Title: As Scams Become More Costly and Sophisticated, What is Needed to
Protect Consumers?

Description: Increasingly, Americans are falling victim to more frequent
and sophisticated scams. Technology is helping to fuel this increase.
And it’s costing Americans a lot of money. We’ll learn about federal
efforts to combat a growing number of scams and how effective these
efforts are from GAO’s Seto Bagdoyan.

Related work: GAO-25-107088, Consumer Protection: Actions Needed to
Improve Complaint Reporting, Consumer Education, and Federal
Coordination to Counter Scams 

Released: April 2025

{Music}

[Seto Bagdoyan:] Fraudsters are very agile, very adaptive, and they're
using AI to perpetrate their schemes.

[Holly Hobbs:] Hi and welcome to GAO's Watchdog Report, your source for
fact-based, nonpartisan news and information from the U.S. Government
Accountability Office. I'm your host, Holly Hobbs. 
Increasingly, Americans are falling victim to more frequent and
sophisticated scams. Technology is helping to fuel this increase. Things
like text messages, social media, and even Artificial Intelligence have
all been used to make scams seem more realistic. And they are costing
Americans a lot of money. Some victims have lost tens of thousands of
dollars, or even their entire life savings to scams. Today, we'll learn
more about federal efforts to combat the growing number of scams and how
effective these efforts are. Joining us is GAO’s Seto Bagdoyan, who led
work for a new report on this topic. Thanks for joining us.

[Seto Bagdoyan:] Thanks for having me back.

[Holly Hobbs:] Maybe we can start with how big of a problem is this?

[Seto Bagdoyan:] So that is a great question. It's unknown how bad it
is. There are various estimates in the hundreds of billions of dollars
on a global basis. But the best estimate based on complaints from
consumers is from the FBI—about $10 billion a year. That's based on
approximately 300,000 complaints from consumers that the FBI has
determined revolve around scams.

[Holly Hobbs:] Can you give us some examples of common scams and how
technology is being used in these scams?

[Seto Bagdoyan:] Scams do rotate, believe it or not. The scammers are
very adaptable to any counter from anyone. So, you have romance scams,
grandparent scams, investment scams, all kinds of derivatives. Those are
kind of principal technology service, you know, ‘Sign up I'll fix your
computer for you.’ Those kinds of things. AI of course is big
impersonation. You know, you look at ‘that's grandma on the phone, you
know, it's. Yeah. Okay.’ And that ‘Oh my gosh, that's my grandson. I
have to help him out in a foreign country.’ ID theft, all those kinds of
things are big, big.

[Holly Hobbs:] What's being done to educate consumers about these scams?

[Seto Bagdoyan:] So we looked at 13 agencies, federal agencies, and
every one of them has an education component to their response to scams.
So basically, trying to make people comfortable with reporting scams.
Trying to show them how to avoid them in the first place. Just kind of
consumer protection, self-protection. Now, in terms of other activities,
they don't investigate much. The amounts may be too small. There isn't
much information based on the complaint. If there is a pattern and
there's kind of a class action, look to it if you will, then FBI, FTC,
CFPB, Treasury at times will coordinate on a transactional basis and
have a big-time investigation. That's where you get the headlines of,
you know, a bunch of scammers from India having been taken down, or
Bulgaria, the Nigerian princes, if you will, or South Florida.

[Holly Hobbs:] So how effective are these efforts and strategies do we
know?

[Seto Bagdoyan:] No. We don't because nobody really measures
effectiveness. They put it out there. They expect consumers to educate
themselves. But there is no correlation, if you will,—we put out all
these materials, this many people hit on those materials, and then we
can show that scams declined based on reported incidents.

[Holly Hobbs:] You had mentioned that agencies are kind of reliant on
people reporting scams. Do we think that there's underreporting?

[Seto Bagdoyan:] Yes. It’s significant.

[Holly Hobbs:] And do we know why?

[Seto Bagdoyan:] It's basically the shame aspect, human nature. They're
ashamed to report that they were taken—like they bailed out their
grandchild, who was a fake. It was an AI fake. So that is a huge driver.
And some researchers have estimated reporting at only 5%. The most we've
seen is about 20%, which still leaves you with 80% underreporting. And
the agencies, because they respond to reported scams, consumer
complaints, they think they have everything. Where they could be missing
a whole bunch of other things that is not being reported.

[Holly Hobbs:] One of the things we did for our report, which is not too
typical of GAO reports, is we went and submitted some undercover
complaints. Can you tell us a little bit about that and what it told us?

[Seto Bagdoyan:] So we assumed fake identities and pretended to be
consumers behaving in a typical consumer manner. And we followed the
instructions that we were given by a particular agency. And we filed
complaints. And of those who did respond, the standard response was to
direct us to their online education materials, which varyingly are
decent to pretty good to not terribly helpful. As you can expect.

[Holly Hobbs:] I think you said there's 13 federal agencies they've got
their own education campaigns. They've got their own enforcement
activities. Is there a collaborative effort or a government-wide
strategy leading any of this?

[Seto Bagdoyan:] There is no government-wide strategy. Collaboration,
coordination is transactional. It's ad hoc, if you will. There's nothing
systematic. There are some entities that appear to be quasi-official.
But again, they're very targeted, very specific. There's an entity, for
example, that is supposed to meet to discuss scams that are targeting
the elderly, but they don't meet very frequently. I think they've met
twice in several years. 

{MUSIC}

[Holly Hobbs:] So Seto just told us that federal agencies are taking
action against the increasing number of scams impacting Americans. But
they don’t know how effective their efforts are, nor is there a
government-wide strategy to guide these efforts. So, Seto, what more do
we think federal agencies should be doing to combat scams?

[Seto Bagdoyan:] Sure. So in our report we're making a rather large
number of recommendations to multiple agencies. Principal is to direct
the FBI to coordinate the government-wide strategy that I mentioned
earlier. That is paramount. That is your roadmap on how to address this
problem effectively. As part of that, you have to figure out how bad the
problem is. Collect data from the consumer complaints. Analyze them in a
different manner from which we've seen. Figure out what the schemes are,
whether they move around, whether they're common at certain periods of
time, whether they target demographics, age groups, those kinds of
things. So those are the key ingredients. Figure out what the problem is
that your strategy is going to tackle. Not have a strategy first and
then figure out what the problem is.

[Holly Hobbs:] And last question what's the bottom line of this report?

[Seto Bagdoyan:] Bottom line is that consumer scams are likely a
significant, global problem. Right now, at the federal level, there is
no government-wide approach to respond to that. What is in place is
fragmented and generally ineffective. Nobody knows whether any of what
they're doing has any impact. And we're dealing with a genre of
fraudsters who are very agile, very adaptive, very sophisticated, and
they're using AI to maximum benefit to perpetrate their schemes.

[Holly Hobbs:] That was GAO’s Seto Bagdoyan talking to us about consumer
scams and federal efforts to protect against them. Thanks for your time. 

[Seto Bagdoyan:] Thank you.

[Holly Hobbs:] And thank you for listening to the Watchdog Report. To
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