3 

The testimonies submitted for today’s hearing only scratch the surface in describing the multitude of fraud schemes out there. The threat is very real and does not 

appear to be just small-time crooks. Everything from home equity theft, to letter 

fraud originating in Nigeria seems to be occurring—clearly, there is no shortage of 

individuals or perhaps organized crime groups working to trick, abuse, and steal 

from American senior citizens. 

One of the reasons we are here today, besides to shed light on this awful trend, 

is to conduct oversight on the agencies sitting before us, and to make sure they are 

doing their job to protect seniors as effectively and efficiently as possible. 

When reviewing the testimonies, I counted at least five separate tasks forces 

spread out amongst DOJ, FTC, and CFPB alone—some agency specific and others 

intra-agency. My concern here is whether or not we are using are resources as effectively as possible and not duplicating them, when several agencies have separate 

working groups set up that may duplicate the work being done at another agency. 

Additionally, are all the agencies communicating with each other? For example, 

what happens when a phone company sends over a list of numbers that have been 

connected to fraudulent phone calls—like in the widely reported ‘‘876 Jamaica phone 

scam?’’ Does FBI share this list with FTC? Does FTC share this with private companies within its jurisdiction? Stealing from individuals who have worked and saved 

their entire lives so that they may live in dignity during their golden years is nothing less than appalling and we need to make sure government is doing everything 

it can as efficiently as possible to protect these vulnerable individuals. 

# # # 

Mr. TERRY. I look forward to today’s hearing, today’s testimonies, 

and thank everyone for being part of this hearing. And I now yield 

to the ranking member of the subcommittee, the gentlelady from 

Illinois, Ms. Schakowsky. 

OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Ms. SCHAKOWSKY. I really thank the chairman so much for having this hearing. Much of my adult life has been as an advocate 

for seniors. For 5 years, I was director of the Illinois State Council 

of Senior Citizens. The issues of fraud are very important to our 

older population, in particular for many of the reasons that my 

chairman mentioned. 

Seniors represent the fastest growing segment of our population. 

Every day 10,000 Americans turn 65. Happy birthday to 10,000 

people. Many seniors have certain characteristics that make them 

an attractive target for criminal behavior. According to The Scam 

Foundation, more than one in four seniors who live alone have difficulty with activities of daily living or some cognitive impairment. 

According to the FBI, seniors generally have higher net worth, the 

tendency to be trusting, and are less likely to report fraud. 

I do want to say that although I agree that the net worth of seniors is higher, the median income of people over 65 is $22,000 a 

year, so many tend to be cash poor, but perhaps house rich, which 

again makes them vulnerable. 

We have seen an uptick in the numbers of products and services 

that are targeted toward the elderly: anti-aging products, I am well 

aware, health-related products, prize promotions and reverse mortgages. I am incredibly concerned about the negative consequences 

associated with some of those products and services. 

Reverse mortgages allow homeowners over the age of 62 to borrow against their homes to receive either a cash payment or a line 

4 

of credit. And while reverse mortgages, if they are structured fairly, can offer financial security to seniors, they can also lead to unforeseen foreclosures and financial hardship. Many former 

subprime lenders have entered the reverse mortgage market, and 

the results have been devastating for seniors. According to The 

New York Times, the rate of default on reverse mortgages reached 

a record high of 9.4 percent last year. 

I offered an amendment, which is adopted to the Dodd-Frank 

Wall Street Reform Consumer Protection Act that allows the Consumer Financial Protection Bureau to better regulate reverse mortgages. I look forward to hearing from Associate Director Hillebrand 

about the status of that rule making. 

This subcommittee must ensure that our Federal agencies have 

the capacity to root out fraud where the problems are so clear and 

the solutions are within reach. We should especially do so for our 

senior citizens who have done so much for our country. 

Again, I thank the witnesses for appearing today. I look forward 

to working collaboratively with Chairman Terry, as we have, I 

don’t know about uniquely in this Congress, but certainly on this 

committee, and members of the subcommittee to address the issue 

of senior fraud. And I yield now to Mr. Welch. 

Mr. WELCH. I thank Mr. Terry, Ms. Schakowsky. They have been 

leaders on senior fraud issues and protecting seniors in general. I 

really appreciate the bipartisan approach. 

We have today my friend, Bill Sorrell, who is the attorney general of the State of Vermont. He has been attorney general since 

1997. Before that, he was secretary of administration in the administration of Governor Howard Dean. Before that, he was the State’s 

attorney in our largest county, Chittenden County. And he has 

done an extraordinary job of putting the focus on protecting consumers, with a particular focus on seniors. 

And you may remember, Mr. Chairman, we had Mike Smith, 

who is the executive from Fair Point Communications, and actually 

his successor as secretary of administration in Vermont to a Republican governor, Jim Douglas, who had a real concern about fraud, 

and he testified about the Jamaican scams, telephone scams that 

are really ripping off seniors in Vermont, and Mr. Sorrell has been 

very active and aggressive on this. 

And what we need to provide at our level, as both of you so well 

know, are the tools that our attorney generals and our local prosecutors need back home. So this has got to be a partnership, the 

policy has to allow you to do your job, but the hard work actually 

is right at where you all are doing it. So, Mr. Sorrell, I really appreciate it. 

Also, my first job in politics, his mom was on the Senate Government Operations Committee, and was the godmother of all politicians Democratic in Vermont. Now, you may not like that, but we 

all have very fond memories of—— 

Mr. TERRY. Is there another type of politician in Vermont? 

Mr. WELCH. We are trying to—we are trying to keep it clean, you 

know what I mean? But his mom was a big—was a mentor of Howard Dean and many of us, and we really just admire the Sorrell 

family going back generations in Vermont. So thanks for letting 

him be here. 

5 

Mr. TERRY. Thank you. And now I yield 2 minutes to the 

gentlelady from Tennessee, the vice chairman of the full committee, 

Ms. Blackburn. 

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE 

Mrs. BLACKBURN. Thank you, Mr. Chairman. And thank you for 

what I think is a really important hearing. As we look at the issue 

of fraud and the elderly fraud abuse, it is a very complex problem, 

and the more I have delved into it, the more complex it seems to 

become. Of course, I appreciate the fact that much of this I am 

learning firsthand, as I have a mom, who is in her late 80s, and 

just lost my dad, who was in his late 80s. So we are going through 

this and living it every single day, and I appreciate the good work 

that you all are doing to help us get to the bottom of it. 

As we were preparing for this hearing today, I looked at a TBI, 

Tennessee Bureau of Investigation report that actually pulled together the numbers of what had occurred from 2009 to 2011 in the 

elderly fraud offenses, and there were over 6,200, nearly 6,300 that 

were reported, and it accounted for nearly a third of all the fraud 

victims. The most frequently reported offense was the credit card 

ATM fraud. And I know you are dealing with that. 

The majority of the elderly individuals that reported these crimes 

were related to or acquainted with their offender. And, sadly, the 

number of reported fraud cases we have on hand might only be the 

tip of the iceberg, because one of the things that I have learned is 

that many of the elderly are embarrassed to report that this has 

happened to them, or they are not sure how to report it or how it 

happened. So there are a lot of factors that come into play in this. 

And I think there is one other thing that contributes to this, and 

it is the rogue Web sites. These rogue Web sites with rogue financial networks that continue to target our seniors with free goodies 

and with pirated content and it is so inexpensive, so affordable. We 

all know the come-ons that they put out there. Cracking down on 

those pirated Web sites is going to be essential to protecting our 

seniors and allowing them to protect what I term the virtual you, 

their virtual presence online. 

And I am hoping that our hearing today will help clarify the 

roles that each agency has in preventing elderly fraud and possibly 

identifying areas of duplicative efforts so that we can more effectively target the problems. I yield back. 

Mr. TERRY. Thank you. Mr. Lance, the vice chairman of the committee, subcommittee, you are recognized for the remainder of the 

time. 

Mr. LANCE. Thank you, Mr. Chairman. Fraud perpetrated on the 

elderly is often a terrible crime of opportunity. With America’s baby 

boomers beginning to enter retirement age, I am happy that Chairman Terry and this subcommittee are examining the Federal role 

in anticipating and preventing this trend. 

My office receives requests to assist in combating fraud on a 

weekly basis. With technological advancements, the criminal element becomes more sophisticated and more difficult to combat. 

Many scammers prey on American senior citizens, many of whom 

6 

must navigate a complicated bureaucracy on their own, perhaps as 

new users of computers or the Internet. 

It is my hope that Congress, and in particular this subcommittee, 

can provide the needed tools and resources to prevent current and 

future fraud threats. 

Fraud against senior citizens has risen consistently in New Jersey. Nearly 6,400 cases of elder abuse were reported throughout 

the State in 2010, up from the 2 previous years. About one in five 

cases of fraud in New Jersey involves financial exploitation. This 

is intolerable. 

I commend groups such as AARP and the law enforcement community for their aggressive defense on behalf of senior citizens. I 

also commend the New Jersey Division of Aging and Community 

Services for its work as well. 

It is my hope that these partners and our witnesses here today 

will educate the public on the trends and threats regarding this 

issue. I look forward to hearing your testimony this morning. 

Thank you, Mr. Chairman. 

Mr. TERRY. Thank you, Mr. Vice Chairman. We will yield back 

our time and would like to recognize the full committee, I almost 

said—— 

Mr. WAXMAN. She has already gone? 

Mr. TERRY. Yes. So Mr. Waxman, you have the 5 minutes. 

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. WAXMAN. Thank you very much, Mr. Chairman. I want to 

thank you for holding this hearing on fraud affecting older Americans. 

Imagine getting an email from a dear friend that she had gotten 

mugged while on vacation, that her cash and credit cards were 

taken at gunpoint, and she needs you to wire money so that she 

can pay her hotel bill. After you wire the money, you find out that 

the mugging never occurred. Unfortunately, this emergency scam 

happened to a senior in my district, and many other similar frauds 

are committed each day around the country. 

One may think that fraud is easy to spot, but in the case I just 

mentioned, the email was sent from the friend’s actual email account, now hacked, and included her actual address and phone 

number. And with the prevalence of social media sites, one can easily imagine a fraudster knowing that a victim’s or grandchild or 

friend is on vacation. 

