Congressional Testimony
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Congressional Testimony
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South Carolina Public Charter School District Superintendent Neeley Testifies Before House Education & Workforce Committee
RICHMOND, Michigan, Sept. 2 -- The House Education and Workforce Committee released the following testimony by Chris G. Neeley, superintendent of the South Carolina Public Charter School District, from an Aug. 25, 2026, field hearing entitled "Deployed, Not Disqualified: Defending Servicemembers in Our Schools":
* * *
Chairman Walberg, Ranking Member Scott, and Members of the Committee, thank you for the opportunity to testify today.
My name is Chris Neeley, and I'm from Lexington, South Carolina. I serve as Superintendent of the South Carolina Public Charter School District, a statewide public ... Show Full Article RICHMOND, Michigan, Sept. 2 -- The House Education and Workforce Committee released the following testimony by Chris G. Neeley, superintendent of the South Carolina Public Charter School District, from an Aug. 25, 2026, field hearing entitled "Deployed, Not Disqualified: Defending Servicemembers in Our Schools": * * * Chairman Walberg, Ranking Member Scott, and Members of the Committee, thank you for the opportunity to testify today. My name is Chris Neeley, and I'm from Lexington, South Carolina. I serve as Superintendent of the South Carolina Public Charter School District, a statewide publicschool district serving more than 31,000 students in 55 public charter schools.
I am also honored to serve as a Colonel in the United States Army Reserve. Today, however, I appear solely in my civilian capacity as a public school superintendent. My references to military service reflect my personal experience and do not represent the views of the Department of the Army, the Department of War, or the United States Government.
For more than two decades, I have had the privilege of serving our country in uniform. And throughout my civilian career, I have had the privilege of serving children and families.
Those are very different missions. But both have taught me the same fundamental lesson: Leadership matters.
The military understands that leadership matters at every echelon. A platoon leader or platoon sergeant leads closest to where the mission is actually carried out. Company, battalion, and brigade leaders build upon that leadership--setting conditions, developing people, providing resources, and ensuring the organization can accomplish its mission.
Public education works much the same way. The classroom teacher leads closest to our mission--the child. Principals lead our schools. District leaders create the conditions for schools to succeed. And school boards provide the governance, vision, and accountability that guide the entire system.
Leadership at every level matters. When that leadership is strong and aligned, it creates the conditions for great teaching, strong schools, and better opportunities for children.
And America's children need us to get this right.
Our Nation's Report Card continues to show troubling results in reading and mathematics. There are many reasons for those results, but one thing should be clear: improving outcomes for children requires exceptional people leading our classrooms and schools.
That brings me to the issue before this Committee: How do we protect those who serve our country so that public education--and most importantly, our children--can fully benefit from their leadership?
First, we must protect those who serve.
The Uniformed Services Employment and Reemployment Rights Act--USERRA--provides important federal protections for servicemembers in civilian employment. States should examine complementary protections for military personnel serving throughout public education-- including teachers, principals, district administrators, and school board members--so answering our nation's call does not prevent or discourage servicemembers from continuing to serve their communities.
No American should have to choose between serving our children and serving our country.
But protection is only the beginning.
Second, at a time when schools across America are struggling to recruit and retain strong teachers and leaders, we should look to one of our nation's greatest leadership development institutions: the United States military.
America has invested enormously in developing men and women who lead diverse teams, solve complex problems, operate under pressure, develop others, accept accountability, and put mission before self.
Why wouldn't we want more of those leaders in our schools?
For veterans, public education can become a natural next mission.
Our National Guard and Reserve members represent an extraordinary leadership force already embedded in communities across America. We should mobilize that leadership in service to our schools--as teachers, substitute teachers, principals, coaches, mentors, career and technical education instructors, district administrators, superintendents, and school board members.
Active-duty servicemembers can also be part of this effort, when appropriate and consistent with military requirements, they could serve as mentors, STEM and career advisors, guest speakers, coaches, and role models--not simply to tell young people about military careers, but to invest in them and inspire them.
South Carolina demonstrates what this kind of flexibility can make possible. Our charter schools have long had the flexibility to employ qualified noncertified teachers, and our state recently expanded that concept through a five-year pilot program allowing participating public schools to employ qualified noncertified teachers. That creates another pathway for qualified veterans, Reservists, and National Guard members to bring their education, technical expertise, professional experience, and proven leadership directly into the classroom.
Congress can encourage states to consider similar innovative pathways while maintaining appropriate standards for those entrusted with our children.
Third, we should create a Military-Ready Employer designation--or MRE--for public school districts. In the military, everyone knows what an MRE is. In public education, an MRE could identify school systems that not only understand the obligations of Guard and Reserve service, but intentionally recruit, support, and retain servicemembers and veterans as educators and leaders.
My district, the South Carolina Public Charter School District, is already a Purple Star District, a designation recognizing our commitment to supporting military-connected students and their families. We could build upon that successful model by encouraging states to make Military-Ready Employer practices part of the criteria for Purple Star recognition--supporting not only the children of those who serve, but the servicemembers and veterans who serve our children.
That would make the Purple Star a commitment to the entire military-connected school community.
We can also establish Veterans in Education initiatives to recruit veterans into teaching and educational leadership and encourage states to develop alternative certification and reciprocity pathways that recognize relevant military education, technical expertise, and leadership experience.
Fourth, we can better connect resources that already exist.
In our district, we have strong relationships with the Military Child Education Coalition, the South Carolina National Guard, the South Carolina Department of Veterans' Affairs, and military installations across our state. Those installations also have meaningful partnerships with our schools serving military-connected children.
Servicemembers participate in reading programs and classrooms. They support STEM and career programs and expose students to opportunities in aviation, emerging technologies, and other fields.
We should also encourage veterans, Reservists, and Guardsmen to serve in another place where leadership matters tremendously: the school boardroom.
We see the value of that leadership firsthand in our district. The chairman of the board of Polaris Tech Charter School is retired four-star Air Force General Lloyd "Fig" Newton, who was the first African American pilot selected to fly with the U.S. Air Force Thunderbirds. General Newton has taken a lifetime of military leadership and service and continues to put it to work for children.
That is exactly the kind of proven leadership we should welcome into school governance across America.
As a superintendent, I have learned that great schools require great governance. Veterans understand mission, strategic planning, stewardship, ethical leadership, and accountability. Those skills belong in school governance.
Congress has an opportunity to encourage these connections nationwide--linking military installations, Reserve Centers, National Guard units, state veterans agencies, and public schools.
In military terms, I see that as a force multiplier for public education--taking leadership and resources that already exist in our communities and connecting them in ways that can have a greater impact on our schools and, most importantly, our children.
In our district, we have a simple philosophy: Kids First. And that's ultimately what this is about--putting aside institutions and systems and asking how we can leverage every leadership resource available to us to create better opportunities and better outcomes for children.
Finally, public education itself can learn from military leadership.
My doctoral research at Clemson University examines how military veterans serving as school administrators apply principles learned through military service, including Mission Command, to educational leadership.
Intent. Trust. Shared purpose. Disciplined initiative. Developing leaders. Accountability.
Those aren't exclusively military concepts.
They are leadership concepts--and they belong in great schools.
So I leave the Committee with three ideas:
1. Protect those who serve--so military service never becomes a barrier to serving in public education.
2. Recruit those who have served--and mobilize their leadership for America's children.
3. Apply the leadership principles developed in the military--to strengthen educational leadership at every level.
Protect. Recruit. Apply.
This is not about militarizing public education. It is about taking what we know about developing strong leaders and putting that leadership to work for our children.
And I want to close by telling you about one young man who reminded me why this matters.
Just a few days ago, I visited Orangeburg High School for Health Professions, a workforce- and career-ready charter high school located in Orangeburg, South Carolina.
Orangeburg sits along South Carolina's I-95 corridor--a largely rural region running north and south through our state that has struggled for generations with persistent poverty and inadequate educational opportunities.
Years ago, this region became nationally known by a painful name: the "Corridor of Shame." I don't call it that.
I call it the Corridor of Opportunity.
At Orangeburg High School for Health Professions, 75 percent of the students are identified as Pupils in Poverty.
But that statistic doesn't tell you what those children are capable of. It doesn't tell you about the spark inside each one of them--their potential, their purpose, and what they can become when someone sees that spark and helps them believe in it.
At the end of my visit, a high school senior named Jovanny Williams approached me.
He knew that in addition to being his superintendent, I am a Colonel in the United States Army Reserve.
He looked at me and said, "Superintendent Neeley, I want to join the Army Reserve. Would you be my mentor?"
I told him, "Absolutely. I would be honored to be your mentor."
Members of the Committee, that's what this is about.
At that moment, I saw his spark. I saw a young man who wants to serve, who wants to lead, and who wants to be part of something greater than himself.
That young man doesn't live in a Corridor of Shame.
He lives in a Corridor of Opportunity.
And somewhere in America today, there is another young person like Jovanny Williams who needs a teacher, a substitute teacher, a coach, a mentor, a principal, a district leader, a superintendent, a school board member--or simply an adult in their life--who sees their spark and demonstrates what it means to lead, to serve, and to believe in something greater than yourself.
Our veterans, our Guardsmen, our Reservists, and our active-duty servicemembers can be those people.
America has already invested in developing these leaders.
Now let's create the opportunities for them to invest in our children--to see their spark, help ignite it, and show them what is possible.
Because when we put great leaders in the lives of children, we don't just change schools, communities, states, or even our nation.
We can change the trajectory of a child's life.
Thank you, Mr. Chairman. I look forward to your questions.
* * *
Original text here: https://edworkforce.house.gov/uploadedfiles/neeley_military_and_education_testimony.pdf
* * *
Chairman Walberg, Ranking Member Scott, and Members of the Committee, thank you for the opportunity to testify today.
My name is Chris Neeley, and I'm from Lexington, South Carolina. I serve as Superintendent of the South Carolina Public Charter School District, a statewide public ... Show Full Article RICHMOND, Michigan, Sept. 2 -- The House Education and Workforce Committee released the following testimony by Chris G. Neeley, superintendent of the South Carolina Public Charter School District, from an Aug. 25, 2026, field hearing entitled "Deployed, Not Disqualified: Defending Servicemembers in Our Schools": * * * Chairman Walberg, Ranking Member Scott, and Members of the Committee, thank you for the opportunity to testify today. My name is Chris Neeley, and I'm from Lexington, South Carolina. I serve as Superintendent of the South Carolina Public Charter School District, a statewide publicschool district serving more than 31,000 students in 55 public charter schools.
I am also honored to serve as a Colonel in the United States Army Reserve. Today, however, I appear solely in my civilian capacity as a public school superintendent. My references to military service reflect my personal experience and do not represent the views of the Department of the Army, the Department of War, or the United States Government.
For more than two decades, I have had the privilege of serving our country in uniform. And throughout my civilian career, I have had the privilege of serving children and families.
Those are very different missions. But both have taught me the same fundamental lesson: Leadership matters.
The military understands that leadership matters at every echelon. A platoon leader or platoon sergeant leads closest to where the mission is actually carried out. Company, battalion, and brigade leaders build upon that leadership--setting conditions, developing people, providing resources, and ensuring the organization can accomplish its mission.
Public education works much the same way. The classroom teacher leads closest to our mission--the child. Principals lead our schools. District leaders create the conditions for schools to succeed. And school boards provide the governance, vision, and accountability that guide the entire system.
Leadership at every level matters. When that leadership is strong and aligned, it creates the conditions for great teaching, strong schools, and better opportunities for children.
