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GAO-24-107107 1 (2024-07-25)

handle is hein.gao/gaoqpf0001 and id is 1 raw text is: Why This Matters Key Takeaways Scams are a significant and growing problem for U.S. individuals and businesses. Some scams result in a fraudulently induced payment, which occurs when a person with payment authority is manipulated or deceived into making a payment for the benefit of the scammer. These scams succeed by playing on a victim's emotions and exploiting vulnerabilities, often resulting in significant financial losses. For example, losses from one type of fraudulently induced payment scam-fake investment opportunities-rose from $3.31 billion in 2022 to $4.57 billion in 2023, according to the Federal Bureau of Investigation's (FBI) 2023 Internet Crime Report on reported complaints. The federal government has not reported on total losses associated with fraudulently induced payments, in part due to underreporting by victims. Even when victims do report such scams, it can be challenging to recover the funds. We were asked to review the characteristics of fraudulently induced payments and how financial institutions and peer-to-peer (P2P) payment companies mitigate the impacts of these scams. This report provides information on fraudulently induced payment scams, including reported efforts by selected financial institutions to mitigate these scams. * Fraudulently induced payment scams can take many forms, but they generally involve scammers playing on victims' emotions to manipulate them into sending money. Some scammers are using generative artificial intelligence (Al)-technology that can create text, images, audio, or video- which is making these scams harder for victims to detect, according to select industry stakeholders and federal agencies. * Financial institutions are generally not required under federal law to reimburse consumers for losses stemming from a fraudulently induced payment because such a payment is authorized by a person with payment authority on the account (i.e., the owner of the account or other authorized person). * Financial institutions and P2P payment companies provide consumer education and staff training in various manners and degrees, to help identify and avoid potential scams. Additionally, select institutions and payment apps have put in place measures to slow down payments to provide the consumer an opportunity to verify the legitimacy of the payment. * Industry representatives we interviewed recommend a multisector approach, including telecommunications and social media companies, as well as law enforcement, to address fraudulently induced payments. Page 1 GAO-24-1 07107 Payment Scams Page 1 GAO-24-107107 Payment Scams

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