Last month the Federal Trade Commission released the results 

of its most recent survey on fraud, reflecting data from 2011. This 

report estimated that over 25 million Americans were victims of 

surveyed frauds, including those that preyed on consumers’ desire 

to improve their health, find a job or save money on everyday 

needs. 

According to the FBI, older Americans possess certain characteristics that make them attractive targets for fraudulent activity. 

Many seniors have accumulated retirement savings, tend to be polite and trusting, and are unable or reluctant to report fraud or 

serve as criminal witnesses. They are also targeted disproportionVerDate Nov 24 2008 15:28 Jul 31, 2014 Jkt 037690 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-41 CHRIS
7 

ately for certain scams like those involving prize promotions, 

health-related products and services, and reverse mortgages. 

And appallingly, older Americans are also exploited financially 

by those close to them, including by trusted people like family 

members, friends, attorneys or financial advisors. 

Fraud against the elderly is a very serious crime with the potential for severe harm, including lost retirement funds, ruined credit, 

and an emotional toll on victims and their families that is not easy 

to overcome. 

I commend President Obama for recognizing this through his administration’s significant efforts to educate consumers about fraud 

and through his establishment of the financial fraud enforcement 

task force. 

Federal, State, and local authorities must remain vigilant in the 

fight against fraud occurring on consumers of any age, and Congress must ensure that law enforcement has the tools it needs to 

win that fight. This hearing on fraudulent activities is a good start. 

Thank you, Mr. Chairman. 

I thank the witnesses for being here. I do want to apologize in 

advance, because I will be required to be at another subcommittee 

at the same time, and while cloning is a possibility, it still hasn’t, 

God forbid, come to the level of making another me. 

And I have some time left. Anybody on our side or either side 

want the time? 

Mrs. BLACKBURN. If the gentleman would yield for just—— 

Mr. WAXMAN. The gentlelady from the Virgin Islands. I yield to 

her. 

Mrs. CHRISTENSEN. I wanted to just say for my part that fraud 

committed against the elderly—and I thank you for yielding— 

against our seniors is an egregious crime, and so I want to thank 

the chairman and ranking member for holding this hearing. 

In my district, people over 60 are a sizeable population and we 

have a fair number of people in their 90s, and so in a place where 

services are not readily available, they are particularly vulnerable 

to insurance and other financial crimes even, easy repairs on 

homes and any number of fraudulent offers that seem attractive, 

and so they take advantage of them and find themselves in difficulty, so I am glad we are having this hearing. And thank you 

to the witnesses for being here. I yield back. 

Mr. WAXMAN. I have a few minutes left. I want to yield to the 

gentlelady from Tennessee. 

Mrs. BLACKBURN. I thank the gentleman from California. I was 

just going to encourage you to send your avatar to the other hearing and then you can stay with us. You know, I thought that—— 

Mr. WAXMAN. A good idea. 

Mrs. BLACKBURN. Yes. 

Mr. WAXMAN. Another good idea. 

Mrs. BLACKBURN. Absolutely. Yield back. 

Mr. WAXMAN. Thank you. 

Mr. TERRY. Thank you. All right. We do not need avatar testimony. 

We appreciate all of you here. I am going to introduce the entire 

panel, and appreciate all of you being here, and we will go right 

to left. When you start, Ms. Brown. You are the director of EduVerDate Nov 24 2008 15:28 Jul 31, 2014 Jkt 037690 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-41 CHRIS
8 

cation, Workforce and Income Security with GAO. Appreciate you 

being here. 

Joseph Campbell, criminal investigation division of the Federal 

Bureau of Investigation. And I had mentioned to him earlier that 

it is always nice that we invite you in instead of you just showing 

up. That has a little bit different connotation. 

Gail Hillebrand, associate director—— 

Oh. Charles Harwood. We are going to let you testify as well. 

Acting director, Bureau of Consumer Protection, Federal Trade 

Commission. 

And Gail Hillebrand, associate director, Consumer Education and 

Engagement, the Consumer Financial Protection Bureau. 

And last, and already introduced by our good friend from 

Vermont, we have the AG of Vermont, Mr. Bill Sorrell. 

So appreciate all of you here. And we will go from my left to 

right. So Ms. Brown, you get to start. You are now recognized for 

5 minutes. 

STATEMENTS OF KAY BROWN, DIRECTOR, EDUCATION, WORKFORCE, AND INCOME SECURITY, U.S. GOVERNMENT ACCOUNTABILITY OFFICE; JOSEPH S. CAMPBELL, DEPUTY ASSISTANT DIRECTOR, CRIMINAL INVESTIGATION DIVISION, 

FEDERAL BUREAU OF INVESTIGATION; CHARLES HARWOOD, 

ACTING DIRECTOR, BUREAU OF CONSUMER PROTECTION, 

FEDERAL TRADE COMMISSION; GAIL HILLEBRAND, ASSOCIATE DIRECTOR, CONSUMER EDUCATION AND ENGAGEMENT, CONSUMER FINANCIAL PROTECTION BUREAU; AND 

HON. WILLIAM H. SORRELL, ATTORNEY GENERAL, STATE OF 

VERMONT 

STATEMENT OF KAY BROWN 

Ms. BROWN. Thank you. Chairman Terry, Ranking Member 

Schakowsky, and members of the subcommittee, thank you for this 

opportunity to discuss our work on elder financial exploitation. My 

remarks today are based on a year-long GAO study completed last 

November. 

Financial exploitation can result from foreign lottery scams, unscrupulous financial advisors, betrayal by trusted in-home caregivers, or multiple other causes. This exploitation can undermine 

the health, dignity and independence of older adults, leading to farreaching effects for the victims in particular, but for society in general. Victims who lose their ability to support themselves can put 

additional pressure on scarce health care and social service resources. 

Much of the responsibility for combating elder financial exploitation falls on State and local social service, criminal justice and 

consumer protection agencies. And the problem is large and likely 

growing. 

The Federal Government has an important role to play, and 

today I will mention four key areas that can benefit from Federal 

attention. 

First, officials at all levels of government need to better understand the nature and extent of the problem. Data from FTC’s Consumer Sentinel Network, FBI’s Internet Crime Complaint Center, 

9 

and FinCEN’s suspicious activity reports can be analyzed to shed 

light on current trends and schemes to help agencies better determine how to best direct Federal resources. In our report, we made 

recommendations to FTC that we believe would improve the usefulness of the consumer sentinel data for these purposes. 

Second, identifying and preventing financial exploitation that is 

before victims have lost their entire life savings requires marshalling the efforts of those who interact with older adults regularly in 

the community, such as bank tellers and medical professionals. In 

our field work, we were told that bank staff in particular may be 

reluctant to report their suspicions of exploitation for fear of violating important privacy rules. We recommended that CFPB takes 

steps to help employees of financial institutions recognize signs of 

exploitation and understand their reporting options. 

Third, regarding investigating and prosecuting financial exploitation, State and local criminal justice officials told us they could 

benefit from additional training and support from the Federal 

agencies that have specialized expertise. This is especially true for 

interstate and international mass marketing scams. We have recommended that Justice launch its planned Web site that would 

make resources, such as training and primary litigation materials, 

available to State and local officials, and also that Justice conduct 

outreach to clarify the process for requesting assistance or referring 

cases to the Federal level. 

And fourth, possibly the best way to fight this problem is 

through education. Older adults, family members and the public in 

general need more information about what constitutes financial exploitation and how to avoid it. This information could range from 

tips on avoiding scams, to shedding light on the many designations 

used by financial service professionals. 

Each of the seven Federal agencies we reviewed independently 

produces educational materials, but we believe these efforts would 

be more effective if they were part of a broader, more coordinated 

national public awareness campaign. 

As you will hear from others today, multiple Federal agencies are 

working to address financial exploitation in ways that are consistent with each of their individual missions. Also, agency representatives have participated in various working groups and collaborated through task forces over time; however, we believe a 

more cohesive and deliberately planned national strategy is needed 

to increase the likelihood of success and to optimize the use of 

scarce Federal resources. 

The recently formed Elder Justice Coordinating Council, charged 

by law with setting priorities and coordinating Federal elder justice 

efforts, can be an appropriate vehicle for this. We recommended 

that the council develop this national strategy along with a clear 

set of goals and assignments for completing these goals. The council met this week for the second time and received a set of recommendations from its working group that, if approved and implemented, would begin to address many of the issues I have raised 

today. 

This concludes my prepared statement. I am happy to answer 

any questions. 

Mr. TERRY. Well timed. Much appreciated. 

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[The prepared statement of Ms. Brown follows:] 

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Mr. TERRY. Mr. Campbell, you are now recognized for your 5 

minutes. 

STATEMENT OF JOSEPH S. CAMPBELL 

Mr. CAMPBELL. Thank you. Chairman Terry, Ranking Member 

Schakowsky—— 

Mr. TERRY. Is your microphone on? 

Mr. CAMPBELL. Chairman Terry, Ranking Member Schakowsky 

and members of the subcommittee, I am pleased to appear before 

you today to discuss the FBI’s efforts to combat fraud against our 

Nation’s seniors. 

At the beginning of 2011, the first of our Nation’s baby boomers 

reached the age of 65. Since then, thousands a day also reach that 

milestone. They have many reasons to celebrate. Senior citizens are 

most likely to have a nest egg, to own their home, and to have excellent credit. Unfortunately, these are also many of the same 

qualities which make them so attractive to con artists. 

Unscrupulous loan officers, investors, appraisers, developers and 

others are exploiting home equity conversion mortgages, HECMs, 

also known as reverse mortgages, to defraud senior citizens. 

HECM-related fraud is occurring in every region of the United 

States and reverse mortgage schemes have the potential to increase substantially as demand for these products rises in demographically dense senior citizen jurisdictions. 

For its part, the FBI continues to develop new ways to both detect and combat these fraudsters. We are working with our partners at all levels of law enforcement and within regulatory agencies 

and using the full array of investigative techniques to find and stop 

criminals before the fact rather than after the damage has been 

done. 

Most recently, Nigerian letter frauds combined the threat of impersonation fraud with a variation of an advanced fee scheme in 

which correspondence from Nigeria offers the recipient the opportunity to share in a percentage of millions of dollars that the author, a self-proclaimed government official, is trying to transfer illegally out of Nigeria. The scheme relies on convincing a willing victim to send money to the author of the letter in Nigeria in several 

installments of increasing amounts for a variety of reasons. 