And America's children need us to get this right.
Our Nation's Report Card continues to show troubling results in reading and mathematics. There are many reasons for those results, but one thing should be clear: improving outcomes for children requires exceptional people leading our classrooms and schools.
That brings me to the issue before this Committee: How do we protect those who serve our country so that public education--and most importantly, our children--can fully benefit from their leadership?
First, we must protect those who serve.
The Uniformed Services Employment and Reemployment Rights Act--USERRA--provides important federal protections for servicemembers in civilian employment. States should examine complementary protections for military personnel serving throughout public education-- including teachers, principals, district administrators, and school board members--so answering our nation's call does not prevent or discourage servicemembers from continuing to serve their communities.
No American should have to choose between serving our children and serving our country.
But protection is only the beginning.
Second, at a time when schools across America are struggling to recruit and retain strong teachers and leaders, we should look to one of our nation's greatest leadership development institutions: the United States military.
America has invested enormously in developing men and women who lead diverse teams, solve complex problems, operate under pressure, develop others, accept accountability, and put mission before self.
Why wouldn't we want more of those leaders in our schools?
For veterans, public education can become a natural next mission.
Our National Guard and Reserve members represent an extraordinary leadership force already embedded in communities across America. We should mobilize that leadership in service to our schools--as teachers, substitute teachers, principals, coaches, mentors, career and technical education instructors, district administrators, superintendents, and school board members.
Active-duty servicemembers can also be part of this effort, when appropriate and consistent with military requirements, they could serve as mentors, STEM and career advisors, guest speakers, coaches, and role models--not simply to tell young people about military careers, but to invest in them and inspire them.
South Carolina demonstrates what this kind of flexibility can make possible. Our charter schools have long had the flexibility to employ qualified noncertified teachers, and our state recently expanded that concept through a five-year pilot program allowing participating public schools to employ qualified noncertified teachers. That creates another pathway for qualified veterans, Reservists, and National Guard members to bring their education, technical expertise, professional experience, and proven leadership directly into the classroom.
Congress can encourage states to consider similar innovative pathways while maintaining appropriate standards for those entrusted with our children.
Third, we should create a Military-Ready Employer designation--or MRE--for public school districts. In the military, everyone knows what an MRE is. In public education, an MRE could identify school systems that not only understand the obligations of Guard and Reserve service, but intentionally recruit, support, and retain servicemembers and veterans as educators and leaders.
My district, the South Carolina Public Charter School District, is already a Purple Star District, a designation recognizing our commitment to supporting military-connected students and their families. We could build upon that successful model by encouraging states to make Military-Ready Employer practices part of the criteria for Purple Star recognition--supporting not only the children of those who serve, but the servicemembers and veterans who serve our children.
That would make the Purple Star a commitment to the entire military-connected school community.
We can also establish Veterans in Education initiatives to recruit veterans into teaching and educational leadership and encourage states to develop alternative certification and reciprocity pathways that recognize relevant military education, technical expertise, and leadership experience.
Fourth, we can better connect resources that already exist.
In our district, we have strong relationships with the Military Child Education Coalition, the South Carolina National Guard, the South Carolina Department of Veterans' Affairs, and military installations across our state. Those installations also have meaningful partnerships with our schools serving military-connected children.
Servicemembers participate in reading programs and classrooms. They support STEM and career programs and expose students to opportunities in aviation, emerging technologies, and other fields.
We should also encourage veterans, Reservists, and Guardsmen to serve in another place where leadership matters tremendously: the school boardroom.
We see the value of that leadership firsthand in our district. The chairman of the board of Polaris Tech Charter School is retired four-star Air Force General Lloyd "Fig" Newton, who was the first African American pilot selected to fly with the U.S. Air Force Thunderbirds. General Newton has taken a lifetime of military leadership and service and continues to put it to work for children.
That is exactly the kind of proven leadership we should welcome into school governance across America.
As a superintendent, I have learned that great schools require great governance. Veterans understand mission, strategic planning, stewardship, ethical leadership, and accountability. Those skills belong in school governance.
Congress has an opportunity to encourage these connections nationwide--linking military installations, Reserve Centers, National Guard units, state veterans agencies, and public schools.
In military terms, I see that as a force multiplier for public education--taking leadership and resources that already exist in our communities and connecting them in ways that can have a greater impact on our schools and, most importantly, our children.
In our district, we have a simple philosophy: Kids First. And that's ultimately what this is about--putting aside institutions and systems and asking how we can leverage every leadership resource available to us to create better opportunities and better outcomes for children.
Finally, public education itself can learn from military leadership.
My doctoral research at Clemson University examines how military veterans serving as school administrators apply principles learned through military service, including Mission Command, to educational leadership.
Intent. Trust. Shared purpose. Disciplined initiative. Developing leaders. Accountability.
Those aren't exclusively military concepts.
They are leadership concepts--and they belong in great schools.
So I leave the Committee with three ideas:
1. Protect those who serve--so military service never becomes a barrier to serving in public education.
2. Recruit those who have served--and mobilize their leadership for America's children.
3. Apply the leadership principles developed in the military--to strengthen educational leadership at every level.
Protect. Recruit. Apply.
This is not about militarizing public education. It is about taking what we know about developing strong leaders and putting that leadership to work for our children.
And I want to close by telling you about one young man who reminded me why this matters.
Just a few days ago, I visited Orangeburg High School for Health Professions, a workforce- and career-ready charter high school located in Orangeburg, South Carolina.
Orangeburg sits along South Carolina's I-95 corridor--a largely rural region running north and south through our state that has struggled for generations with persistent poverty and inadequate educational opportunities.
Years ago, this region became nationally known by a painful name: the "Corridor of Shame." I don't call it that.
I call it the Corridor of Opportunity.
At Orangeburg High School for Health Professions, 75 percent of the students are identified as Pupils in Poverty.
But that statistic doesn't tell you what those children are capable of. It doesn't tell you about the spark inside each one of them--their potential, their purpose, and what they can become when someone sees that spark and helps them believe in it.
At the end of my visit, a high school senior named Jovanny Williams approached me.
He knew that in addition to being his superintendent, I am a Colonel in the United States Army Reserve.
He looked at me and said, "Superintendent Neeley, I want to join the Army Reserve. Would you be my mentor?"
I told him, "Absolutely. I would be honored to be your mentor."
Members of the Committee, that's what this is about.
At that moment, I saw his spark. I saw a young man who wants to serve, who wants to lead, and who wants to be part of something greater than himself.
That young man doesn't live in a Corridor of Shame.
He lives in a Corridor of Opportunity.
And somewhere in America today, there is another young person like Jovanny Williams who needs a teacher, a substitute teacher, a coach, a mentor, a principal, a district leader, a superintendent, a school board member--or simply an adult in their life--who sees their spark and demonstrates what it means to lead, to serve, and to believe in something greater than yourself.
Our veterans, our Guardsmen, our Reservists, and our active-duty servicemembers can be those people.
America has already invested in developing these leaders.
Now let's create the opportunities for them to invest in our children--to see their spark, help ignite it, and show them what is possible.
Because when we put great leaders in the lives of children, we don't just change schools, communities, states, or even our nation.
We can change the trajectory of a child's life.
Thank you, Mr. Chairman. I look forward to your questions.
* * *
Original text here: https://edworkforce.house.gov/uploadedfiles/neeley_military_and_education_testimony.pdf
Consumer Federation Director Winters Testifies Before Senate Special Committee on Aging (Part 1 of 2)
WASHINGTON, Aug. 21 -- The Senate Special Committee on Aging released the following testimony by Ben Winters, director of AI and privacy at the Consumer Federation of America, from a July 29, 2026, hearing entitled "The AI Deception Machine: Deepfakes, Chatbots, and the New Frontier of Senior Fraud":
* * *
Thank you, Chair Scott, Ranking Member Gillibrand, and Members of the Committee. My name is Ben Winters, and I am the Director of AI and Privacy at the Consumer Federation of America (CFA), one of the nation's leading non-profit consumer organizations. Founded in 1968, CFA advances pro-consumer ... Show Full Article WASHINGTON, Aug. 21 -- The Senate Special Committee on Aging released the following testimony by Ben Winters, director of AI and privacy at the Consumer Federation of America, from a July 29, 2026, hearing entitled "The AI Deception Machine: Deepfakes, Chatbots, and the New Frontier of Senior Fraud": * * * Thank you, Chair Scott, Ranking Member Gillibrand, and Members of the Committee. My name is Ben Winters, and I am the Director of AI and Privacy at the Consumer Federation of America (CFA), one of the nation's leading non-profit consumer organizations. Founded in 1968, CFA advances pro-consumerpolicies through research, advocacy, and education. CFA is a membership organization representing nearly 250 consumer groups nationwide and works with federal and state legislators and regulators to promote beneficial policies, oppose harmful ones, and ensure a balanced debate on issues important to consumers. CFA has been on the forefront of AI and scams advocacy, drafting model bills, publishing investigative reports, and working with regulators to protect consumers from fraud and harmful uses of AI.2
* * *
1 Thank you to Katie McCann, CFA's Advocacy and Administrative Associate, for assistance in preparing this testimony.
2 Last year, CFA published Scamplified, which illustrates how a whole host of generative AI tools and other underregulated technologies on the market are facilitating faster, smoother, and more convincing scams. https://consumerfed.org/news/reports/scamplified/. In April this year, CFA filed a class action complaint and jury trial demand against Meta Platforms, Inc (Meta), on behalf of itself and a proposed class of D.C. Facebook users for knowingly allowing scam advertisements on their platform, maximizing profits from them, and misleading consumers about safeguards. https://consumerfed.org/news/press-releases/consumerfederation-of-america-sues-meta-for-failing-to-protect-users-from-scam-advertisements/. In April this year, CFA published the True Cost of Scams earlier this year, which analyzed reported scam data as well as estimations of underreporting from prominent institutions to estimate how much money Americans are really losing to scams. In 2024, we estimated the cost was at least $119 billion and just this week, CFA published a 2025 update to the True Cost of Scams - showing a significant jump in scam losses up to nearly $150 billion dollars last year. https://consumerfed.org/news/reports/the-scam-economy/ The People First Chatbot Act, based on a model bill developed by CFA in cooperation with the Electronic Privacy Information Center and Fairplay, was introduced by Representatives Valerie Foushee and Greg Casar earlier this month and nine states this year. https://consumerfed.org/news/testimony-comments/the-people-first-chatbot-bill/
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Americans are losing money to scams online at a historic rate. In 2025 alone, Americans reported losing $21 billion, with older Americans reporting losing more than $7.7 billion alone.
The true cost is somewhere between 7 and 25 times higher than this, based off underreporting estimates from the FBI, the FTC, and others.3 These losses have multiplied rapidly in the last several years - creating a sharp upward trend in this devastating statistic. As you learn about these staggering statistics and horrible stories, it is essential to focus on diagnosing why this trend has gotten worse, then attack those issues aggressively. While not the sole cause or reason for scams, Generative AI is a scammer's dream -the tech makes it easy, effective, and elusive to scam well and to scam fast. Multiple trend lines are converging to make this fire burn faster and brighter: AI companies aggressively marketing and deploying powerful tools with little regard for foreseeable harm; an Executive Branch unwilling to hold technology companies accountable regardless of their conduct; and a climate of confusion and anxiety around healthcare eligibility, entitlement benefits, and economic security that scammers are exploiting in real time. Beyond just scams, Generative AI and the technologies enabling and spreading that content are leading to scammy ads, bad advice, sycophantic relationship-building without the actual human present, and more.
