Americans’ savings are at risk as never before as new, technology-driven fraud and scams are surging across the U.S, costing American households an estimated $12.5 billion in 2024, a 25 percent increase over the previous year. These are just reported losses, with actual totals likely much higher. Using sophisticated technology, scammers are directly targeting unsuspecting consumers, and there’s no better route to a consumer than through their phone and its apps.
Scammers rely on social media channels and communication networks to reach customers. According to a recent Aspen Institute report, 68% of Americans reported receiving scam calls at least weekly, 61% of Americans reported receiving scam text messages at least weekly and about one-third of Americans say they get scam phone calls at least daily. These statistics are alarming and demonstrate that current policies for addressing fraud are insufficient. And while financial institutions are doing their part to educate consumers and mitigate incidents of fraud, by the time fraud reaches the banks’ systems, consumers may have already been harmed and their funds put at risk. As a result, action from industries and regulatory bodies outside of the banking sector is needed to achieve a durable solution.
The Problem and the Solutions
Phone scams have become part of everyday life for American consumers, and they’re becoming more sophisticated and convincing, boosted by AI deepfakes, voice cloning and location spoofing. Many scams originate from organized transnational crime groups that leverage global communications infrastructure to target Americans at scale.
In this global piracy enterprise, the FCC’s task is to safeguard the ports of entry and regulate the highways upon which data travels. Helpful steps would include: mandating standards for authenticating all U.S. calls; alerting consumers to unauthenticated calls and messages, especially international ones; deploying robust international anti-scam filters to block spoofing and mass campaigns; enforcing anti-fraud standards consistently across mobile virtual network operators; and sharing confirmed scam numbers and traffic data across carriers.
The FCC has recognized this growing problem and has taken important steps to address it — for example, it has worked to implement critical laws that strengthen communications networks’ security, including the Truth in Caller ID Act of 2009, the TRACED Act in 2019, the Secure and Trusted Communications Networks Act in 2019 and the Secure Equipment Act in 2022. In addition, the FCC has expanded its front-office staff to include a national security advisor to mitigate threats from transnational abuse of U.S. communications networks.
The FCC under the current chairman has taken a comprehensive approach, combating robocalls at every point in the call lifecycle, with a focus on preventing the calls in the first place. The agency has disconnected 1,200 non-compliant voice service providers from the U.S. phone network, a notable sign of progress. We share the FCC’s focus on prevention and appreciate the chairman’s decisive actions to crack down on scam calls.
The FCC should build on these commendable efforts to further safeguard communications networks’ integrity and close the gaps that currently exist.
Tactics
To take on phone scammers, it’s essential to understand the tactics they use. Robocalls are a classic method, but phone scams have evolved in their technological sophistication and variety. Regardless of technology, these scams prey on busy, distracted consumers and exploit their trust in institutions like banks and government agencies.
Spoofing – falsifying information to make a call appear to be originating locally or from a trusted institution – is a key tactic for scammers. For example, fraudsters spoof legitimate bank phone numbers, posing as fraud or security teams. They pressure victims to share one-time passwords or approve real-time transfers.
Smishing – phishing attacks orchestrated through SMS – also helps scams proliferate. For example, scammers impersonate bank alerts through text messages, prompting victims to click malicious links or call fake support lines. These messages harvest credentials and one-time passwords to authorize real transactions.
Mass-smishing campaigns amplify the damage of smishing attacks, with “unpaid toll” or “delivery fee” text blasts duping victims into entering card details on phishing sites. Criminals use SIM farms and international routing to send millions of scam texts, sometimes using SIM boxes.
Recommended Steps
The FCC has been working for years to stop fraud perpetrated through communications networks, but further steps are needed to close gaps that leave the system vulnerable to scammers. Here are a few actions the Commission can take to fortify communications infrastructure against such vulnerabilities.
The FCC should authenticate all U.S. calls through its mandated STIR/SHAKEN standard. The Commission recently proposed enhancements to the STIR/SHAKEN framework that would promote consumers’ confidence that the calls they receive are legitimate. But further action is required to fully safeguard the system against scammers. The FCC should specify what telecom service providers must do to comply with an existing rule that requires providers to take effective steps to ensure that they do not transmit illegal calls. The FCC should also require providers to verify the caller has the legal right to the number that will be displayed in the recipient’s caller ID.
The FCC should also alert consumers to unauthenticated calls or messages, especially those originating overseas. Many scams originate from Southeast Asian transnational networks, which spoof their data to appear local to their victims. The simple step of alerting consumers could help them reconsider whether a call is legitimate. The FCC should deploy robust international anti-scam filters to block spoofing and mass messaging campaigns, and alert consumers when a call or message is suspected of being a scam.
The FCC should adopt stronger Know Your Customer controls to prevent criminals from exploiting telecom accounts. Banks use KYC standards to guard against money laundering, terrorism financing and other illicit financing. Communications networks should follow similar standards.
The Commission should bolster scrutiny of networks and technology that enable scams.
- SIM boxes. Global scam farms use SIM boxes to perpetrate mass smishing campaigns. SIM boxes can hold dozens or thousands of prepaid SIM cards in order to route international voice calls or SMS messages through local numbers. The FCC last year adopted changes to its list of communications equipment and services that pose a risk to U.S. national security. In line with such goals, the FCC should consider taking stronger precautions against approving SIM box importation and marketing.
- MVNOs. Mobile Virtual Network Operators can act as the weak link in the telecom supply chain and may warrant more robust oversight. MVNOs offer mobile voice and data services by leasing network capacity from bigger carriers like T-Mobile, AT&T or Verizon to provide services under their own brand. They often specialize in niche markets, offering competitive pricing or customized, flexible and often digital-only plans. The Commission should examine how major carriers enforce anti-fraud controls for MVNOs that lease networks from them.
The FCC should share confirmed scam numbers and traffic data across carriers. Building on successful data-sharing models like the Cybersecurity Information Sharing Act of 2015, the FCC should foster scam prevention across overall communications infrastructure by sharing known threat intelligence across providers. More broadly, the FCC should collaborate with the Federal Trade Commission, national security and law enforcement agencies and bank regulators to prevent scams from using telecom, social media and the payment rails to drain consumers’ accounts.
Conclusion
A comprehensive solution to the scam epidemic requires efforts from all sectors affected by scams, as well as the regulators of those industries. In addition to social media and the financial system, U.S. communication networks are a key conduit for scammers and must be safeguarded against exploitation. The FCC can play a critical role in fighting scams by bolstering defenses of America’s communications networks.