To combat the numerous fraudsters who would do our citizens 

harm, the Federal Bureau of Investigation and the National White 

Collar Crime Center established the Internet Crime Complaint 

Center, IC–3. The IC–3 serves as a vehicle to receive, develop and 

refer criminal complaints regarding the rapidly expanding arena of 

Internet fraud. It gives the victims of Internet fraud a convenient 

and easy-to-use reporting mechanism that alerts authorities of suspected criminal or civil violations. 

Through the IC–3, we are also establishing effective alliances 

with industry, allowing us to leverage both intelligence and subject 

matter expert resources. In 2012, IC–3 received complaints from 

more than 42,000 victims over the age of 60 with total reported 

losses of more than $115 million. 

The more prevalent scams reported to IC–3 which target the elderly are romance scams, lottery scams, 419-type letters, also reVerDate Nov 24 2008 15:28 Jul 31, 2014 Jkt 037690 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-41 CHRIS
29 

ferred to as Nigerian scams, and the grandparent scam. The grandparent scam is a telephone scam targeting grandparents and involved fraudsters calling elderly individuals claiming to be a grandson, granddaughter or other young relative in a legal or financial 

crisis. The crisis generally involves a claim of being arrested or in 

a car accident in another country. The callers create a sense of urgency and make a desperate plea for money, begging the grandparents not to tell the parents, while often crying on the phone to 

help prevent the potential victims from discovering the scam. 

With jurisdiction over both Federal and private insurance programs, the FBI is also actively involved in the health care fraud 

prevention partnership and the cabinet level health care fraud prevention and enforcement team. Since the inception of the Medicare 

fraud strike force, prosecutors filed more than 700 cases, charging 

more than 1,400 defendants, who collectively billed the Medicare 

program more than $4 billion. Over 900 defendants pleaded guilty 

and over 100 others were convicted in jury trials, and more than 

700 defendants were sentenced to imprisonment for an average 

term of more than 45 months. 

By working together to stop fraud, we can ensure America’s hard 

earned dollars are used to care for the sick and we can keep our 

Nation’s health care system strong for those who need it both now 

in and in the future. 

Chairman Terry, Ranking Member Schakowsky, I would like to 

thank you again for this opportunity to discuss the FBI’s efforts to 

combat fraud against our nation’s senior citizens. I am now happy 

to answer any questions that you may have. 

Mr. TERRY. Thank you very much. 

[The prepared statement of Mr. Campbell follows:] 

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Mr. TERRY. Now, Mr. Harwood, you are recognized for 5 minutes. 

STATEMENT OF CHARLES HARWOOD 

Mr. HARWOOD. Thank you, Chairman Terry, Ranking Member 

Schakowsky and members of the subcommittee. I am Charles Harwood, acting director of the Bureau of Consumer Protection at the 

Federal Trade Commission. The FTC has submitted an official 

statement for the record. My remarks and responses to questions 

are based on that statement, but they are my views. 

Seniors are among the many victims of the consumer fraud 

schemes targeted by the FTC. Three Commission efforts, one concerning work-at-home scams, one concerning prize or lottery fraud, 

and one concerning identity theft illustrate our law enforcement 

and education efforts on behalf of senior consumers. 

Many Americans, including seniors, living on fixed income or 

with limited ability to work outside the house look for ways to supplement their incomes by working from home. Opportunistic scam 

artists take advantage of this market by selling bogus work-athome programs that in reality, just deplete the consumer’s resources even further. 

This past February, the Commission sent out redress checks to 

more than 50,000 consumers as a result of our successful law enforcement action against the deceptively named Real Wealth Program, a work-at-home scheme that targeted seniors. In its mailings 

to consumers, Real Wealth claimed ‘‘All I do is mail 30 postcards 

every day and I make an extra $350 a week,’’ and, ‘‘collect up to 

$9,250 with my simple 3-minute form. In fact, consumers who responded received nothing, or at most, they received a booklet on 

how to pitch the very same scam to other consumers. 

The case highlights our work with partners. First, it was referred 

to us by AARP legal counsel for the elderly, a local legal services 

provider here in D.C. And second, we partnered with the AARP 

Fraud Fighter Call Center to offer interested consumers one-on-one 

counseling about the fraud. 

Prize and lottery fraud is also on the Commission’s radar scream. 

Consumers between 65 and 74 years of age are more likely to be 

victims of such scams, according to the Commission’s recent fraud 

report, which has already been referred to, and which was a survey 

of common consumer fraud schemes. 

On the enforcement side, the Commission has not only gone after 

the perpetrators of such lottery frauds, but it has also pursued a 

money transfer company, Money Gram, that allegedly allowed its 

system to be used by telemarketers pitching prize and lottery 

fraud. 

Complementing our law enforcement efforts, an innovative partnership with the AARP foundation enables the Commission to refer 

individuals for peer counseling who are over the age of 60, and who 

have called the FTC complaining they have been the victim of certain frauds, including prize and lottery frauds. 

The Commission is the Federal clearinghouse for consumer identity theft complaints, which we share with other Federal, State and 

local criminal prosecutors, and we have been the leaders in identify 

theft education for both business and consumers. Just last week, 

38 

the Commission held a workshop to collect information about the 

extent to which seniors are vulnerable to identify theft. In particular, the Commission is concerned about tax, Medicare and nursing-home related identity theft. The Commission has invited public 

comment on the issues discussed at the workshop, and as we learn 

more, we will share our findings with our civil and criminal law enforcement partners and use the information to advance our education and outreach efforts. 

As a part of our consumer protection mission, the Commission 

tries to anticipate how fraud schemes may evolve and we watch for 

emerging threats. We are watching closely two developments that 

may give rise to frauds directed towards seniors in the coming 

years. 

One development relates to health care coverage. We know from 

experience that changes in government programs create fertile conditions for fraud schemes. Scams involving questionable national 

medical discount plans have been around for a while now and have 

been the target of a number of FTC and State law enforcement actions. 

As the Affordable Care Act is implemented, the discount plan 

scam could easily evolve into an ACA-related scam sewing confusion and tricking consumers, including seniors, into paying for 

worthless products or divulging financial account information. 

The second development concerns the Internet. A recent Pew 

study shows that the number of adults over 65 who use the Internet is increasing rapidly. As more seniors use the Internet, more 

will be exposed to fraudulent online offers. We see more Internet 

fraud affecting—we will see more Internet frauds in the future affecting seniors, we think. Indeed it is conceivable that the Internet 

scammers will actually target the online seniors as their numbers 

increase. 

Finally, education is an essential part of our consumer protection 

and fraud prevention work. The Commission is widely known for 

its plain language information on dozens of issues, including family 

emergencies, which Mr. Campbell talked about, also known as the 

grandparent scam and which at least one member talked about, 

fraudulent prize offers, and government imposter scams. 

We have partnered with other government agencies, State and 

local law enforcement agencies and community resources to disseminate the information. 

In addition to our broad-based outreach efforts, in a new initiative, the Commission is turning to activities directors and other 

professionals in facilities where boomers and seniors live and visit 

for guidance on the kinds of information that people will find useful, the messengers they trust, and the delivery mechanisms they 

are likely to pay attention to. Ultimately we expect to provide these 

professionals with fraud awareness materials and activities that 

they can tailor to and share with their particular communities. 

Thank you for the opportunity to describe the Commission’s consumer protection work on behalf of older Americans. 

Mr. TERRY. Thank you. 

[The prepared statement of Mr. Harwood follows:] 

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Mr. TERRY. Ms. Hillebrand, you are recognized for your 5 minutes. 

STATEMENT OF GAIL HILLEBRAND 

Ms. HILLEBRAND. Thank you, Chairman Terry, Ranking Member 

Schakowsky and distinguished members for the opportunity to 

speak with you today about the Consumer Financial Protections 

Bureau’s work to address the devastating problem of elder financial 

exploitation. 

The CPB’s division of consumer education and engagement includes our office for the financial protection for older Americans. 

This office for older Americans is specifically dedicated to the financial health of Americans aged 62 and older. 

Older Americans have assets that make them attractive targets 

for fraudsters. The net worth of U.S. households aged 65 and older 

was approximately $18 trillion in 2009. And these individuals and 

families may be victimized by a broad range of perpetrators, including scam artists, family members, caregivers, financial advisors, 

home repair contractors, and even fiduciaries. 

One national prevalence study found that an estimated 5.2 percent of Americans, 60 and over experienced financial mistreatment 

by a family member, and other studies indicate that most incidents 

of elder financial abuse are never reported to authorities, but remain under the radar. After a fraud, older Americans have very little time and few opportunities to recoup those lost savings. 

So to address elder financial exploitation, we recognize that collaboration across and among levels of government is critical. We 

participate in the congressionally mandated Elder Justice Coordinating Council as a venue for that collaboration. 

I would like to discuss a few of the current initiatives at the 

CFPB to address financial issues and problems faced by older 

Americans. First, older Americans can lose money because they 

trust the wrong person to give them financial advice. There are a 

bewildering array of titles for persons claiming special expertise in 

providing financial advice to seniors, and it can be very hard to distinguish those persons holding an easy-to-obtain credential from a 

fully-trained professional. 

To begin to address this challenge, we studied the variety of socalled senior designations and issued a report discussing the risks 

for older consumers who may rely on these designations. That report is entitled Senior Designations for Financial Advisors: Reducing Consumer Confusion and Risks. 

Second, we are helping seniors, caregivers and others in the community avoid fraud and scams. We have partnered with the FDIC 

to build a new module for the FDIC’s Money Smart Program, called 

Money Smart for Older Adults. The new material identifies common financial issues that face seniors, including how to spot scams 

and frauds, and we will we jointly issuing that material for use 

across the Nation this summer. 

Third, older Americans who experience declining mental capacity 

and capacity to handle their finances face special challenges. Even 

mild cognitive impairment can disastrously reduce an older adult’s 

ability to detect a fraud or scam. 22 percent of Americans over 70 

53 

experience mild cognitive impairment, and experts say that the 

ability to handle finances is one of the very first life skills to go, 

often well before family members observe the more visible signs of 

diminished capacity. This means some seniors need a family member or other person to handle their money, and those legally authorized fiduciaries are a critical source of support, but they often 

have no training in how to handle someone else’s money. Some 

may fall victim to fraud or even engage in it. 