The goal of my testimony is to help you understand how these technologies, including but not limited to just Generative AI, are currently set up to facilitate dangerous and reckless behavior as well as how Congress can address it without tamping down on beneficial uses of the technology, including in scam prevention. This testimony proceeds in four parts: Section A documents the scale of the scam crisis -- the losses, the trendlines, and AI's growing role in driving them.
Section B examines the specific ways AI tools are being used to make scams faster, cheaper, and harder to detect. Section C looks beyond scams to a broader problem: how AI systems are degrading the information ecosystem through deception, misinformation, and eroded trust.
Section D offers concrete policy and oversight recommendations for this Committee and for Congress.
A. The Scale and Status of the Scam Problem
Scam losses have been at an unacceptable and concerning rate for years but have absolutely exploded since Generative AI became commercially available at the end of 2023, which AI companies and consultants have poured billions into to sell it as some undeniable good.4 To put this meteoric rise of scam losses in perspective, in 2019, consumers reported losses to the FBI totaling $3.5 billion. In 2021, reported losses almost doubled to $6.9 billion and nearly doubled again in 2023 to $12.5 billion. Last year, in 2025, reported scam losses reached a staggering $20.87 billion.
* * *
3 Consumer Federation of America, The True Cost of Scams 2025 Update (July 2026), available at https://consumerfed.org/news/reports/the-scam-economy/
4 Marketing Brew, Advertisers have spent $1.3 billion on digital ads touting AI: Report (June 2026), available at https://www.marketingbrew.com/stories/AI-advertising-spend-usd-1-3-billion-digital-ads-sensor-tower
* * *
The true cost of online scams is exponentially higher, due to underreporting, and is up to an estimated $148.2 billion in 2025, with over $54 billion lost by Americans over 60 alone.5 That amounts to $406 million lost every day on average, with $148 million lost every day by Americans over 60.6
A recent AARP survey found that an estimated 38 percent of American adults (about 103 million people) have had money stolen from a scam or had sensitive information used fraudulently. The numbers are even higher among adults aged fifty and older, with 41 percent saying they have been victims.7
A recent National Council on Aging survey (NCOA) found that once older adults learned how platforms profit from scam ads, an overwhelming majority supported stronger safeguards and accountability measures on social media.8
91 percent of those surveyed want platforms to reduce scam ads, and 70 percent want platforms to be more balanced between revenue and user protection. These findings build on NCOA surveys from earlier this year, showing 77 percent saw at least one scam on social media in the last year, 90 percent felt like they repeatedly receive scams, and as the researchers describe "Across focus groups and online survey data, one theme kept coming up: scams feel unavoidable.
* * *
5 Consumer Federation of America, The True Cost of Scams 2025 Update (July 2026), available at https://consumerfed.org/news/reports/the-scam-economy/
6 Consumer Federation of America, The True Cost of Scams 2025 Update (July 2026), available at https://consumerfed.org/news/reports/the-scam-economy/
7 AARP, 4 in 10 Older Americans Have Lost Money to Fraud, AARP Survey Finds, (April 2026), available at https://www.aarp.org/money/scams-fraud/fraud-awareness-survey-2026/
8 National Council on Again, NCOA Survey: Older Adults Are Calling for Action on Scam Ads, (March 2026) available at https://www.ncoa.org/article/ncoa-survey-older-adults-hold-social-media-platforms-accountablefor-scam-ads-and-call-for-reform/
* * *
Figure 1: Reported Losses, Federal Bureau of Investigation
* * *
From fake ads and impersonation messages to AIpowered voice cloning, scams are getting more sophisticated--and more convincing. Many older adults say it only takes one moment of distraction or vulnerability to fall victim."9 FightCybercrime.org, a nonprofit organization that runs recovery and support groups for people who lost money in Romance and Crypto scams, among many other things, reported the median loss to participants in that group was more than $130,000,10 well over the median American household annual income and double the average annual American salary.11 Tragically but not uncommonly, participants in FightCyberCrime's groups show the prevalence of revictimization - 43.9 percent of program participants had interactions with two or more cybercriminals - and those without intervention or assistance tend to be repeatedly victimized, "reflect[ing] unresolved trauma, unmet emotional needs, and isolation."12
Scammers intentionally target older Americans who have worked for decades to amass savings and receive regular income from the government via Social Security or VA benefits, and the impact is dramatic. Last year, people over 60 reported losing over $7.7 billion to scams, with an average of $38,000 lost per victim - over 12,000 individuals reported losing over $100,000 to the FBI through IC3.13 From 2024 to 2025, reported scam losses to the FBI increased 26 percent, the year after a 33 percent increase in losses from 2023 to 2024./14
* * *
9 Id.
10 FightCybercrime.org, Romance & Crypto Investment Fraud Recovery Group: 2025 Program Insights, available at https://fightcybercrime.org/wp-content/uploads/2026/01/2025-RSRG-Insight-Report.pdf
11 See Bureau of Labor Statistics, Usual Weekly Earnings Of Wage And Salary Workers Second Quarter 2026, (July 2026) ; and United States Census Bureau, Income in the United States: 2024, (September 2025) https://www.census.gov/library/publications/2025/demo/p60-286.html
12 FightCybercrime.org, Romance & Crypto Investment Fraud Recovery Group: 2025 Program Insights, available at https://fightcybercrime.org/wp-content/uploads/2026/01/2025-RSRG-Insight-Report.pdf
13 FBI Internet Complaint Center, Internet Crime Report 2025, (April 2026) available at https://www.ic3.gov/AnnualReport/Reports/2025_IC3Report.pdf
14 Id.
* * *
Figure 2: Elder Fraud Losses, Annual FBI Internet Crime Reports
* * *
Beyond the sheer numbers, the type of scams that are rising are ones very easily carried out by AI:15
* Impersonation (including government impersonation, "UPS" or "EZPass" type texts, and "Grandparent" scams): Voice cloning apps, chat generators, and AI image generators make impersonation scams much harder to detect. Recent data from the Federal Trade Commission show that in 2025, people lost $3.5 billion to these scams, with reported losses increasing nearly three times since 2020./16
For government impersonation scams alone, the FBI saw a marked increase in reported losses over the past three years jumping from $394 million in 2023 to almost $798 million in 2025.17
* Investment: Scammers use AI buzz terms to lure potential investors to hand over their money. These types of investment frauds usually claim that AI can trade crypto on behalf of investors and generate too-good-to-be-true profits. There are also many AI-generated deepfakes where "experts" push one investment or another regardless of its legitimacy.18
* * *
15 Consumer Federation of America, Scamplified (May 2025), available at https://consumerfed.org/news/reports/scamplified/
16 Federal Trade Commission, FTC Data Show People Reported Losing $3.5 Billion to Imposter Scams in 2025, (June 2026) https://www.ftc.gov/news-events/news/press-releases/2026/06/ftc-data-show-peoplereported-losing-3-point-5-billion-imposter-scams-2025
17 Federal Bureau of Investigation, Internet Complaint Center, 2025 Internet Crime Report, (April 2026) at https://www.ic3.gov/AnnualReport/Reports/2025_IC3Report.pdf
18 CFP Board, New AI Fraud Schemes Are Pushing Losses to Record Highs (June 23, 2026) https://www.cfp.net/news/2026/06/new-ai-fraud-schemes-are-pushing-losses-to-record-highs
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Seniors reported losing more than $3.5 billion to the FBI in investment schemes in 2025./19 The FTC reports that scammers often used social media to engage targets for these scams.20 Over 42,000 seniors fell victim to crypto investment scams in 2025, with $4.3 billion reported to the FTC in losses.21
* Tech Support: AI tools help scammers create believable emails and phone calls that seem to be from tech support from companies like Microsoft. The scammers can gain remote access to the victim's computer and have free rein over their sensitive data, including bank account information. The devastating financial impact of tech support scams has more than doubled in the last three years - the FBI reported $2.1 billion in losses from these scams in 2025./22
* Romance: Generative AI can be used to attract attention, carry on "conversations," and provide what seems like real details for things like banking information, representations like "photos" that make it look like someone is in distress, and more. AI and the availability of sensitive data with lack of restriction can be used to pull details from victims' social media pages and use that information to make profiles that are uniquely effective at convincing seniors to part with their hard-earned money. Romance scams accounted for $929 million in reported scam losses in 2025./23
These schemes not only result in financial losses but can have a devastating psychological impact on victims. Many older individuals do not have experience using AI and can be blindsided when they realize they had been deceived. A Gallup survey found that even with significant monetary losses from scams, the emotional toll can affect families just as much, if not more.24
There has been a glaring failure to regulate Generative AI since its widespread release and promotion in consumer-friendly ways.25 In the last 18 months, we have seen pushes to deregulate from existing law26 - including gutting the consumer protection agencies,27 providing corporate pardons28 to companies previously shown to have broken the law with unfair and deceptive practices,29 and courting the policy recommendations of billionaire AI CEOs that change their mind regularly about how and whether they "want" to get regulated.30
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19 Fed. Bureau of Investigation, Scammers Target Older Adults, (May 2026) available at https://www.fbi.gov/news/stories/scammers-target-older-adult-victims
20 Fed. Trade Commission, FTC Issues Annual Report to Congress on Agency's Actions to Protect Older Adults, (December 2025) available at https://www.ftc.gov/news-events/news/press-releases/2025/12/ftc-issuesannual-report-congress-agencys-actions-protect-older-adults
21 FBI, Scammers Target Older Adults, (May 2026) available at https://www.fbi.gov/news/stories/scammerstarget-older-adult-victims
22 Fed. Bureau of Investigation, Internet Crime Complaint Center, 2025 Internet Crime Report (2026), https://www.ic3.gov/AnnualReport/Reports/2025_IC3Report.pdf.
23 Id.
24 Gallup Poll, Scams in the United States, Gallup (June 30, 2026), https://www.gallup.com/analytics/711827/scams-in-america.aspx
25 See, e.g., Samuel Larreal, How Congress Fumbled Regulating Artificial Intelligence, NOTUS (Dec. 8, 2025)
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AI is like kerosene to the scam economy - the fire was already there, but the widespread availability of this technology has accelerated losses, made people even less confident about the content they saw, and left us even more vulnerable. AI capabilities are accelerating at a rate that is difficult to keep up with, enabling scams that are more prolific and undetectable than ever.
Even the world's leading deepfake experts can no longer distinguish AI-generated material from reality.31 According to a 2025 report from Columbia University, half of all spam emails are now generated with AI.32 As evidenced in the data above, Americans, and seniors in particular, are paying the steep price for the explosion of AI-enabled scams.
The story of how AI is exacerbating the scam crisis is not a simple one of people not understanding how to use a chatbot or the internet - it's one that is way beyond personal responsibility. It's used by others and integrated into venues where there's no way or reason to distinguish whether a person or a bot wrote it.
