Consumer Protection

Fraud is Sweeping the Nation as Federal Watchdogs are Put Down

Recent analysis shows fraud losses are hitting Americans hard while Congress and Trump move to undo consumer protections and dismantle federal regulators.

Americans are increasingly at risk of losing their money to fraud and scams according to Consumer Federation of America (CFA)’s analysis of Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB) data. CFA aims to advance pro-consumer policies and is deeply concerned that the Trump administration’s moves to cripple our federal fraud regulators means it is now open season on consumers. “Rather than empowering regulators to crack down on fraudsters, the Trump administration and Congressional Republicans are making it virtually impossible for our federal ‘fraud police’ to help scammed and cheated Americans,” according to Erin Witte, Director of Consumer Protection at CFA, “Americans of all ages are losing billions of dollars to fraud while Trump is pardoning the corporate lawbreakers who steal it.”

Despite more people losing larger amounts of money to fraud, the Trump administration has fired the CFPB’s Rohit Chopra, ordered all CFPB staff to stop all work, pardoned billions of dollars of corporate misconduct, and fired two FTC commissioners.

Big tech and digital payment apps in particular have been increasingly exploited by fraudsters as a way to steal consumers’ money. CFA’s analysis shows that fraud perpetrated via digital payment apps has increased by over 200% since 2021, with losses to consumers totaling at least $390 million in 2024 alone (and likely much more). In 2022, consumers who filed complaints with the  CFPB about money services (like digital wallets) reported that “the issue that best described the problem they experienced” as “fraud or scam.” Broadly, the trend continued into 2023 when the CFPB found that consumers “raised issues related to fraudulent activity in nearly every product category.”

Prior to the Trump administration, the CFPB brought aggressive enforcement actions and developed regulations to address the stampede of big tech into finance. But in a stunning move to abandon victims of fraud, Trump’s appointee, Acting CFPB Director Russ Vought pardoned Zelle’s repeat offender bank backers for opening the doors to fraudsters to steal more than $870 million from their customers. The Bureau found that “hundreds of thousands of consumers filed fraud complaints and were largely denied assistance, with some being told to contact the fraudsters directly to recover their money.” The CFPB’s ousted Director Chopra had previously highlighted the growing ubiquity of digital payment apps as a vehicle for scammers to steal consumers’ money.

“When seniors are getting actively scammed, we don’t have time for giant corporations to try to pass the blame to each other,” Erie Meyer, the former Chief Technology Officer at the CFPB said, “Congress gave CFPB rulemaking authority to address this exact abuse, and we used it to put the consumer first. If big tech wants to be in the payment space, they should have to follow the same rules as brick-and-mortar businesses.” In November, the CFPB published a final rule that would subject ‘general-use digital consumer payment applications’ to supervision by the CFPB, allowing the agency to monitor for risk of harm to consumers, but a Republican-led Congress is quickly moving to kill this rule.

“Americans are already being financially squeezed by inflation, and now the only watchdogs trying to fight the proliferation of fraud in America are being dismantled or muzzled,” said Witte.

“It feels like American consumers are at risk of fraud around every corner: whether due to identity theft, scams, or account takeovers,” Witte said of the nationwide fraud epidemic, “the only reason you’d want to gut the CFPB or hamstring the FTC at a time like this is if you simply don’t care about people losing their hard-earned money.”