So for the untrained person, often a family member who is asked 

to step in and handle someone else’s money, the CFPB is developing a set of guides for lay fiduciaries. These guides will explain 

what a fiduciary does, how to properly segregate and account for 

funds, and how to protect the assets of seniors from frauds by others. 

Fourth, there is a role for financial institutions and for those who 

regulate them. Bank tellers may be among the first persons to observe signs that an older adult may be the victim of financial 

abuse, but the bank may be unsure whether Federal privacy laws 

permit them to report their suspicion to social service or law enforcement agencies. So the CFPB is developing strategies for clearly communicating with financial institutions that the GrammLeach-Bliley Act does not prohibit them from sharing these suspicions with law enforcement and adult protective services. 

Finally, I would like to mention two resources that CFPB offers 

to all consumers that are of use to older Americans. At our Web 

site, consumerfinance.gov, we offer Ask CFPB. Ask CFPB is an 

interactive online tool. It provides consumers with short, unbiased 

answers to their financial questions and includes a special tag for 

issues that may be of particular interest to seniors. 

We also accept consumer complaints through our Consumer Response program. And Consumer Response is handling complaints 

on a wide variety of financial products, including things like credit 

cards, mortgages and credit reports. 

Elder financial exploitation is a serious problem for our country. 

I commend you, Chairman Terry, Ranking member Schakowsky, 

and all of the members of the subcommittee for holding this hearing to put this issue in the spotlight. Thank you. 

[The prepared statement of Ms. Hillebrand follows:] 

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Mr. TERRY. Mr. Attorney General, appreciate your efforts to get 

here, and you are now recognized for 5 minutes. 

STATEMENT OF HON. WILLIAM H. SORRELL 

Mr. SORRELL. Thank you very much, Mr. Chairman. My thanks 

to the subcommittee, and particularly to Congressman Welch for 

the invitation to be here and speak to these issues today. I am not 

here speaking on behalf of the National Association of AG’s nor individual attorneys general, but I would be very surprised if General 

Madigan or General Bruning, General Cooper, General Koster, 

would disagree with what I have to say as to what we are seeing 

in Vermont, or disagree with the requests I make for Federal assistance. 

We have a very real problem in the State of Vermont right now 

with scams preying on seniors, and as has been discussed with the 

aging demographic in this country, it is just going to get worse. 

Just some of the reasons why seniors are particularly preyed 

upon by certain scam artists, we have talked about the fact that 

they tend to have more resources or assets than others, but seniors 

tend to be more trusting than others. They want to believe that you 

have their best intentions at heart. They are more polite. They 

don’t as readily hang up or close the door. And not just in rural 

Vermont. Seniors frequently tend to find themselves socially isolated, and a lot of seniors report that they appreciate the call from 

Jamaica or whatever to interact and talk about religion or the family or whatever. 

And then, of course, we have to take into account that seniors, 

some seniors suffer from dementia or related diseases, but otherwise, normal aging processes can have an impact on seniors in 

terms of making reasoned decisions about their financial affairs. 

My remarks go not to home repair fraud or caregivers or family 

members who perpetrate frauds. We see that. I want to focus a little bit on the stranger frauds, particularly those that come in from 

outside the country. We have talked about Jamaica a little bit, but 

we see a lot of the so-called grandparents scams, the grandson or 

granddaughter who has supposedly been in an auto accident or has 

been arrested. They will say, I have a cold. That is why I don’t 

sound like—or I got punched in the mouth or I hit the steering 

wheel in the auto accident, so I don’t sound like myself. 

We had the lottery and sweepstakes cases. We had a Vermonter 

who took out a home equity loan on her house to send the port fees 

or taxes off to Australia or Canada to get the lottery winnings. 

We see the romance or relationship scams coming in from out of 

the country, pen pals that leads to more. And just to bring it more 

immediately, just in the last 10 days to our consumer assistance 

program, we had an 83-year-old man suffering from dementia who 

lost $8,000 in an investment scam and a 79-year old woman who 

wired $29,000 to her dear friend in Ghana. All scams. 

Truth is, States are struggling, we need Federal help. The 

Vermont State Police, let alone the Burlington Police Department 

or the Montpelier Police Department are not in the position to 

identify the scam artists from out of the country. We don’t have the 

jurisdiction to arrest them or prosecute them. And the likelihood 

59 

that we will get the Vermont consumer’s money back is virtually 

nil. We really need Federal help on that. So there are three main 

issues I would like to very quickly mention. 

We need Federal assistance to support research and development 

of evidence-based programs that go beyond simple consumer education, the fliers, the posters in banks and whatever, of what will 

work on a sustainable way to help seniors avoid being scammed, 

put together training materials, send to the States where at the 

ground level we can use those. So we are looking for effective and 

sustaining programs, research-based, to change consumer behavior. 

Second of all, and related to the first, is once we have those 

training materials and that research, we are looking for the support of State or local networks of individuals who work in senior 

meal sites, Social Security offices, banks, senior housing sites, to 

help prevent through interactions with seniors scams, identify it 

when they see it is happening, and then be able to effectively intervene to avoid further harm. 

And third and finally, we ask the Congress and look forward to 

working with our Federal partners to take a look at those players 

in the marketplace that in their legal carrying out of their business 

unknowingly, or at least facilitate the perpetration of the frauds. 

And particularly we would look to those wire service industries. 

And just in 2002, the States had a survey where 58 percent of the 

money wired to Canada over the period of the survey was fraudulent. I believe the FTC had a 2007 report where of wire transfers 

of over $1,000 into Canada during the survey period, 79 percent 

were fraudulent. 

So we would ask the Congress to look at some things at this industry and others and give protection from antitrust restrictions on 

wire companies sharing information about vulnerable consumers; 

maybe some extra hoops for wires of a certain amount to certain 

countries. 

Thank you very much for the opportunity, and I look forward to 

answering questions. 

[The prepared statement of Mr. Sorrell follows:] 

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Mr. TERRY. Thank you very much. Very informative from all of 

you. 

My first comment/slash question, Ms. Brown and Ms. Hillebrand, 

my wife is a bank teller part-time. Kids are getting older, wanted 

something to do. And about 2 months ago, and this is kind of an 

impetus for this hearing today, older gentleman, mid 80s, walks 

into the bank, he is a customer there, or has his accounts there, 

says, I need a money order check for X thousands of dollars. 

And my wife, thinking, well, this is odd that he is asking for this, 

and prompts a couple of questions. Oh, you know, what is this for? 

And he says, well, I am going to get this money. If I give this X 

amount of money, $5,000 or whatever it was, I am going to get all 

of this money. 

And, of course, she knew instantly he was being scammed and 

told him, you are being scammed. This isn’t real. You are not going 

to get this money. I feel very uncomfortable letting you go through 

with this transaction. 

No. And he was very, very demanding, called the boss over, supervisor. 

Supervisor instantly recognized it. Refused to give him the check 

that he was asking for. And they didn’t know, as Ms. Hillebrand, 

you pointed out, what their rights were. They just know they were 

being a good—wanted to protect this guy from the mistake he was 

about to make. 

So they asked, is there somebody in your family that helps you 

with your money? And they concluded the conversation, well, bring 

her in and we will work with the both of you on this check. And, 

of course, he didn’t show back up. But those are very real out 

there. 

And so that is just a real life story that occurred. And so when 

you mention, Ms. Hillebrand, about bank tellers needing to know 

what their rights are, most of the time, bank tellers have a lot of 

things they have to know about banking law, but how to work with 

somebody at the counter is probably not one of the things they are 

really taught. So you pointed that out in both your statements. 

Now, I am going to focus my questions a little bit—Mr. Campbell, Mr. Harwood, first question is regarding collection of the data. 

You mentioned, Mr. Campbell, your IC–3, 42,000 registered complaints within that database. Mr. Harwood, I don’t know how many 

you all receive at the FTC in a year span. 

Do you guys work together? Do you share the data and coordinate your efforts, Mr. Campbell, Mr. Harwood? Mr. Campbell first. 

Mr. CAMPBELL. That is right. We do share that information, and 

we feed much of it into the Consumer Sentinel Network as well, 

where it can be shared even additionally from there. And I believe 

Mr. Harwood can comment on that as well. 

Mr. HARWOOD. Yes. In fact, Mr. Campbell’s correct. IC–3 does 

feed almost all of its complaints, all of its complaints except for the 

murder and fraud-type things, I think, to—murder and those kinds 

of things, to the FTC, and then they are incorporated into our Consumer Sentinel System. 

Last year we received about 2 million complaints from consumers 

around the country. And our total database is over—I am going to 

say it is over 8 million complaints that we make available to law 

72 

enforcement agencies throughout the United States, Federal, State 

and local to use in developing cases. 

Mr. TERRY. All right. Now, Mr. Campbell, on the law enforcement side, and Mr. Sorrell brought this up to some extent, and you 

are dealing with international. How does local law enforcement, 

how are they able to work with State and Federal agencies when 

they have a person that has been scammed, when there is an actual victim? 

Mr. CAMPBELL. Well, certainly with the international aspect, as 

you can imagine, there are difficulties there in pursuing that, but 

we do receive information from all kinds of sources, including local 

law enforcement, in regard to scams similar to the one that you 

posited. And what we do then is run checks on all of that information, determine if there have been others elsewhere, if it is a pattern, if it is tied to any particular criminal organizations, tied to 

any particular subjects that we are already focusing on, and determine if in that sense there is a pattern involved that would initiate 

our involvement. 

The onesies, twosies, there are so many of them, it is difficult for 

us obviously with resources, but the good thing about the IC–3, 

though, is that they can compile that information, store it, continue 

to run analysis. And it may come up later that, based on information we get, it is tied to something else that is substantial enough 

that we would be able to engage, but we also do share that information with others who might be able to take action. 

Mr. TERRY. Very good. General Sorrell brought up a really good 

point, and that is there are money entities that are enabling the 

fraud. Money Gram. General Sorrell mentioned that 58 percent of 

the checks going to Canada through this wire service is fraudulent, 

and even higher when the amounts get higher. 

How can the FBI work to shut those down? Is there something 

that Congress needs to do to disable those that are enabling this 

type of fraud? 

Mr. CAMPBELL. Well, I don’t have specific information as to what 

we are doing with Money Gram and so forth, and I can maybe get 

back to you on something like that—— 

Mr. TERRY. All right. 