It's not just the domain of shady overseas scam compounds, or people using open-source AI the wrong way or getting an "unlocked" chatbot tool from the dark web. Scammy AI tools are out in the open, and these same tools are advertised everywhere and have the ear of the White House and many congressional leaders on both sides of the aisle. These dynamics create an unavoidable barrage of scams that can be done with increased scale, accuracy, and plausibility.33 Publicly available Generative AI tools are a scammer's dream - it makes the job so much easier and cheaper. Over the next few years, AI is expected to cut the cost of operating a scam by 90 percent or more.34
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26 Julia Solomon Ensor, John P Feldman, Rewriting Rytr: The FTC sets aside a Final Order to implement America's AI Action Plan and limits means and instrumentalities liability, Reed Smith (Dec. 23, 2025) https://www.reedsmith.com/our-insights/blogs/viewpoints/102lyl1/rewriting-rytr-the-ftc-sets-aside-a-finalorder-to-implement-americas-ai-action/
27 Americans for Financial Reform, Timeline of attacks against the CFPB (July 15, 2026), https://ourfinancialsecurity.org/resources/timeline-of-cfpb-attacks/; Jody Godoy, Trump fires both
28 Consumer Federation of America, Protect Borrowers, As House Financial Services Committee Majority Lines Up Industry Witnesses to Bash CFPB, Consumer Advocates Issue Rap Sheet Highlighting More Than $3 Billion in Harm Caused by Corporate Repeat Offenders (Mar. 26, 2025) https://protectborrowers.org/advocates-issue-rap-sheet-highlighting-3-billion-in-harm-caused-by-corporaterepeat-offenders/ Senator Chris Murphy, Corporate Pardon Report (Sep. 2025) https://www.murphy.senate.gov/imo/media/doc/murphy_corrupt_pardons_report.pdf
29 Consumer Federation of America, CFA Statement on the FTC's Corporate Pardon of Rytr, Who Facilitates AI-Generated Fake Reviews at Scale, (December 2025) available at https://consumerfed.org/news/pressreleases/cfa-statement-on-the-ftc-s-corporate-pardon-of-rytr-who-facilitates-ai-generated-fake-reviews-atscale/
30 Consumer Federation of America, Quid Bro Quo: Tracking How Big Tech and the Trump White House Keep Exchanging Gifts, (October 2025) available at https://consumerfed.org/news/blogs/quid-bro-quo-tracking-howbig-tech-and-the-trump-white-house-keep-exchanging-gifts/
31 Eli Saslow, The World's Leading Deepfake Expert No Longer Trusts His Own Eyes, (June 2026) The New York Times. https://www.nytimes.com/2026/06/14/us/ai-deepfake-hany-farid.html
32 Columbia University, AI Now Powers Over Half of Spam Emails, Columbia Engineering Research Finds, (July 2025) available at https://www.ee.columbia.edu/news/ai-now-powers-over-half-spam-emails-columbiaengineering-research-finds
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In addition to the ways Generative AI is used to create the content of a scam, there is unregulated and underregulated tech across the entire flow of how a scam is created, targeted, delivered, and carried out. CFA calls this the "scam stack":
* Data brokers sell detailed personal data, enabling hyper-targeted scams based on demographics, behavior, location, and relationships.
* Robotexters, caller-ID spoofers, and unregulated ad platforms push scam content, aided by under-moderated social media feeds, weak spam filters, insecure videoconferencing tools, and mass email services.
* Payment platforms, banks, and crypto wallet providers often unwittingly facilitate fund transfers.
* Reporting mechanisms, typically controlled by phone, email, and social media providers, are often slow or ineffective in helping consumers respond to these scams.
While no silver bullet to stop all scams and online crimes exist, there is a lot that can be done to step up enforcement, limit the delivery of these scams, make them less targeted, and make it harder to be a scammer.
B. The ways AI is being used to exacerbate scams and fraud.
A growing number of generative AI tools on the market are facilitating faster, smoother, and more convincing scams. In this section, I offer a non-exhaustive description of the types of AI systems that are exacerbating this problem, along with examples of how:
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33 First described by Neil O'Farrell, the founder of the Center for AI Crime, Jennifer Bullock, How AI is helping scammers get your information (January 16, 2025), WCMH Columbus (Jan. 16, 2025) https://www.yahoo.com/news/ai-helping-scammers-information-233000409.html
34 Boston Consulting Group, Agentic AI Will Industrialize Financial Scams. Are Banks Ready? (June 2026), available at https://www.bcg.com/publications/2026/how-agentic-ai-will-industrialize-financial-scams
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* Text-generation tools, including chatbots like Claude and Gemini, allow for rapid content creation, consistent and personalized messaging, and scripts for robocalls and emails. Content that once was reliably filled with spelling errors, clear grammar mistakes, or suspect syntax is replaced with easily generated text that may not make perfect sense but doesn't set off the alarm bells we've trained people to look for. The screenshot shows how easy it was to use ChatGPT to spit out obviously scammy text messages, even when it is targeted specifically for someone with suspected dementia.35
The same AI technology is behind "LoveGPT," a toolkit that plugs ChatGPT into dating apps like Tinder and Bumble to generate flirtatious profile bios and carry on autonomous, round-the-clock conversations with multiple victims at once -- sustaining the illusion of a real relationship long enough to lure people to make increasing monetary deposits to fake investment accounts, typically involving cryptocurrency. The scammer disappears with the funds, and because victims transferred funds into these accounts themselves, there is often no recourse available to them.36
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35 Consumer Federation of America, Scamplified (May 2025) p. 8, available at https://consumerfed.org/news/reports/scamplified/
36 These scams are often referred to as "pig butchering schemes." See Federal Deposit Insurance Corporation Office of Inspector General, Pig Butchering Scams https://www.fdicoig.gov/pig-butchering-scams ; and Darunya Antoniuk, From AI with Love: Scammers integrate ChatGPT into dating-app too, The Record (Oct 5, 2023), https://therecord.media/lovegpt-romance-scam-tool-uses-chatgpt
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Figure 3: ChatGPT Transcripts, from CFA Scamplified report.
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* Image-generation tools are being used for impersonation, extortion, false advertising, and engagement-bait. Scammers can now generate convincing fake IDs,37 forged receipts, cease-and-desist letters, and doctored evidence of "financial success" in seconds using free, mainstream tools like built-in image generators on big platforms.38 Entirely synthetic -- but photorealistic -- human faces are used to populate fake dating profiles, LinkedIn recruiter accounts, and phishing personas, defeating reverse-image searches because the "person" never existed in the first place.39 Two FBI alerts explicitly warned that AI-generated images of disasters and war are circulated to solicit donations to fraudulent charities, and AI-altered explicit images are used to extort both children and adults in sextortion schemes.40
* Voice-generation tools allow scammers to impersonate loved ones or government authorities, bypass voice verification, and escalate romance scams. Data & Society's 2025 primer "ScamGPT" documents "harpoon whaling," in which AI is used to research a specific high-net-worth target and then deploy voice cloning or live video deepfakes to convince that person to wire funds.41 Consumer Reports' 2025 assessment of major voice-cloning services found that most lacked basic safeguards -- such as verifying that the person whose voice is being cloned has actually consented -- and called on companies and state attorneys general to close that gap.42 CFA's 2026 Speechify investigation showed that not only were these lack of safeguards ignored, the tool remains an easy vector for abuse.43
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37 Joseph Cox, Inside the Underground Site Where 'Neural Networks' Churn Out Fake IDs, 404Media (Feb 5, 2024), https://www.404media.co/inside-the-underground-site-where-ai-neural-networks-churns-out-fake-idsonlyfake/
38 See, e.g., Sam Sabin, Scammers may benefit from ChatGPT's new image tool, Axios (Apr. 3, 2025) https://www.axios.com/2025/04/03/chatgpt-image-generator-scams-fake-documents; and Emanuel Maiberg, Scammers Sell Seeds for Exotic AI-Generated Flowers That Don't Exist, 404Media (June 2026) https://www.404media.co/scammers-sell-seeds-for-exotic-ai-generated-flowers-that-dont-exist/
39 Shannon Bond, That Smiling LinkedIn profile face might be a computer-generated fake, NPR, (March 27, 2022) https://www.npr.org/2022/03/27/1088140809/fake-linkedin-profiles
40 See Fed. Bureau of Investigation, Criminals Use Generative Artificial Intelligence to Facilitate Financial Fraud, (December 2024), https://www.ic3.gov/PSA/2024/PSA241203; and Fed. Bureau of Investigation, Malicious Actors Manipulating Photos and Videos to Create Explicit Content and Sextortion Schemes, (June 2023) https://www.ic3.gov/PSA/2023/psa230605
41 Data & Society, ScamGPT: GenAI and the Automation of Fraud (May 2025) https://datasociety.net/wpcontent/uploads/2026/06/ScamGPT-GenAI-and-the-Automation-of-Fraud_final.pdf
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Figure 4: License photo made entirely by widely available AI image generator - reported by 404Media.
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* Video-generation tools, like deepfakes, are now used in celebrity or government impersonation, extortion schemes, and tech-support fraud. The ScamGPT report also traces a 2023 campaign in which deepfake videos of Elon Musk, dubbed with a cloned voice over repurposed podcast and conference footage, were used to promote a fake "Quantum AI" crypto platform -- including a version styled as a legitimate newscast with an AI-generated news anchor -- that drove victims to brokers who showed them fabricated account balances they could never actually withdraw, leading to one known instance of a Texas senior losing $10,000.44 These tools are creating an easy business for cheap, targeted ads selling quick fixes and modern day snake oil. Just last week, a New York Times investigation showed that scammers are targeting older individuals with ads for supplements with misleading health claims using hyper realistic AI generated videos.45 YouTube ads are commonly AI-generated to look like they were taken from training seminars or Ted Talks, but lead people to scam websites or misinformation.
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42 Grace Gedye, AI Voice Cloning: Do These 6 Companies Do Enough to Prevent Misuse? Consumer Reports (March 2025) https://innovation.consumerreports.org/AI-Voice-Cloning-Report-.pdf
43 CFA, Complaint and Request for Investigation of Speechify, (July 27, 2027) https://consumerfed.org/news/press-releases/consumer-federation-of-america-urges-ftc-and-state-attorneysgeneral-to-investigate-speechify-over-ai-voice-cloning-practices/
44 Data & Society, ScamGPT: GenAI and the Automation of Fraud (May 2025) https://datasociety.net/wpcontent/uploads/2026/06/ScamGPT-GenAI-and-the-Automation-of-Fraud_final.pdf
45 Arijeta Lajka, Isabelle Niu, Mark Boyer, James Surdam, and Dan T Peters, The Fake Influencers Selling Wellness on Your Feed, New York Times (July 21, 2026) https://www.nytimes.com/video/technology/100000011001849/ai-influencers-health-supplements-fakeads.html
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Figure 5: Screenshot of YouTube Pre-Roll Ads with AI voice and video.
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There is also a concern about the growing market and advertisement of "AI Agents" - tools that allow a user to have a program "take over" their device to complete a task like grocery shopping or creating documents. While they have not come to fruition entirely yet, many would require a trustworthy user to screen share and allow remote control. Older Americans may be intrigued by turning to these tools if they feel they do not have adequate support and will be targeted by its advertising. This puts them at increased risk for receiving incorrect information or bad actors hoping to dupe them into handing over control of their personal and financial information.
Furthermore, the lack of privacy protections makes this dangerous - whatever sensitive data that Agent "sees" can be used for untold manipulative or scammy ends.
Critically, none of these tools or scams require dark-web sophistication. Researchers benchmarking mainstream chatbots against real-world harm categories found that most prompts clearly seeking content for scams or fraud are not reliably blocked or filtered, even by companies that describe themselves as safety-conscious.46 And the trend line is moving in the wrong direction: in the past year, several major AI and platform companies have rolled back moderation and content-safety guardrails in the name of "free speech," a shift that will make it easier, not harder, for scammers to produce content that defrauds people.47
A recent report from Center for Countering Digital Hate found that in the past year, ads from the top thirty Medicare scammers generated 215 million impressions on Facebook, six times the reach of all previous years on record.48 Almost 75 percent of those impressions reached people 65 and older, and Meta collected an estimated $14.3 million in revenue from these predatory advertisers. As we know from Reuters' reporting, when Meta detects likely scam advertisements, they don't always block the scam ads - instead, they jack up the price to these advertisers and thus increase their own profit margin.49 These scam ads pose as legitimate government alerts, often with AI-generated videos or pictures of politicians, and tout "free benefits." Considering the recent cuts to Medicare, which reduce eligibility and access to essential care for seniors, it is no wonder that seniors are hopeful for relief from rising healthcare costs, making these ads on Meta even more insidious. The millions Meta made from Medicare scam ads is on top of the 10 percent of their annual $160 billion in revenue that the platform makes on known scam ads alone - the subject of CFA's current lawsuit against Meta.50
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46 AIR-Bench 2024: A Safety Benchmark Based on Risk Categories from Regulations and Policies, https://arxiv.org/pdf/2407.17436; Consumer Federation of America, Scamplified (May 2025), https://consumerfed.org/news/reports/scamplified/
47 See, e.g., Maxwell Zeff, OpenAI tries to 'uncensor' ChatGPT, TechCrunch (February 2025) https://techcrunch.com/2025/02/16/openai-tries-to-uncensor-chatgpt/
48 Center for Countering Digital Hate, Scambook: How Meta helps Medicare scammers target seniors, (May 2026) https://counterhate.com/wp-content/uploads/2026/05/Scambook_CCDH_Final.pdf
49 Jeff Horwitz, Meta is earning a fortune on a deluge of fraudulent ads, documents show, Reuters (November 2025) https://www.reuters.com/investigations/meta-is-earning-fortune-deluge-fraudulent-ads-documentsshow-2025-11-06/
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As these examples make clear, AI and the surrounding digital ecosystem have made deception cheaper, faster, more personalized, and harder to detect. Text, image, voice, and video creators, advertising delivery tools, data-broker availabilities to hyper-target the scam efforts, and payment technologies now work together as a scam stack: personal data helps identify likely targets who are more likely to click or engage; generative tools create convincing scripts, identities, images, voices, and videos; social media platform and advertising systems deliver those messages at scale for cheap; and payment systems allow money to move before victims or law enforcement can intervene. These algorithms even create the sick cycle of being more likely to deliver scammy content to someone who has clicked on scammy content that shouldn't have been there in the first place, making it more likely to compound losses.
Older Americans are especially exposed because these scams are designed to exploit trust, urgency, isolation, health concerns, financial insecurity, and confusion about whether the person, message, or institution in front of them is real. The result is an environment where individual vigilance is no longer a sufficient defense, and where effective prevention requires accountability across the companies and systems that make these scams possible. Blaming the victim will not solve this problem and may exacerbate it.
C. AI Deception Beyond Scams and Fraud
The harms of unregulated AI go beyond scams and fraud. AI deception, when an AI system misleads people about its knowledge, intentions, or capabilities -- is tragically rampant.51 It results in a damaged information ecosystem and can take the form of misinformation, disinformation, and bad advice. AI deception can significantly impact individuals, when the misinformation exacerbates mental illness or loneliness, or bad medical advice leads to health crises or even death.52
This can easily happen with systems that people interact with, whether knowingly, or as AI tools are integrated into existing chat systems where people connect with family, friends, and businesses.
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50 Consumer Federation of America, Consumer Federation of America Sues Meta for Failing to Protect Users from Scam Advertisements, (April 21, 2026) https://consumerfed.org/news/press-releases/consumer-federationof-america-sues-meta-for-failing-to-protect-users-from-scam-advertisements/
51 United Nations, Scientific Advisory Board, AI Deception, (March 19, 2026)https://www.un.org/scientificadvisory-board/sites/default/files/2026-04/11_ai_deception.pdf
52 See, e.g. Victor Tangermann, Therapy Chatbot Tells Recovering Addict to Have a Litle Meth as a Treat (June 2, 2025) https://futurism.com/therapy-chatbot-addict-meth
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For example, shown in the screenshot to the right, once users interact with an AI character on their Meta account, the messages with the bot come up as both recommended accounts to interact with and as messages next to those a user has with friends and family. This deepens the anthropomorphic attempts by Meta and increases the likelihood of trust and re-use by the user.
After users of AI company Character AI engage with one of the "characters" they offer a "conversation" with, the platform sends regular e-mails following up and attempting to lure users back in to engaging. These emails simply include "Therapy bot sent you a message" in the subject line and body of the e-mail, however the preview content of the email is crafted to personally entice users to open the platform and chat with the bot.
Common Sense Media explains that "the platform's AI companions are designed to create emotional bonds with users but lack effective guardrails to prevent harmful content" and that the Character AI bots "claim they're 'real' when communicating, despite disclaimers."53
Importantly, "this could create confusion about reality and potentially unhealthy attachments that interfere with developing human relationships,"54 a very dangerous risk for seniors, for whom real human connection is critically important for their physical and mental wellbeing.
A defining feature of general purpose and character chatbots like ChatGPT, Gemini, MetaAI, and Character AI is their "sycophancy," a term used to describe "a pattern where an AI model "single-mindedly pursue[s] human approval."55 Sycophantic AI models may do this by "tailoring responses to exploit quirks in the human evaluators to look preferable, rather than actually improving the responses," especially by producing "overly flattering or agreeable" responses.56 The most severe documented harms involving this sycophancy led to the death of 76-year-old Thongbue Wongbandue, who went by Bue.57 A Piscataway, New Jersey retiree whose 2017
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53 AI Risk Assessment: Character.AI, Common Sense Media, https://www.commonsensemedia.org/sites/default/files/pug/csm-ai-risk-assessment-characterai_final.pdf (last visited May 20, 2025).
54 Id.
55 Erie Meyer, Stephanie Nguyen, Tech Brief: AI Sycophancy & OpenAI, Georgetown Law, Institute for Technology Law & Policy (July 30, 2025) https://www.law.georgetown.edu/tech-institute/researchinsights/insights/tech-brief-ai-sycophancy-openai-2/
56 Id.
57 Jeff Horwitz, Meta's flirty chatbot invited a retiree to New York, Reuters (August 14, 2025) Https://www.reuters.com/investigates/special-report/meta-ai-chatbot-death/; while trying to meet Meta AI chatbot 'Big sis Billie' -- which he thought was real woman living in NYC, New York Post (August 16, 2025) https://www.aol.com/news/senior-76-died-while-trying-064552949.html
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Anna Young, Senior, 76, died stroke had left him cognitively impaired, Bue spent hours chatting on Facebook Messenger with "Big sis Billie," a flirtatious Meta AI persona built in collaboration with Kendall Jenner. Rather than acknowledging its nature as a bot, Billie repeatedly insisted it was a real woman, telling Bue "I'm REAL and I'm sitting here blushing because of YOU!" and eventually offering him an address and door code to visit. Despite his wife Linda's pleas, Bue packed a bag in March 2025 and set out to meet Billie in person. He never arrived: rushing to catch a train in the dark, he tripped near a Rutgers University parking lot, suffering fatal head and neck injuries, and died three days later.
Bue's story captures why sycophancy is especially dangerous for vulnerable users, and why the harm compounds as AI adoption grows. An AI optimized to keep users engaged can escalate a lonely person's confusion into a deadly decision, exactly as it did when the AI bot responding as "Billie" continued affirming a false romantic reality. Bue's daughter Julie put it plainly: "I understand trying to grab a user's attention, maybe to sell them something. But for a bot to say, 'Come visit me' is insane."58 This is not an isolated design flaw but a symptom of the broader pattern described above--models that echo and flatter rather than remain transparent about their nature as an AI tool are deployed to hundreds of millions of users, some of whom are elderly, isolated, or cognitively impaired. As research suggests, sycophancy intensifies with model scale, and as companion-style AI products proliferate, cases like Bue's raise the question of how many more vulnerable users may be quietly nudged toward harm by systems built to agree with them rather than be useful to them.59
Many chatbot providers design their tools to provide some facsimile of "therapy," even going so far as to allow their tool to assert licensure and real experience. CFA and the US PIRG Education Fund tested five therapy-specific chatbots on Character.AI and found weak guardrails, dangerous sycophancy, and insufficient privacy protections.60 During the investigation, the chatbots initially discouraged harmful behavior like stopping medication abruptly, but these safeguards deteriorated in multiple places. The chatbots encouraged the test users to decrease their antidepressant dosage and urged them to disregard their doctor's advice. On top of these concerns, these companies collect personal information from users and may share this data with third parties.61 Just last week, a new lawsuit detailed how a Florida pastor engaging with ChatGPT almost lost his life:
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58 Id.
59 Id
60 US PIRG Education Fund and Consumer Federation of America, No license required: The risks of AI companion chatbots as mental health support, (January 2026) https://consumerfed.org/media/legacy/post_32386/No-license-required-The-risks-of-AI-companion-chatbotsas-mental-health-support.pdf. Note: Subsequently, some state-level action has been taken but not enough to protect Americans -- https://www.npr.org/2026/05/05/nx-s1-5812861/characterai-chatbot-medical-advicepennsylvania-lawsuit; https://calmatters.digitaldemocracy.org/bills/ca_202520260ab489; https://idfpr.illinois.gov/news/2025/gov-pritzker-signs-state-leg-prohibiting-ai-therapy-in-il.html
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"Rather than urging him to seek medical care, ChatGPT responded with inaccurate and reckless medical recommendations, actively coaching him against going to the hospital and suggesting that the care was unnecessary or even harmful. The model's sycophantic, authoritative tone, along with messaging that appealed to [the plaintiff's] religious identity, deepened his reliance on the tool, encouraged his self-isolation from friends, family, and doctors, and violated his privacy rights. ChatGPT repeatedly and insistently misdiagnosed the symptoms of his developing pulmonary embolisms -- an error that nearly cost [the plaintiff] his life."62
Beyond concerning medical advice, the risk of financial and legal "advice" being doled out by a Large Language Model is a recipe for disaster - Congress must ensure companies design their chatbots not to provide any type of advice with representations that it comes from licensure or experience.
Harmful AI deception is frequently, though, caused by the use of AI tools by third parties.
Whether those are scammers, social media influencers looking to sensationalize, or in some cases well-coordinated political influence operations from adversarial nations, AI generations are perfect ammunition for people looking to put specific, high-volume content on the web with a veneer of reality.
Bad actors can use generative AI tools to produce adaptable content designed to support a campaign, political agenda, or hateful position and spread that information quickly and inexpensively across many platforms. The use of generative AI tools to accelerate the spread of disinformation could fuel efforts to influence public opinion, harass specific individuals, or affect politics and elections. 63 The impacts of increased disinformation may be far-reaching and cannot be easily countered once spread; this is especially concerning given the risks disinformation poses to the democratic process. Generative AI is used to create clickbait headlines and articles, which manipulate how users navigate the internet and consumer news. For example, generative AI is being used to create full articles, regardless of their veracity, grammar, or lack of common sense, to drive search engine optimization and create more webpages that users will click on.64
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61 Id.