Mr. CAMPBELL [continuing]. but in regard to Congress, certainly 

if there is legislation that could be contemplated, we would be interested in working through the Department of Justice to consider 

legislation that might be effective, especially in those cross-border 

issues, which—— 

Mr. TERRY. Yes. 

Mr. CAMPBELL [continuing]. do create a lot of threat problems for 

the elderly. 

Mr. TERRY. Mr. Harwood? 

Mr. HARWOOD. Sure. Thank you. So with regard to Money Gram 

in particular, the FTC filed a law enforcement action against 

Money Gram precisely for facilitating lottery and prize promotion 

scams that involved Canadian operations. That was filed a couple 

of years ago. We obtained a substantial order against Money Gram, 

including injunctive relief and restitution for consumers. 

Since then, we have instituted a regular conference in Chicago 

that involves Money Gram, Western Union and GreenDot, a newer 

73 

entry into the wire transfer, money transfer industry, and we meet 

regularly to talk with them about the kinds of complaints that we 

are seeing and the kinds of things they are doing to try to deal 

with the problem. That conference includes representatives from 

other Federal, State and local law enforcement agencies. 

Third, we have been working with all three of those entities to 

develop consumer education initiatives so they can actually stop or 

warn consumers before they wire money offshore and try to discourage them. 

And then finally, all the complaints that we get from Western 

Union, Money Gram and Green Dot, and we get many, many complaints from them, go into the consumer sentinel system and we 

make those complaints available to Federal, State and local law enforcement agencies. 

Mr. TERRY. Fantastic. My time has expired, and Ms. 

Schakowsky, you are now recognized. 

Ms. SCHAKOWSKY. Thank you, Mr. Chairman. 

In a June 2012 report to Congress, the Consumer Financial Protection Bureau noted that consumers are getting reverse mortgages 

at younger ages, and that 70 percent of the borrowers are opting 

for lump sum payments rather than an income stream or line of 

credit. Unsuspecting seniors who select the lump sum option are 

particularly vulnerable to fraud, given the appeal of quick money. 

The CFPB has identified property flipping, inflated appraisals, 

cash-out theft, power of attorney and third-party imposters as some 

of the top risks to reverse mortgage borrowers. 

As I mentioned in my opening statement, Ms. Hillebrand, I offered an amendment that provides the director of the CFPB with 

authority to issue regulations for reverse mortgage transactions, 

and I was wondering what the status of the rule-making process, 

recognizing that there are some funding issues and the delayed appointment of Mr. Cordray, but how are we doing? 

Ms. HILLEBRAND. Thank you, Congresswoman Schakowsky, for 

that question and for your longstanding interest in protecting consumers as they consider whether or not to take reverse mortgages. 

We started with a study, which I believe was mandated by DoddFrank, I think that was part of your amendment to DFA, quite a 

comprehensive study. We found that even after housing counseling, 

some of the basic characteristics of these loans were not well understood. Housing counselors told us that people didn’t quite understand that it is a loan and, that you are essentially borrowing and 

using up your home equity as you go. And that was a difficult concept for people who actually were considering taking these loans. 

We did say in that study, or identified some of the potential future activities. One is regulation. And we said that we expect to 

undertake a project to improve and integrate the Truth in Lending 

Act and the Real Estate Settlement Practice Act disclosures for reverse mortgages, because it is a very different kind of product than 

a forward mortgage, so they would work better, and that as part 

of that project, we would consider—— 

Ms. SCHAKOWSKY. Let me just say—— 

Ms. HILLEBRAND. Yes. 

Ms. SCHAKOWSKY [continuing]. as someone who has been refinancing, some of that paperwork, I think, is virtually useless, I just 

74 

want you to know. I mean, you get this huge pile, you have got, 

like, an hour for the closing, and it is flipping through. And, you 

know, just a point there. 

Ms. HILLEBRAND. I appreciate that. 

Ms. SCHAKOWSKY. We don’t all often feel better because a piece 

of paper has been added to the stack. 

Ms. HILLEBRAND. Well, no. We want to actually make the disclosure work for consumers, and that is a major undertaking and 

something that we intend to do as—in the meantime, we do have 

some good consumer education material focusing on the key insight 

from the study, it is a loan, and then focusing on four key questions people should ask themselves. 

And for all of your constituents, if they are considering a reverse 

mortgage, make certain that both spouses are on the loan. If they 

are not, you can have a situation where the widow or widower has 

to either cough up the full amount of the loan proceeds or move out 

of the family home. So that is number one: put all the borrowers 

on the house. And then there are some difficult questions about 

what your expected life—how long you think you will live, whether 

it is worth it. And if you are too young, it also can be quite dangerous to take the reverse mortgage, because you have a risk of 

outliving your money. 

Ms. SCHAKOWSKY. The thing that is hard about a bunch of these 

different scams is that often there is a legitimate offering. A workat-home program, I suppose, could be legitimate. 

So what are the kinds of things that we can do to really help people distinguish? I mean, I think that is kind of what you are saying, Ms. Hillebrand, but are there other examples, or Mr. Sorrell, 

I mean, the kinds of things that help people sort through an offer, 

some of the key things they should be listening for that would alert 

them. I am just wondering if anybody wants to add to that? 

Mr. SORRELL. Well, I would go back to my suggestion that where 

the Federal Government could be really helpful is with some research-based analysis of what can work, because our view is just 

straight consumer education, the fliers, the mailers, even the peer 

counseling, the posters at banks near the teller as to whether this 

check is actually going to be there, the funds are going to be there 

2 weeks from now when it has finally gotten back to the sending 

bank, that that is not adequate. And I think AARP would suggest 

that just a few weeks after peer-to-peer counseling, the beneficial 

impact is reduced. 

So we really want to see the National Institute of Mental Health 

and academia take a look at this to tell us at the State level what 

can be effective for sustainable protection going forward. 

Ms. SCHAKOWSKY. I have got a couple of seconds. Mr. Harwood, 

it looked like you want to—— 

Mr. HARWOOD. Sure. I would agree with everything that General 

Sorrell said. That is part of the reason that we have been working 

with this new consumer education effort to try to talk with professionals and activities directors and others who are at facilities that 

are frequented by boomers and seniors to try to get a better sense 

of what kinds of messengers they will trust, what kinds of messages will be meaningful to them, and hopefully in that way help 

75 

them better educate consumers in a way that is going to be best 

received by those consumers receiving the messages. 

Ms. SCHAKOWSKY. Let me just say because it is interesting that 

the gentleman who was actually protected at the bank went away 

mad. You know? Anyway, thank you. 

Mr. TERRY. It is interesting. At this time the gentlelady from 

Tennessee is recognized for your 5 minutes. 

Mrs. BLACKBURN. I thank the chairman, I want to go to Mr. Harwood and General Sorrell, and let’s talk about some specifics. So 

let me use this Jamaican lottery scheme as an example. And I 

know New England has been hit particularly hard by that. 

And as these events happen, whether it is that lottery scheme 

which is telephone driven—— 

Mr. SORRELL. Yes. 

Mrs. BLACKBURN [continuing]. Or whether it is some of the rogue 

Web sites, what I want to know from you is what you are learning 

on the ground that you could transfer that information to Mr. Harwood? And then Mr. Harwood, what could you give us as action 

items where you could block some of these phone calls, block these 

Web sites, block the financial networks that are allowing some of 

the transactions? You always don’t have a bank teller who is going 

to say, you know, I think this is a scam. Let me get some help over 

here. 

And so let’s use that as a specific and talk about the lessons 

learned and then the action item that transfer that information 

and the action item and we have got 3 minutes and 47 seconds to 

do that. 

Mr. SORRELL. In 30 seconds I will say we don’t have the answers. 

We are trying peer-to-peer counseling. We go to AARP functions. 

We go on talk shows. We continue to say if it sounds too good to 

be true, it probably is. But what we have found thus far is that 

even one-to-one contact, that after a matter of weeks, the protective 

impact of that gets dissipated. 

Mrs. BLACKBURN. OK, let me say then when you find the action, 

what you are doing with that data and that information? Are you 

putting it in the Consumer’s Sentinel Network or how you are 

working with Mr. Harwood? Where do you transfer your lesson 

learned? How you are handling that? 

Mr. SORRELL. We communicate the information that we have to 

the Federal authorities. 

Mrs. BLACKBURN. OK. Then, Mr. Harwood, what then what do 

you do with that and what can you advise us would be helpful to 

do? 

Mr. HARWOOD. Thank you, Representative. There are a couple of 

challenges. First of all, we get information that oftentimes doesn’t 

tell a complete picture. Lots of times what happens in these scams 

the consumer knows something about what happened and they 

know they lost some money, but they oftentimes don’t know where 

they sent it. Sometimes it goes to multiple places. Sometimes it is 

wired to one country but picked up in another country. Sometimes 

there is an intermediary. I know that General Sorrell has seen all 

of these stories come up as well. 

So the first things, oftentimes, is to try to take those pieces of 

information that we receive from attorneys general and others and 

76 

try to turn them into a meaningful picture, and that is where the 

Consumer Sentinel system comes in and other analysts come it. 

You are trying to create a where is this money being wired from, 

where is it being picked up at? And it is oftentimes a challenge, 

frankly, because these scammers don’t want to be found. They are 

trying to hide behind international borders and behind multiple 

steps in the process. 

Nevertheless, we have had some success in that regard. In fact, 

some companies have stopped agreeing to wire or process money 

that goes to Jamaica. I think GreenDot, which is one of the wire 

transfer companies, actually stopped allowing people to remove 

money in Jamaica because of the number of scams that are coming 

there. That, in part, is because of ongoing dialogue with GreenDot 

about the number of scams. 

Mrs. BLACKBURN. What about the credit card processors? And 

PayPal, and some of those? 

Mr. HARWOOD. I don’t think they have taken the same sort of action in that regard, but I would have to confirm that before I could 

say for sure. 

Mrs. BLACKBURN. OK. 

Mr. HARWOOD. The next step is there is actually a Federal law 

enforcement effort that is actually located in Jamaica called Project 

JOLT that is a joint effort by criminal law enforcers, and I think 

it is the Postal Inspection Service that is leading that effort at that 

point, but it includes other Federal criminal agencies. They are 

working with local prosecutors in Jamaica to try to shut down some 

of the scammers in those countries. They use information such as 

the information from the Sentinel system to help them target the 

entities they are going after. 

Of course, the challenge is even if you find them you have to 

know how to prosecute them and get them extradited to the United 

States. That is a very expensive process and can oftentimes be a 

challenge for criminal law enforcers, but that, nevertheless, is what 

they try to do. So the information we obtain is used also by Project 

JOLT to develop their efforts and go forward. 

Mrs. BLACKBURN. What about the communication companies? 

What kind of information do you have to give them and programs 

like FairPoint? 

Mr. HARWOOD. So this would be, for example, we are talking 

about telephone companies, mobile carriers, Internet? 

Mrs. BLACKBURN. Yes. 

Mr. HARWOOD. So there are a couple of different things we have 

done with them. Obviously, they are aware of the problem we are 

seeing here. The challenge has been a lot of these operations now 

use VoIP services, so they actually disguise where they are located. 

VoIP is an automatic system. It is very hard to track them down. 

So as much as the phone companies like to tackle the problem, oftentimes they can’t really see where the calls are coming from. 

Which, again, means they can be only of limited service to us. But 

to the extent they know what is going on they do try to work with 

us. 

Mrs. BLACKBURN. Thank you. Yield back. 

Mr. TERRY. At this point, we recognize the son of the Godmother 

of Vermont politics, Mr. Welch. 

77 

Mr. WELCH. Thank you very much, Mr. Chairman. 

I want to follow up on Mrs. Blackburn’s questions, Mr. Attorney 

General. Thanks so much for being here. The real question here is 

at the point where the scam is initiated, or at the point where the 

victim is coming into the bank, it is at the moment before that actual transfer of cash, that appears to be from everyone’s testimony 

the very critical moment. 

And there are some challenges here. For instance, Mr. Terry’s 

wife, what is she to do when the depositor comes in, has a right 

to access the money, but she really does know that this is going 

to vanish? Are there some things that we can do to provide encouragement and protection to a person like his wife who is going to 

do what we all think is the right thing? 

Mr. SORRELL. Well, we had an example up at the Price Chopper 

in St. Johnsbury where a woman was in trying to wire money, a 

grandparents scam, and the clerk said, Mrs. Stowe, I think this is 

a scam. I don’t want to do this. And she said it might well be a 

scam, I love my granddaughter, she needs help, send the money. 

But Price Chopper didn’t send it and within a matter of hours, 

learned that it was a scam. So that was a intervention. Good for 

Price Chopper. 

I don’t know what legally could be done, unless you are looking 

at some restrictions of some extra hoops that a wire transfer company would need to go through for transfers above a certain 

amount to certain countries or would-be recipient locations. 

Mr. WELCH. Mr. Harwood, what about that? Because again, as 

a practical matter, what the Attorney General told us is something 

we all knew. Once the money is out the door, it is gone. And that 

victim is not going to get it back. And then you also mentioned that 

a lot of victims are so embarrassed that they got taken that they 

won’t even report. Are there things that we can do that would help 

the wire transfer company? That would help the banks? That 

would help the Price Choppers? So that when they made a very 

reasonable judgement that look, this is a scam, they could take appropriate action to stop it before it ended? 

Mr. HARWOOD. That is a great question. There are a couple of 

things. First of all, obviously we have been trying to encourage the 

wire transfer companies to implement better procedures that would 

make it possible to more easily track where the money is being 

picked up, who is picking it up, that sort of thing. Their current 

procedures—let me say their historic procedures have been rather 

loose in terms of tracking where the money is going. 

Mr. WELCH. So let’s talk about that a little bit, because they obviously make money each time they make a transfer. So the victim’s loss is the wire company’s gain. And it shouldn’t be any motive here but, there is not a strong incentive for them to make that 

extra step. What would be some of the practical steps they could 

take, and that we could practically and reasonably require them to 

take, to provide for the protection of the person transferring that 

money? 

Mr. HARWOOD. Well, I think there are a couple of things. First 

of all—and some of them have already done this—implement a callback program where they are being asked to wire a certain amount 

78 

of money, before they actually make that wire, call back the consumer. 

Mr. WELCH. That is it sort of what Mrs. Terry did. 

Mr. HARWOOD. And some of them are already doing that. It 

would be great to see that happening with all the companies. Secondly more intervention by the actual tellers than we are seeing 

now. In some cases they have got signs up, not all of them have 

signs or warnings up, or provide the training. That would be wonderful to see. Third, it would be good if we could make sure that 

when they wire a particular country or particular location, the 

more precise we can get information on where that money is being 

wired, the more likely it is going to be for us to actually target the 

scam there. 

Lots of times right now you can wire to one place, but it can actually be picked up somewhere else. For example, if you wire it to 

Vancouver, British Columbia, your money might even be picked up 

in Montreal, for example, which makes it different to deal with 

that issue. 

And then finally, through our ongoing sort of dialogue with all 

the wire transfer companies, we have been pointing out to them 

which ones seem to have the worst problems. Somebody commented on the fact there are antitrust issues with sharing information. We are trying to bridge that by working with them and saying, you seem to have bigger problems with this country, seem to 

have a bigger problem with this country. And we do that by looking 

at the data we are getting on all of them through our consumer—— 

Mr. WELCH. So you from the FTC would be OK with the allowing 

of sharing of information when the goal of that sharing was to protect against victimization? 

Mr. HARWOOD. Well, I am not an antitrust attorney, but I would 

certainly think that because I think there would be significant consumer benefits in that regard. 

Mr. WELCH. So you wouldn’t object to us doing the right thing 

here? 

Mr. HARWOOD. No, even for competition purposes, yes. 

Mr. TERRY. He might not be able to speak for the Justice Department though. 

Mr. WELCH. Do I still have some time? 

Mr. TERRY. Yes. 

Mr. WELCH. Well, I just want to ask the FBI, you know, Mr. 

Sorrell, the Attorney General, is saying that the Montpelier Police 

Department, Burlington Police Department, they don’t have all the 

resources. But I have noted you guys are kind of busy yourselves 

with a few things going on, and wire transfers are probably not 

things that you have a lot of agents to chase down one after another. What I think might be helpful, Mr. Chairman, is that we ask 

the FBI, the FTC, and maybe the National Association of Attorneys 

General to give us some concrete A, B, C what we can do that 

would help at that point of transfer so that we are stopping the 

transfer before it is impossible to catch up. Would that be something—— 

Mr. SORRELL. We would welcome that. 

Mr. HARWOOD. We as well. 

Mr. WELCH. Thank you. I yield back. 

79 

Mr. TERRY. Thank you, Peter. And at this point I now recognize 

Mr. Lance, the vice chairman of this subcommittee. 

Mr. LANCE. Thank you, Mr. Chairman. To Ms. Hillebrand, you 

discussed the fact that financial advisors, sometimes the elderly, 

trust the wrong advisor. Could you explain briefly how your authority differs from that of the FTC? 

Ms. HILLEBRAND. Thank you. Let me start by describing a little 

more detail our study, which is a congressionally-mandated study 

on senior designations. We found a wide variety of these designations. Some you can—there is one you can get by taking a 100- 

question multiple choice test with no education, all the way to ones 

that require graduate level education and substantial professional 

credentials. 

But the initials are quite similar and it is very hard to tell one 

from the other. So we issued the report with the analysis looking 

at things like what is the educational requirement to get the designation? Is there any ongoing checkup to see if you are still qualified by the entity that gives the designation? Is there any oversight? A CPA license can be taken away by the State Board of Accountants; can a designation be taken away by the conferring agency? We found a very wide variety and have recommended that the 

agencies that do licensing think about adding a feature to their license check sites that say we can check on this too. You asked a 

slightly different question and I will try to answer it. 

Mr. LANCE. Are most of these designations determined by State 

entities? 

Ms. HILLEBRAND. The designations are conferred by private entities, private bodies that give the designations. But most of these 

folks also have a license of some kind and many of them hold a 

State license. 

Mr. LANCE. And the State license would be CPA—— 

Ms. HILLEBRAND. Could be a CPA license, could be a financial 

planning licenses in States that license those, it could be an insurance agency license. 

Mr. LANCE. Is there a broad array across the Nation as to these 

designations and whether or not they are overseen by State capitals? 

Ms. HILLEBRAND. Yes, the licenses are overseen by the State licensing body, but generally, there is nobody overseeing the designations and that is why we raised this issue to bring it partly to 

the attention of those who license the individuals who have a license to look at what they are doing with the designation as well. 

Mr. LANCE. Thank you. It seems to me that scam artists are brazenly open about their business and I am not sure that current 

penalties deter them. To the FBI, do you believe that we need more 

severe penalties to deter scams and fraud? 

Mr. CAMPBELL. Again, we would certainly be interested in working through the Department with regard to studying potential legislation that might—— 

Mr. LANCE. The Department of Justice? 

Mr. CAMPBELL. The Department of Justice, that is right, in regard to maybe considering stiffening those penalties. That is correct. 

80 

Mr. LANCE. And from your perspective, what is the most egregious situation where you think penalties might—stronger penalties might be appropriate? 

Mr. CAMPBELL. Well, that is—that is difficult to say, because 

with each of these scams, they impact various victims in different 

ways regarding their life savings, personal issues, that type of 

thing. So I think more research would probably have to be done in 

order to sort of categorize maybe what is more egregious or has 

specific factors related to it that might mean that there are aggravating factors, that type of thing. 

Mr. LANCE. Thank you. To whoever on the panel is expert on this 

area, I am not as familiar with reverse mortgages as I should be. 

Are there several national reverse mortgage companies? Or is this 

widely dispersed across the Nation? Perhaps, Ms. Hillebrand? 

Ms. HILLEBRAND. Yes, thank you. There is a program federally 

insured and providers generally will provide the so-called HECM 

mortgage. That is the more common one. Consumers do have a 

choice to take it all out in a lump sum or take monthly payments. 

If you take it all out in a lump sum, you are at risk of somebody 

stealing it from you after you have it in your pocket. That is it a 

danger that is very hard to understand when somebody says to you 

would you like this dollar amount or so much per month? 

Mr. LANCE. Are reverse mortgages regulated at the State level 

or are they regulated here? 

Ms. HILLEBRAND. At the Federal level. 

Mr. LANCE. At the Federal level. And which agency does the regulation? 