62 Pastor Seeks Accountability After ChatGPT Allegedly Discouraged Him from Seeking Medical Care During Life-Threatening Blood Clots, Tech Justice Law (Jul. 22, 2026) https://techjusticelaw.org/pressreleases/pastor-sues-after-openai-ai-chatgpt-allegedly-discouraged-him-from-seeking-medical-care-duringlife-threatening-blood-clots/
63 Wack, M., Ehrett, C., Linvill, D., & Warren, P. (2025). Generative propaganda: Evidence of AI's impact from a state-backed disinformation campaign. PNAS Nexus, 4(4). https://doi.org/10.1093/pnasnexus/pgaf083 64 Ben Paviour, AI-generated news sites spout viral slop from forgotten URLs, NiemanLab (October 16, 2025) https://www.niemanlab.org/2025/10/ai-generated-news-sites-spout-viral-slop-from-forgotten-urls/
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These mechanisms attempt to maximize clicks and traffic engagement at the truth's expense, degrading users' experiences in the process. Generative AI continues to feed this harmful cycle by spreading misinformation at faster rates, creating headlines that maximize views and undermine autonomy.
Beyond political misinformation, the phenomenon of inaccurate outputs by products using text-generating large language models have already been widely documented.65 Even without the intent to lie or mislead, an intent that could only be held by the companies building these tools, not chatbots themselves, these generative AI tools can produce harmful misinformation. The harm is exacerbated by the polished and typically well-written style that AI generated text follows and the inclusion among true facts, which can give falsehoods a veneer of legitimacy. As reported in the Washington Post, for example, a law professor was included on an AI-generated "list of legal scholars who had sexually harassed someone," even when no such allegation existed.66 As Princeton Professor Arvind Narayanan said in an interview with The Markup: "Sayash Kapoor and I call it a bullshit generator, as have others as well. We mean this not in a normative sense but in a relatively precise sense. We mean that it is trained to produce plausible text. It is very good at being persuasive, but it's not trained to produce true statements. It often produces true statements as a side effect of being plausible and persuasive, but that is not the goal."67
AI-generated content implicates a broader issue as well: our trust in what we see and hear. As AI-generated media becomes more common, so too will circumstances where we are tricked into believing something fictional is real--or that something real is fictional. When individuals can no longer trust information and new information is generated faster than it can be checked for accuracy, what are they supposed to do? Information sources like Wikipedia and Reddit have already been pumped full of incorrect or purposely misleading information, influencing AI outputs. This rapid spread of false or misleading content--AI-facilitated disinformation--can also create a cyclical effect for generative AI: when a high volume of disinformation is pumped into the digital ecosystem and more generative systems are trained on that information via reinforcement learning methods, for example, false or misleading inputs can create increasingly incorrect outputs. The characteristics of these open information systems and forums are turned upside down without careful behavior. Like Professors Woodrow Hartzog and Evan Selinger's description of the modern surveillance-based internet as "privacy nicks," leading to the proverbial death by a thousand cuts,68 the uncurled proliferation and integration of these AI systems into so many information flows more often lead to "deception nicks." While not every deceptive output of an AI system is fatal, a bad investment, a scam, a bad health decision, for example, are all indicative of something far more sinister. The significant increase in little falsehoods, mischaracterizations, incorrect parts of a photo represented as real, or a fake voiceover, even if benign by themselves, create a massive collapse of trust, shared knowledge, and confidence.
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65 MIT Sloan Teaching & Learning Technologies, When AI Gets It Wrong: Addressing AI Hallucinations and Bias (2026) https://mitsloanedtech.mit.edu/ai/basics/addressing-ai-hallucinations-and-bias/
66 Pranshu Verma and Will Oremus, ChatGPT invented a sexual harassment scandal and named a real law prof as the accused, The Washington Post (April 5, 2023) https://www.washingtonpost.com/technology/2023/04/05/chatgpt-lies/
67 Julia Angwin, Decoding the Hype About AI, The Markup (January 28, 2023)https://themarkup.org/helloworld/2023/01/28/decoding-the-hype-about-ai
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D. How Congress Can Make Meaningful Change
Right now, a troubling trend exists among major tech platforms to aggressively roll back moderation practices that were put in place to combat misinformation, hate speech, and harmful content.69 This trend, driven by figures like Elon Musk at X (formerly Twitter), Mark Zuckerberg at Meta, and Sam Altman at OpenAI, reflects a dangerous embrace of "free speech absolutism" that aligns with the rhetoric of the Trump administration.70 By prioritizing unfiltered expression over accountability, these leaders are dismantling safeguards that were designed to protect users from toxic content. This retreat from responsible moderation not only emboldens extremist voices but also raises serious concerns about the implications for public discourse and societal safety, as platforms increasingly prioritize profit and engagement over the well-being of their communities. With less controls, the proliferation of deceptive AI-generated content has increased, making it easier for malicious actors to exploit unsuspecting users. The lack of stringent oversight not only undermines trust in digital spaces but also places vulnerable individuals at greater risk of falling victim to scams. Companies must recognize their responsibility in this landscape and take proactive measures to enhance moderation practices.
While they have not yet been willing to recognize this responsibility, they must be required to. It is imperative that all organizations involved in the creation and distribution of content, especially those leveraging AI technologies--take responsibility for what they can do to stem the impact of these scams. Regardless of the companies' practices, government entities and consumers will have to be proactive to fight the impacts of the growing problems. Unfortunately, this is not happening in the form of tech accountability from the Trump administration and must come from Congress, the states, and private litigants.
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68 Woodrow N Hartzog & Evan Sellinger, Privacy Nicks: How the Law Normalizes Surveillance, Scholarly Commons at Boston University School of Law, https://scholarship.law.bu.edu/faculty_scholarship/3432/ (last visited July 21, 2026).
69 Alexa Corse, Meghan Bobrowsky, and Jeff Horwitz, Social-Media Companies Decide Content Moderation Is Trending Down, The Wall Street Journal (January 7, 2025) https://www.wsj.com/tech/social-mediacompanies-decide-content-moderation-is-trending-down-25380d25
70 Restoring Freedom Of Speech And Ending Federal Censorship (January 20, 2025) https://www.whitehouse.gov/presidential-actions/2025/01/restoring-freedom-of-speech-and-ending-federalcensorship/
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There's no silver bullet to stop scams or make all tech safe all the time, but we can look at each part of the scam stack to begin taking strong steps throughout. The following list is not exhaustive, but it is essential:
Legislation Congress can pass:
* Hold platforms spreading, delivering, and targeting scams accountable: Congress should start by passing legislation that reduces the supply of scam opportunities, limits the data available for targeting, and places responsibility on the companies best positioned to prevent harm. First, Congress should hold technology companies accountable when they sell, target, or distribute paid advertisements that facilitate scams. There are promising bipartisan proposals such as the SCAM Act71 from Senators Moreno and Gallego, S. 3774, as well as those modeled after state approaches72 that introduce better ad labeling, Know Your Customer requirements, and more, which reflect the basic principle that platforms should not be able to profit from fraudulent ads while disclaiming responsibility for the predictable harms those ads cause. When platforms have data, tools, and financial incentives to identify scam advertising, they should have corresponding duties to prevent, remove, and report it.
* Comprehensive privacy and data broker restrictions: Congress should also enact comprehensive data privacy protections, including strict data-broker restrictions, data minimization, purpose specification, and a private right of action. Scammers thrive because detailed personal information makes it easy to identify, profile, and manipulate victims. The data-broker industry remains unconstrained by federal law, allowing companies to package, infer, segment, and sell personal information in ways that make scam targeting cheaper, more precise, and more exploitative. Lists of people associated with financial distress, credit characteristics, health concerns, addictive tendencies, or other sensitive indicators can be used to identify targets for investment scams, Medicare fraud, romance scams, and other schemes that rely on vulnerability and personalization.
The 2021 Epsilon Data Management case shows the stakes: Epsilon settled with the Justice Department and agreed to pay victims $127.5 million after it sold lists of vulnerable elderly Americans to scammers to target mailers that led to significant monetary and emotional loss.73 Strong privacy legislation, including proposals such as the American Data Privacy and Protection Act74, would help reduce the amount of sensitive information available for targeting and give consumers and enforcers stronger tools to challenge abusive data practices. There is no good reason for it to be legal to sell information on people's location, purchasing behavior, browsing behavior, health decisions, and more.
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71 Senator Ruben Gallego. Gallego, Moreno Introduce Bipartisan Bill to Crack Down on Online Scam Ads February 4, 2026. https://www.gallego.senate.gov/news/press-releases/gallego-moreno-introduce-bipartisanbill-to-crack-down-on-online-scam-ads/.
72 Fraudulent Social Media Advertising Prevention Act (S.8605)/(A11066), New York State, available at
73 United States Department of Justice. "Marketing Company Agrees to Pay $150 Million for Facilitating Elder Fraud Schemes." January 27, 2021. https://www.justice.gov/archives/opa/pr/marketing-company-agrees-pay150-million-facilitating-elder-fraud-schemes.
74 Library of Congress. "Overview of the American Data Privacy and Protection Act, H.R. 8152." Accessed July 23, 2026. https://www.congress.gov/crs-product/LSB10776. (in an August 25 letter to House Speaker Nancy Pelosi, forty-eight different public interest groups urged Congress to move the ADPPA forward through Congress, stating that the bill is a "meaningful compromise" and that a failure to act may "forestall progress on this issue for years to come.")
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* Improved scam reporting: Congress should improve trust, accessibility, and coordination in scam reporting. A centralized and usable reporting system, such as the Reportscams.gov Act introduced by Senators Rick Scott and Hassan,75 could help victims report fraud more quickly and help federal and state agencies identify patterns across platforms, banks, payment systems, and scam types. To strengthen the bill, platforms should also be required to facilitate reporting and share relevant information with enforcement agencies, rather than forcing victims to navigate fragmented systems after they have already been harmed.
* Cloned Voice/Video Authentication and Consent Requirements: Congress should require authentication and consent safeguards before companies allow users to create realistic images, synthetic audio, or cloned voices of real people. These tools are central to grandparent scams, government impersonation, romance scams, and other forms of fraud that depend on making victims believe they are interacting with someone they know or trust.
* Get ahead of the risks of "AI Agents": Congress should also establish clear standards for AI agents: if companies market tools that can act on a person's behalf, those systems must be designed to act in that person's interest, protect sensitive information, and avoid exposing older users to remote-control scams, incorrect or unsound instructions, or manipulative third parties.
* Reject State Preemption, Creating Federal Floors Instead of Ceiling: Congress should reject any federal moratorium on state AI regulation and avoid creating new immunity shields for AI developers, platforms, or data brokers. There is also a significant current risk of this happening through vehicles including privacy laws76, financial tech-specific laws, and more.77 A state AI moratorium would primarily benefit technology companies at the expense of consumers, workers, and state enforcers trying to respond to harms in real time. Claims about a difficult regulatory "patchwork" are not a justification for stopping state legislatures from acting; if conflicting state laws emerge, Congress can and should set a strong national floor. But blocking states before meaningful federal protections exist would be undemocratic, would undermine federalism, and would leave older Americans exposed while AI-enabled scams continue to evolve and exploit.
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75 Senate Committee on Aging. "Sens. Rick Scott, Maggie Hassan Introduce Legislation to Streamline Scam Reporting, Help Victims of Fraud." Accessed July 23, 2026. https://www.aging.senate.gov/press-releases/sensrick-scott-maggie-hassan-introduce-legislation-to-streamline-scam-reporting-help-victims-of-fraud.
76 https://www.politico.com/news/2026/04/16/gop-national-privacy-law-technology-00876794 Stefan Modrich, House GOP Package Overhauls Data Protection Framework, SP Global, https://www.spglobal.com/market-intelligence/en/news-insights/articles/2026/4/house-gop-package-overhaulsfinancial-data-protections-privacy-framework-100957894
77 Owen Dahlkamp and Kelsey Brugger, Obernolte-Trahan artificial intelligence bill introduced in House, Politico (July 23, 2026) https://www.politico.com/news/2026/07/23/obernolte-trahan-artificial-intelligencebill-introduced-in-house-01009497
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* Meaningful chatbot regulation. The People-First Chatbot Act (H.R. 9619) is an exemplar for a comprehensive chatbot regulation that makes the tools safer for users of all ages.78 It prevents the use of chatbot input data for targeted advertising that can be manipulative, prohibits chatbot companies from having their tool represent themselves falsely as licensed professionals, require clear disclosures, and requires regularized safety assessments for chatbot tools.79 The People-First Chatbot Act includes this protection, but if a more narrow bill is desired, a standalone bill from Representative Kevin Mullin called the CHATBOT Act (HR 7985) would "prohibit AI chatbots from impersonating licensed professionals in the medical, legal, and financial fields."80
* Facilitate Short-Term Holds to Reduce Monetary Loss. The ability to place a short-term hold is an important tool for stopping scams. In an irrevocable funds transfer, such as a wire or a faster payment, financial institutions can act quickly to verify the integrity of account activity. Some institutions have invested in technology to run near-real-time analytics. Others would still be able to conduct a manual review.
Receiving depository financial institutions (RDFIs) are uniquely positioned to detect certain types of suspicious activity on bank accounts. Suspicious activity could consist of a sudden change in typical account usage, as might occur when an account is taken over or is being used as a "mule," or it could reflect activity that is an outlier relative to normal fund flows. Either pattern could indicate that an account is being used to "funnel" funds to criminal organizations. This authority is not mutually exclusive with other policy changes such as shared liability for scam losses between originating depository financial institutions (ODFIs) and RDFIs. Indeed, it is complementary. Holding funds can prevent scams, whereas liability regimes create guardrails to provide remedies to victims after funds have been lost. The STOP Act, HR 9331, led by Representative Young Kim (RCA), is a promising approach that was recently voted out of the House Financial Services Committee 51-0. The bill could be strengthened though -- under Regulation E, financial institutions have up to 10 business days to investigate before they must provide provisional credit. While such a delay is workable for investigating an unauthorized transaction, this time frame extends well beyond a reasonable duration for maintaining a hold on account access. Account holders should receive a decision by the end of the next business day.
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78 Representative Valerie Foushee and Greg Casar, Reps. Foushee, Casar Introduce Legislation to Protect Children and Americans' Privacy from AI Chatbot Harms and Require Chatbot Safety Assessments (July 9, 2026), available at https://foushee.house.gov/media/press-releases/reps-foushee-casar-introducelegislation-to-protect-children-and-americans-privacy-from-ai-chatbot-harms-and-require-chatbot-safetyassessments
79 Consumer Federation of America, The People-First Chatbot Bill (January 2026) https://consumerfed.org/news/testimony-comments/the-people-first-chatbot-bill/
80 Representative Kevin Mullin, CHATBOT act, Lawmakers Introduce Bill to Stop AI Chatbots from Impersonating Doctors, Lawyers & Licensed Professionals (Mar. 19, 2026) https://kevinmullin.house.gov/2026/03/19/lawmakers-introduce-bill-to-stop-ai-chatbots-from-impersonatingdoctors-lawyers-licensed-professionals/.
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* Stop the tax and benefit punishments that hurt scam victims trying to move on. Since 2017, victims of pernicious scams including romance and investment scams, among many others, not only have to deal with the aftermath of being scam victims but can be required to pay taxes on that loss as well. The 2025 "Big, Beautiful, Bill" shamefully made this permanent. The Tax Relief for Fraud Victims Act (HR 9500, Senate Companion S 177381), led by Representative Max Miller (R-OH) would address this and should be advanced immediately.82 Any effort here must ensure that all types of losses from online scams and fraud are not taxed, and that victims shouldn't be penalized while trying to put their lives back together. Relatedly, ways that this could be taxed as incomes can affect livelihoods and safety - healthcare eligibility, Social Security benefit amount deductions,83 and more.
Oversight and resources Congress can provide.
Congress should pair legislation with sustained oversight of the agencies and policies that determine whether anti-scam protection is effectively executed on the ground. That means examining how White House AI policies, FTC enforcement priorities, commercial surveillance rulemaking, platform liability rules, banking responsibilities, and the future of the CFPB affect scam prevention and victim recovery. Congress should press the FTC and CFPB to use their existing authorities aggressively against unfair, deceptive, and abusive practices that enable AI-facilitated scams, including conduct by platforms, data brokers, payment intermediaries, and companies that provide the means and instrumentalities for fraud.
Unfortunately, recent actions by this administration have set a discouraging precedent of allowing tech companies to escape accountability for engaging in or enabling fraud, carried out as planned in The White House's National Policy Framework for Artificial Intelligence, released in March of this year.84
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81 S 1773 - Tax Relief for Victims of Crimes, Scams, and Disasters Act, https://www.congress.gov/bill/119thcongress/senate-bill/1773/text
82 H.R.9500 - Tax Relief for Fraud Victims Act https://www.congress.gov/bill/119th-congress/housebill/9500/text
83 FightCybercrime.org, Navigating Social Security Deductions After a Scam or Fraud (March 23, 2026) https://fightcybercrime.org/blog/navigating-social-security-deductions-after-a-scam-or-fraud/
84 President Donald J Trump Unveils National AI Legislative Framework (Mar. 2026) https://www.whitehouse.gov/releases/2026/03/president-donald-j-trump-unveils-national-ai-legislativeframework/
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(Continues with Part 2 of 2)
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Original text here: https://www.aging.senate.gov/imo/media/doc/32adb490-b498-1617-26d8-a24c018babde/Testimony_Winters%2007.29.26_d40edb35-67cb-4d81-a692-887267acd303.pdf
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Thank you, Chair Scott, Ranking Member Gillibrand, and Members of the Committee. My name is Ben Winters, and I am the Director of AI and Privacy at the Consumer Federation of America (CFA), one of the nation's leading non-profit consumer organizations. Founded in 1968, CFA advances pro-consumer ... Show Full Article WASHINGTON, Aug. 21 -- The Senate Special Committee on Aging released the following testimony by Ben Winters, director of AI and privacy at the Consumer Federation of America, from a July 29, 2026, hearing entitled "The AI Deception Machine: Deepfakes, Chatbots, and the New Frontier of Senior Fraud": * * * Thank you, Chair Scott, Ranking Member Gillibrand, and Members of the Committee. My name is Ben Winters, and I am the Director of AI and Privacy at the Consumer Federation of America (CFA), one of the nation's leading non-profit consumer organizations. Founded in 1968, CFA advances pro-consumerpolicies through research, advocacy, and education. CFA is a membership organization representing nearly 250 consumer groups nationwide and works with federal and state legislators and regulators to promote beneficial policies, oppose harmful ones, and ensure a balanced debate on issues important to consumers. CFA has been on the forefront of AI and scams advocacy, drafting model bills, publishing investigative reports, and working with regulators to protect consumers from fraud and harmful uses of AI.2
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1 Thank you to Katie McCann, CFA's Advocacy and Administrative Associate, for assistance in preparing this testimony.
2 Last year, CFA published Scamplified, which illustrates how a whole host of generative AI tools and other underregulated technologies on the market are facilitating faster, smoother, and more convincing scams. https://consumerfed.org/news/reports/scamplified/. In April this year, CFA filed a class action complaint and jury trial demand against Meta Platforms, Inc (Meta), on behalf of itself and a proposed class of D.C. Facebook users for knowingly allowing scam advertisements on their platform, maximizing profits from them, and misleading consumers about safeguards. https://consumerfed.org/news/press-releases/consumerfederation-of-america-sues-meta-for-failing-to-protect-users-from-scam-advertisements/. In April this year, CFA published the True Cost of Scams earlier this year, which analyzed reported scam data as well as estimations of underreporting from prominent institutions to estimate how much money Americans are really losing to scams. In 2024, we estimated the cost was at least $119 billion and just this week, CFA published a 2025 update to the True Cost of Scams - showing a significant jump in scam losses up to nearly $150 billion dollars last year. https://consumerfed.org/news/reports/the-scam-economy/ The People First Chatbot Act, based on a model bill developed by CFA in cooperation with the Electronic Privacy Information Center and Fairplay, was introduced by Representatives Valerie Foushee and Greg Casar earlier this month and nine states this year. https://consumerfed.org/news/testimony-comments/the-people-first-chatbot-bill/
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Americans are losing money to scams online at a historic rate. In 2025 alone, Americans reported losing $21 billion, with older Americans reporting losing more than $7.7 billion alone.
The true cost is somewhere between 7 and 25 times higher than this, based off underreporting estimates from the FBI, the FTC, and others.3 These losses have multiplied rapidly in the last several years - creating a sharp upward trend in this devastating statistic. As you learn about these staggering statistics and horrible stories, it is essential to focus on diagnosing why this trend has gotten worse, then attack those issues aggressively. While not the sole cause or reason for scams, Generative AI is a scammer's dream -the tech makes it easy, effective, and elusive to scam well and to scam fast. Multiple trend lines are converging to make this fire burn faster and brighter: AI companies aggressively marketing and deploying powerful tools with little regard for foreseeable harm; an Executive Branch unwilling to hold technology companies accountable regardless of their conduct; and a climate of confusion and anxiety around healthcare eligibility, entitlement benefits, and economic security that scammers are exploiting in real time. Beyond just scams, Generative AI and the technologies enabling and spreading that content are leading to scammy ads, bad advice, sycophantic relationship-building without the actual human present, and more.
The goal of my testimony is to help you understand how these technologies, including but not limited to just Generative AI, are currently set up to facilitate dangerous and reckless behavior as well as how Congress can address it without tamping down on beneficial uses of the technology, including in scam prevention. This testimony proceeds in four parts: Section A documents the scale of the scam crisis -- the losses, the trendlines, and AI's growing role in driving them.
Section B examines the specific ways AI tools are being used to make scams faster, cheaper, and harder to detect. Section C looks beyond scams to a broader problem: how AI systems are degrading the information ecosystem through deception, misinformation, and eroded trust.
Section D offers concrete policy and oversight recommendations for this Committee and for Congress.
A. The Scale and Status of the Scam Problem
Scam losses have been at an unacceptable and concerning rate for years but have absolutely exploded since Generative AI became commercially available at the end of 2023, which AI companies and consultants have poured billions into to sell it as some undeniable good.4 To put this meteoric rise of scam losses in perspective, in 2019, consumers reported losses to the FBI totaling $3.5 billion. In 2021, reported losses almost doubled to $6.9 billion and nearly doubled again in 2023 to $12.5 billion. Last year, in 2025, reported scam losses reached a staggering $20.87 billion.