Ms. HILLEBRAND. There are requirements under the Truth in 

Lending Act, and we have the regulatory responsibility at the 

CFPB. As you know, under Dodd-Frank, there are multiple entities 

that can enforce the Truth in Lending Act and we are among those 

entities. 

Mr. LANCE. Thank you very much, and I yield back the 15 seconds I have left. 

Mr. TERRY. Very well. Thank you. Now we recognize the gentleman from Missouri, Mr. Long. 

Mr. LONG. Thank you. And thank you all for being here today. 

General, let me ask you, on my notes here from your testimony, 

earlier you said that the Federal Government could be of benefit 

to you by research and development, training materials, change 

consumer behavior. And then you said something about protection 

from, was it antitrust, or did I write that down wrong? 

Mr. SORRELL. Yes, that was the issue Congressman Welch raised, 

and there are concerns that there might be some antitrust restrictions on companies that wire funds sharing information with each 

other about their customers who are vulnerable to being scammed. 

And also possibly the sharing of information as to locations to 

which money is being wired that there have been complaints or reports of high percentages of—— 

Mr. LONG. So that is something we could help you with on a Federal level? 

Mr. SORRELL. Very much. Yes. 

Mr. LONG. OK. I would like to get something in writing from you 

later. In answering the question, to you, General, you mentioned 

81 

AARP could be of benefit to us or to you or something. Could you 

explain that or how that would work? 

Mr. SORRELL. AARP is very concerned about seniors generally 

and being scammed. And there was a wonderful meeting—very 

beneficial meeting at Stanford a couple of years ago that AARP was 

behind trying to bring academia and enforcers together to deal 

with issues about how to better protect seniors from being 

scammed. 

Mr. LONG. Do you know what they define as a senior? How old 

do you have to be to join AARP or—— 

Mr. SORRELL. I think it is 50. 

Ms. HILLEBRAND. Fifty-five, I think. 

Mr. SORRELL. I have been a member for so long I have forgotten 

when I became eligible. 

Mr. LONG. Well, you might be interested to know that some of 

your money is being spent to send out literature such as this from 

the AARP. And it says: According to our records show that you 

haven’t registered for the valuable benefits of AARP membership, 

even though are you are fully eligible. Please return the above form 

with your payment to receive your membership kit and new card 

for you and a household member. Their membership is included at 

no additional charge. 

It is pretty tempting. You are going to get a free insulated travel 

bag if you send this in with the appropriate dollar amount, and 

they even have a card in there for my daughter because the letter 

is addressed to her and she is 24 years old. 

Mr. TERRY. I think they have lowered the age. 

Mr. LONG. It says on here that you have to be 50. Is this normal? 

Why would they send something to a 24-year-old kid? 

Mr. SORRELL. I assume that was some mistake, but I can’t speak 

for AARP on that 

Mr. LONG. I tried to contact them—my staff tried to contact them 

and they said that they will call me personally on the matter. I 

don’t know why they can’t share information with my staff. Anyway, I qualify, but my 24-year old daughter doesn’t. 

Let’s see, Ms. Hillebrand, you are talking about SEC and bad advice—not the SEC, but you are talking about bad advice with financial brokers. Is that what you were—financial advisors? 

Ms. HILLEBRAND. Financial advisors, yes. 

Mr. LONG. How do you ascertain—there is good financial advisors out there, there are financial advisors that have a good reputation, and then there are some other financial advisors out there. So 

how do you ascertain whether you are getting fraudulent advice or 

someone is scamming or maybe they have a really, really good reputation, but they are putting you in mutual funds that they get a 

big payoff on every time they sell you one, and they churn your account and they decide to put you in another one? 

So how do you decide if someone is getting bad financial advice 

or someone is being scammed? 

Ms. HILLEBRAND. So you raise a difficult question for individual 

seniors who are investing their life savings and need to make good 

choices for themselves. It is a complicated market. There are a lot 

of licenses. There are a lot of these people who have the word ‘‘senVerDate Nov 24 2008 15:28 Jul 31, 2014 Jkt 037690 PO 00000 Frm 00087 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-41 CHRIS
82 

ior’’ in their title, and that is what we focused our report on, people 

who claim to have specialize expertise for seniors. 

Of course, individuals need to get references. They need to ask. 

We know do there are some dangers signs. Any advisor or salesperson who tells you the door is closing, act now, that could be a 

moment to stop and say I want to think about this more carefully. 

We have seen some difficulties associated with the so-called free 

lunch programs where people will assert that they are senior specialists, give you a free lunch, and it is actually a sales activity but 

it may be pushed as an educational activity. That is a danger sign. 

But it is a complicated and difficult choice for people. 

Mr. LONG. I would think it would be, because there are a lot of 

financial advisors who operate businesses in different ways, and 

may have had a client for years and years and years, and I don’t 

know where you draw the line between poor financial advice and 

fraudulent financial advice, I would guess. 

And real quick for Mr. Campbell, on mortgage scams, we had a 

tremendous run on real estate scams. I was a real estate broker for 

30 years before I came into Congress, and our particular area, 

southwest Missouri, Springfield in particular, we had a lot of fraudulent real estate companies there that some people have gone to 

prison, others may. But as far as a mortgage scam, how does that 

work exactly? 

Mr. CAMPBELL. Well, it is the same type of thing where we will 

receive information either through contacts we have made within 

that industry or from victims themselves. And then we look into 

those issues and if it turns out that there is a pattern there, again, 

if there is some kind of criminal organization behind it, a dollar 

loss of significant amounts, that type of thing, that is going to trigger then potentially our—— 

Mr. LONG. What is a mortgage scam? Is it the mortgage broker 

collecting—not the real estate broker, but the mortgage broker collecting too much commission? I know how the real estate scams 

work, because we had that prevalent in our community, and they 

would run ads on the radio and signs everywhere where you would 

get in for nothing and then you buy this house and they finance 

it, and then they would talk you into buying another house and another house at a bigger value and they would give you the profit 

off of that one. And pretty soon everything collapsed. 

But a mortgage scam—I am past my time. Real briefly, can you 

just give me one example of how one would work a mortgage scam? 

Mr. CAMPBELL. That is all generally the same. Those are mortgage scams. The same with the reverse mortgage scams. That type 

of thing. Straw buyers, and then—— 

Mr. LONG. But I am assuming there are legitimate reverse mortgage companies out there; correct? Good resource mortgage companies? 

Mr. CAMPBELL. There are, yes, that is correct. 

Mr. LONG. I don’t know much about their business, but it seems 

they have taken a pretty good hit and today and I have not heard 

anyone say there are some good ones out there. Anyway, thank you 

for being here. 

Mr. TERRY. The gentleman’s time has expired. The chair recognized the gentleman from Maryland. 

83 

Mr. SARBANES. Thank you, Mr. Chairman. This is a really, really 

important hearing, given the demographic wave that is coming at 

us and how many seniors potentially are going to be exposed to 

these scams. And Ms. Hillebrand in, particular, I am gratified to 

hear the efforts that the new Bureau is undertaking in this area. 

In that sense, the Bureau arrives just in time given what is coming. 

I have been intrigued by General Sorrell’s observations about 

how things that we might believe would help our seniors in terms 

of education efforts, posters, even peer counseling and so forth, 

really, in some instances, aren’t that effective right out of the gate 

or lose their effectiveness over time. It seems to me that is a huge 

challenge in this and I wondered if you could speak—and any others on the panel who would like to—just about kind of the difference between passive outreach, if you will, and education, versus 

ongoing active outreach, and how you enlist third parties in that, 

how you enlist those who have the occasion to interact with seniors 

on a more regular basis to be kind of part of a comprehensive network of resources that are helping those seniors be much more vigilant? How potentially you enlist families to be on the alert that 

their parents or their grandparents may be at risk for these kinds 

of scams? Because we can delude ourselves into thinking that we 

are doing enough, and in fact, that may not be happening. So I will 

just throw that to you. 

Ms. HILLEBRAND. Thank you for that important question about 

how we can all be more effective in helping seniors and those who 

work with them to protect themselves. We agree. It is not ‘‘here is 

a brochure and good luck with that.’’ We need to actually get in at 

the moment when people are thinking about these financial issues, 

being approached by a scammer, and that is very hard to do. But 

there are some points of light. 

With the Money Smart for Older Adults program, that is designed to be given in person at senior centers and community centers by lay volunteer or a community trainer, because as General 

Sorrell pointed out, people want to be together and talk about 

issues. The Financial Services Roundtable has done some training 

for banks to give to their own tellers to identify those risk spots. 

And we have a project now, we are looking not only at educating 

seniors, but we need to educate the caregiver generation. We need 

to educate those folks who seniors may be turning to in their communities and also in their families. And there is one other form of 

person in between the senior and the scam, and that is folks who 

provide convalescent care settings. So senior housing, assisted living, nursing home staff. And we are putting out a guide later this 

summer for the professionals who work in those places to spot the 

first signs of elder financial abuse. So if may be that it is a senior 

who has trouble making a homeowner’s payment to the homeowners association. That may be an indication that someone is actually tapping them for money and draining their account. We are 

trying to build that layer in with people who are reaching seniors 

in other ways to be aware of and to spot and to start to cut this 

off before the money is lost. 

Mr. SARBANES. General, does your office have, like, an information hotline or like something—or do those sorts of things exist 

84 

where you put out if you for getting a call, if you are curious, or 

if you are worrying about a scam, you can call this number? 

Mr. SORRELL. Yes, we, in a population of about 630,000, we have 

a consumer assistance program. Toll free number. We get between 

5- and 8,000 calls a year. Questions complaints and such. We do 

a lot of Web-based consumer advice. We invite seniors to sign up 

for consumer alerts. We go around to senior centers and make 

these kinds of presentations. But it feels to us that despite all of 

those efforts, as I mentioned earlier, just in the last 10 days, we 

are seeing seniors in Vermont lose thousands of dollars despite our 

best efforts. 

Mr. SARBANES. I am about to run out of time, but do you think 

there can be more opportunities for public service announcements 

on television and other places that sort of offer seniors an opportunity to call into a hotline and so forth? 

Mr. SORRELL. Well one of my suggestions for Federal assistance 

is funding for more academic study as to what will be effective. 

And what we have been trying is only moderately successful. 

Mr. SARBANES. OK. Thank you. 

Mr. TERRY. Thank you, Mr. Sarbanes. At this time the gentleman, Mr. Johnson, is recognized. 

Mr. JOHNSON. Thank you, Mr. Chairman. I want to thank the 

panel for being here today also. I represent the Appalachian Ohio 

district which runs all along the Ohio River. We have a very large 

senior population. And so the testimony and the evidence garnered 

from this hearing is very important to the people that I represent. 

Ms. Brown, starting with you first, your testimony contains a 

frightening statement that the financial fraud perpetrated against 

elders is reaching epidemic proportions. Is this because of a growing senior population, because of the reach of the Internet, or something else? 

Ms. BROWN. I think it is a combination. The first and most important factor is the significant growth in the senior population and 

in proportion of our population that are seniors. And when you 

combine that with the many different new opportunities with different things, like the Internet and ways to reach seniors. I think 

that the third factor that we have heard about today is that there 

are new sets of caregivers that may not be aware that their parents 

or those that they are caring for are becoming vulnerable and are 

in vulnerable positions yet. 

Mr. JOHNSON. I have an 80-year-old mother, and I can tell you 

it is a full-time job for me and my siblings to keep her out of trouble. About every week she has got another good deal that someone 

has laid out for her. Mr. Harwood, you testified that you try to anticipate future areas of concern. How do you read the tea leaves, 

and what data do you use to identify emerging threats? 

Mr. HARWOOD. Thank you. And that anticipation is challenging. 

As I indicated though, we based on past experience, we know some 

area where scams tend to evolve. For example, where there are 

new programs or new initiatives, Federal Government initiatives, 

scammers are opportunistic. They see confusion that surrounds 

those new programs and new initiatives and it is an opportunity 

for them to create confusion and defraud consumers and seniors. So 

we watch for those kinds of things emerging. 

85 

Secondly, we look at things like surveys showing the tremendous 

growth among seniors with regard to Internet usage. And we have 

been seeing a lot of that in the last years. That reflects at this 

point younger seniors who moving on line, but obviously there is 

a much greater usage of the Internet by seniors which leads us to 

suspect that we will see more fraud on the Internet that are targeted to seniors or at least attractive to seniors. 

Mr. JOHNSON. Sure. You know, you bring up a good point. You 

testified that a Pew study shows that seniors over 65 are rapidly 

going on line. More of them are. My 80-year-old mother is one of 

them. I spend more time doing remote diagnostics than I do anything else. And I am an IT professional having spent 30 years in 

the industry. 

Are there special scams that they should be aware of or take precautions to prevent? And before you answer that, you know, we 

have talked here in the House about cybersecurity. Given the magnitude of the threat that you folks are laying out, do we need a 

more proactive, almost like identifying hackers and intruders into 

our networks? Do we need some kind of offensive operation to identify these scams so that we can put the word out to seniors and 

let them know about it? 

Mr. HARWOOD. Well, first of all, I am not a cybersecurity expert, 

so I can’t tell you—I don’t know whether—— 

Mr. JOHNSON. The answer to the second one. So that is good. 

Mr. HARWOOD. Fine. Good. As to the scams, yes, I think that 

there are scams that are particularly likely to be attractive to seniors. We see more and more scams that involve age-related maladies, health issues, things like that, that are occurring on the Internet. Arthritis-related, diabetes-related products being marketed on 

the Internet and elsewhere. Some of those are particularly conditions that are more prevalent among seniors. 

I think probably some of the investment scams, things like that 

may be attractive to seniors as well. The extent those migrate to 

the Internet, we may see some of those as well. The point is that 

various scams that used to be targeted to seniors and more marketed to them through mail or through telephone, as more seniors 

get on the Internet, you are going to see those scams migrate to 

the Internet as well. 

Mr. JOHNSON. Quickly, to what extent are any of these scams 

originating outside of the United States? Do we have any cases of 

cross-border issues? 

Mr. HARWOOD. Many of them, I am sure. Particularly on the 

Internet, it is easy to market across international borders and we 

see a lot of scams that have significant international connections. 

The FTC has filed a number of cases over the years. But of course, 

the international borders can be a challenge for law enforcement. 

Mr. JOHNSON. I have a lot more questions and no more time, Mr. 

Chairman. I yield back. 

Mr. TERRY. Such is life. Jan and I have one question that we are 

going to ask you before we gavel this hearing and that is, each one 

of you—Ms. Brown, we will start with you—30 seconds, minute, 

give us the one thing you want to leave us with. The message to 

us. What can we do? 

86 

Ms. BROWN. What you have heard today is a lot of wonderful 

ideas and a lot of good positive actions with good intentions. And 

what concerns us is that there seem to be scattering in so many 

different directions. Each agency has its own know responsibility 

and they are fulfilling it. That is why we believe that there really 

needs to be a comprehensive plan looking across the board at how 

we can marshal those resources in the best possible way. 

Mr. TERRY. Mr. Campbell? 

Mr. CAMPBELL. Yes, sir. I think increasing the partnerships as 

we discussed here today is going to be important, and sharing information. I also want encourage the public to visit the IC3.gov 

Web site to obtain information about all the scams we are talking 

about today. And there is another Web site they produce called 

lookstoogoodtobetrue.com, and it explains in very plain language 

all of the definitions of the scams that we have spoken about here 

today and information that if you suspect you are being scammed, 

or someone you know, there is good information there and please 

call the FBI or your local law enforcement as well if you believe 

that there is a scam occurring. 

Mr. TERRY. Good counsel. Mr. Harwood? 

Mr. HARWOOD. Thank you, I am actually going to steal an area 

that I suspect General Sorrell is going to make as well, which is 

more research. I actually participated in the Stanford event that he 

talked about, and it is clear that we can are deficient with regard 

to research that would help us understand why seniors are being 

defrauded or how they are being defrauded, what kinds of messages are working with them, what kinds of experience they have. 

That research would also help us better target our consumer education efforts, and in fact, also would probably help us target better 

our law enforcement efforts to have a better sense much of what 

works for those efforts. 

I would strongly urge more research, more study. Both by academics and applied research looking at what messages work for 

seniors. 

Mr. TERRY. Thank you. Ms. Hillebrand? 

Ms. HILLEBRAND. Thank you, Chairman Terry, and I commend 

your wife on her care. 

Mr. TERRY. I will pass that on. 

Ms. HILLEBRAND. Please join the CFPB in encouraging the older 

Americans who you serve to speak up and speak out about elder 

fraud and elder financial abuse. The more people stand up and say 

this nearly happened to me and here is how is how I spotted it, 

and the more they say it did happen to me, and I am telling you 

so that it won’t happen to you, the more we are going to be able 

to spread this word. Thank you. 

Mr. TERRY. Good point. Thank you. General Sorrell? 

Mr. SORRELL. Again my thanks for the opportunity to be here. 

I just want to repeat the States need help. There is a real Federal 

lull here with financial support and resources. I look forward to 

working with the Congress and Federal partners to do a better job 

to protect seniors in this country. 

Mr. TERRY. Well, I want to thank all of you for your efforts here, 

your information, your testimony. It is going to be helpful for us 

deciding how to best help our senior constituents. 

87 

I do want to add that probably the main driving impetus was not 

only my wife’s experience at the bank, but Jan’s passion on this 

issue. So she has a long history of working that area and her election to Congress just transferred where her voice is heard. 

So with that, I ask unanimous consent to have a letter from the 

National Consumers League included in the record. And it has 

been shared with the minority. 

Ms. SCHAKOWSKY. Without objection. 

Mr. TERRY. Without objection, so ordered then. 

[The information appears at the conclusion of the hearing.] 

Mr. TERRY. And again, thank you to our panel. I want to remind 

the members that they have 10 days to submit additional questions 

for the record, and then if there are any questions submitted by the 

members, they will be sent to you, and we respectfully request 

timely responses and multi-month is not considered upon timely by 

most of us. 

So with that note, we are now adjourned. 

[Whereupon, at 11:29 a.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

PREPARED STATEMENT OF HON. FRED UPTON

Defrauding anyone of their hard earned savings is despicable. While the Federal 

Trade Commission indicates the overall rate of fraud against our senior population 

is no more prevalent than fraud against the rest of the population, there are reasons 

to be concerned about this group in particular. 

Demographics are changing in this country, and quickly. The baby boom generation is just beginning to retire and will increasingly swell the proportion of our population enjoying their golden years. In Michigan, out of a population of just under 

10 million people, we have 1.3 million citizens over the age of 65, and another two 

million between the age of 50 and 64. This developing increase means that the number of fraud cases against the elderly will rise for many years to come, even without 

any change in the overall historical rate of fraud. 

Adding to this dynamic is the financial reward to criminals of targeting the elderly. Most workers nearing retirement aspire to begin those years with a nest egg that 

will last them two or more decades. To do so they have accumulated far more assets 

and benefits over their working career than the younger people who are still working. And statistics indicate the wealth gap between today’s retirees and their younger counterparts has widened over the past few decades. These facts would suggest 

that the elderly will increasingly be targeted by criminals. Just as the infamous 

Willie Sutton targeted banks for his robberies, more retirees with more wealth are 

an attractive group to criminals because ‘‘that’s where the money is.’’ 

There are additional reasons to be concerned for the elderly. We are living much 

longer, healthier lives than ever before. But the longer we live, the greater the odds 

of diminishing mental acuity that can affect our decision making and make us more 

susceptible to scams. And as Internet broadband adoption expands, we are also seeing a growing proportion of elderly going online and opening up a potential new avenue for scam artists to target them. Though it may pose new challenges, the good 

news is the Internet can also be a great research tool for seniors to help prevent 

fraud. 

It is our duty to make sure government resources are allocated accordingly to help 

our citizens prevent these crimes. As the saying goes, an ounce of prevention is 

worth a pound of cure. So education can and should be the first line of defense. 

From the federal government down to media to community organizations, there are 

plenty of resources available for consumers to stay informed about scams and learn 

how to protect themselves or their loved ones. The hurdle seems to be getting the 

message to everyone and alerting them to the dangers that exist—whether it’s online or over the phone. 

I am pleased to see the issue is clearly in the focus of our relevant state and federal agencies and you share our goal to prevent this from becoming a bigger problem 

than it is today. I look forward to learning more about the efforts to prevent these 

crimes and hear any recommendation we should consider further. 

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