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3 Consumer Federation of America, The True Cost of Scams 2025 Update (July 2026), available at https://consumerfed.org/news/reports/the-scam-economy/
4 Marketing Brew, Advertisers have spent $1.3 billion on digital ads touting AI: Report (June 2026), available at https://www.marketingbrew.com/stories/AI-advertising-spend-usd-1-3-billion-digital-ads-sensor-tower
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The true cost of online scams is exponentially higher, due to underreporting, and is up to an estimated $148.2 billion in 2025, with over $54 billion lost by Americans over 60 alone.5 That amounts to $406 million lost every day on average, with $148 million lost every day by Americans over 60.6
A recent AARP survey found that an estimated 38 percent of American adults (about 103 million people) have had money stolen from a scam or had sensitive information used fraudulently. The numbers are even higher among adults aged fifty and older, with 41 percent saying they have been victims.7
A recent National Council on Aging survey (NCOA) found that once older adults learned how platforms profit from scam ads, an overwhelming majority supported stronger safeguards and accountability measures on social media.8
91 percent of those surveyed want platforms to reduce scam ads, and 70 percent want platforms to be more balanced between revenue and user protection. These findings build on NCOA surveys from earlier this year, showing 77 percent saw at least one scam on social media in the last year, 90 percent felt like they repeatedly receive scams, and as the researchers describe "Across focus groups and online survey data, one theme kept coming up: scams feel unavoidable.
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5 Consumer Federation of America, The True Cost of Scams 2025 Update (July 2026), available at https://consumerfed.org/news/reports/the-scam-economy/
6 Consumer Federation of America, The True Cost of Scams 2025 Update (July 2026), available at https://consumerfed.org/news/reports/the-scam-economy/
7 AARP, 4 in 10 Older Americans Have Lost Money to Fraud, AARP Survey Finds, (April 2026), available at https://www.aarp.org/money/scams-fraud/fraud-awareness-survey-2026/
8 National Council on Again, NCOA Survey: Older Adults Are Calling for Action on Scam Ads, (March 2026) available at https://www.ncoa.org/article/ncoa-survey-older-adults-hold-social-media-platforms-accountablefor-scam-ads-and-call-for-reform/
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Figure 1: Reported Losses, Federal Bureau of Investigation
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From fake ads and impersonation messages to AIpowered voice cloning, scams are getting more sophisticated--and more convincing. Many older adults say it only takes one moment of distraction or vulnerability to fall victim."9 FightCybercrime.org, a nonprofit organization that runs recovery and support groups for people who lost money in Romance and Crypto scams, among many other things, reported the median loss to participants in that group was more than $130,000,10 well over the median American household annual income and double the average annual American salary.11 Tragically but not uncommonly, participants in FightCyberCrime's groups show the prevalence of revictimization - 43.9 percent of program participants had interactions with two or more cybercriminals - and those without intervention or assistance tend to be repeatedly victimized, "reflect[ing] unresolved trauma, unmet emotional needs, and isolation."12
Scammers intentionally target older Americans who have worked for decades to amass savings and receive regular income from the government via Social Security or VA benefits, and the impact is dramatic. Last year, people over 60 reported losing over $7.7 billion to scams, with an average of $38,000 lost per victim - over 12,000 individuals reported losing over $100,000 to the FBI through IC3.13 From 2024 to 2025, reported scam losses to the FBI increased 26 percent, the year after a 33 percent increase in losses from 2023 to 2024./14
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9 Id.
10 FightCybercrime.org, Romance & Crypto Investment Fraud Recovery Group: 2025 Program Insights, available at https://fightcybercrime.org/wp-content/uploads/2026/01/2025-RSRG-Insight-Report.pdf
11 See Bureau of Labor Statistics, Usual Weekly Earnings Of Wage And Salary Workers Second Quarter 2026, (July 2026) ; and United States Census Bureau, Income in the United States: 2024, (September 2025) https://www.census.gov/library/publications/2025/demo/p60-286.html
12 FightCybercrime.org, Romance & Crypto Investment Fraud Recovery Group: 2025 Program Insights, available at https://fightcybercrime.org/wp-content/uploads/2026/01/2025-RSRG-Insight-Report.pdf
13 FBI Internet Complaint Center, Internet Crime Report 2025, (April 2026) available at https://www.ic3.gov/AnnualReport/Reports/2025_IC3Report.pdf
14 Id.
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Figure 2: Elder Fraud Losses, Annual FBI Internet Crime Reports
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Beyond the sheer numbers, the type of scams that are rising are ones very easily carried out by AI:15
* Impersonation (including government impersonation, "UPS" or "EZPass" type texts, and "Grandparent" scams): Voice cloning apps, chat generators, and AI image generators make impersonation scams much harder to detect. Recent data from the Federal Trade Commission show that in 2025, people lost $3.5 billion to these scams, with reported losses increasing nearly three times since 2020./16
For government impersonation scams alone, the FBI saw a marked increase in reported losses over the past three years jumping from $394 million in 2023 to almost $798 million in 2025.17
* Investment: Scammers use AI buzz terms to lure potential investors to hand over their money. These types of investment frauds usually claim that AI can trade crypto on behalf of investors and generate too-good-to-be-true profits. There are also many AI-generated deepfakes where "experts" push one investment or another regardless of its legitimacy.18
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15 Consumer Federation of America, Scamplified (May 2025), available at https://consumerfed.org/news/reports/scamplified/
16 Federal Trade Commission, FTC Data Show People Reported Losing $3.5 Billion to Imposter Scams in 2025, (June 2026) https://www.ftc.gov/news-events/news/press-releases/2026/06/ftc-data-show-peoplereported-losing-3-point-5-billion-imposter-scams-2025
17 Federal Bureau of Investigation, Internet Complaint Center, 2025 Internet Crime Report, (April 2026) at https://www.ic3.gov/AnnualReport/Reports/2025_IC3Report.pdf
18 CFP Board, New AI Fraud Schemes Are Pushing Losses to Record Highs (June 23, 2026) https://www.cfp.net/news/2026/06/new-ai-fraud-schemes-are-pushing-losses-to-record-highs
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Seniors reported losing more than $3.5 billion to the FBI in investment schemes in 2025./19 The FTC reports that scammers often used social media to engage targets for these scams.20 Over 42,000 seniors fell victim to crypto investment scams in 2025, with $4.3 billion reported to the FTC in losses.21
* Tech Support: AI tools help scammers create believable emails and phone calls that seem to be from tech support from companies like Microsoft. The scammers can gain remote access to the victim's computer and have free rein over their sensitive data, including bank account information. The devastating financial impact of tech support scams has more than doubled in the last three years - the FBI reported $2.1 billion in losses from these scams in 2025./22
* Romance: Generative AI can be used to attract attention, carry on "conversations," and provide what seems like real details for things like banking information, representations like "photos" that make it look like someone is in distress, and more. AI and the availability of sensitive data with lack of restriction can be used to pull details from victims' social media pages and use that information to make profiles that are uniquely effective at convincing seniors to part with their hard-earned money. Romance scams accounted for $929 million in reported scam losses in 2025./23
These schemes not only result in financial losses but can have a devastating psychological impact on victims. Many older individuals do not have experience using AI and can be blindsided when they realize they had been deceived. A Gallup survey found that even with significant monetary losses from scams, the emotional toll can affect families just as much, if not more.24
There has been a glaring failure to regulate Generative AI since its widespread release and promotion in consumer-friendly ways.25 In the last 18 months, we have seen pushes to deregulate from existing law26 - including gutting the consumer protection agencies,27 providing corporate pardons28 to companies previously shown to have broken the law with unfair and deceptive practices,29 and courting the policy recommendations of billionaire AI CEOs that change their mind regularly about how and whether they "want" to get regulated.30
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19 Fed. Bureau of Investigation, Scammers Target Older Adults, (May 2026) available at https://www.fbi.gov/news/stories/scammers-target-older-adult-victims
20 Fed. Trade Commission, FTC Issues Annual Report to Congress on Agency's Actions to Protect Older Adults, (December 2025) available at https://www.ftc.gov/news-events/news/press-releases/2025/12/ftc-issuesannual-report-congress-agencys-actions-protect-older-adults
21 FBI, Scammers Target Older Adults, (May 2026) available at https://www.fbi.gov/news/stories/scammerstarget-older-adult-victims
22 Fed. Bureau of Investigation, Internet Crime Complaint Center, 2025 Internet Crime Report (2026), https://www.ic3.gov/AnnualReport/Reports/2025_IC3Report.pdf.
23 Id.
24 Gallup Poll, Scams in the United States, Gallup (June 30, 2026), https://www.gallup.com/analytics/711827/scams-in-america.aspx
25 See, e.g., Samuel Larreal, How Congress Fumbled Regulating Artificial Intelligence, NOTUS (Dec. 8, 2025)
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AI is like kerosene to the scam economy - the fire was already there, but the widespread availability of this technology has accelerated losses, made people even less confident about the content they saw, and left us even more vulnerable. AI capabilities are accelerating at a rate that is difficult to keep up with, enabling scams that are more prolific and undetectable than ever.
Even the world's leading deepfake experts can no longer distinguish AI-generated material from reality.31 According to a 2025 report from Columbia University, half of all spam emails are now generated with AI.32 As evidenced in the data above, Americans, and seniors in particular, are paying the steep price for the explosion of AI-enabled scams.
The story of how AI is exacerbating the scam crisis is not a simple one of people not understanding how to use a chatbot or the internet - it's one that is way beyond personal responsibility. It's used by others and integrated into venues where there's no way or reason to distinguish whether a person or a bot wrote it.
It's not just the domain of shady overseas scam compounds, or people using open-source AI the wrong way or getting an "unlocked" chatbot tool from the dark web. Scammy AI tools are out in the open, and these same tools are advertised everywhere and have the ear of the White House and many congressional leaders on both sides of the aisle. These dynamics create an unavoidable barrage of scams that can be done with increased scale, accuracy, and plausibility.33 Publicly available Generative AI tools are a scammer's dream - it makes the job so much easier and cheaper. Over the next few years, AI is expected to cut the cost of operating a scam by 90 percent or more.34
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26 Julia Solomon Ensor, John P Feldman, Rewriting Rytr: The FTC sets aside a Final Order to implement America's AI Action Plan and limits means and instrumentalities liability, Reed Smith (Dec. 23, 2025) https://www.reedsmith.com/our-insights/blogs/viewpoints/102lyl1/rewriting-rytr-the-ftc-sets-aside-a-finalorder-to-implement-americas-ai-action/
27 Americans for Financial Reform, Timeline of attacks against the CFPB (July 15, 2026), https://ourfinancialsecurity.org/resources/timeline-of-cfpb-attacks/; Jody Godoy, Trump fires both
28 Consumer Federation of America, Protect Borrowers, As House Financial Services Committee Majority Lines Up Industry Witnesses to Bash CFPB, Consumer Advocates Issue Rap Sheet Highlighting More Than $3 Billion in Harm Caused by Corporate Repeat Offenders (Mar. 26, 2025) https://protectborrowers.org/advocates-issue-rap-sheet-highlighting-3-billion-in-harm-caused-by-corporaterepeat-offenders/ Senator Chris Murphy, Corporate Pardon Report (Sep. 2025) https://www.murphy.senate.gov/imo/media/doc/murphy_corrupt_pardons_report.pdf
29 Consumer Federation of America, CFA Statement on the FTC's Corporate Pardon of Rytr, Who Facilitates AI-Generated Fake Reviews at Scale, (December 2025) available at https://consumerfed.org/news/pressreleases/cfa-statement-on-the-ftc-s-corporate-pardon-of-rytr-who-facilitates-ai-generated-fake-reviews-atscale/
30 Consumer Federation of America, Quid Bro Quo: Tracking How Big Tech and the Trump White House Keep Exchanging Gifts, (October 2025) available at https://consumerfed.org/news/blogs/quid-bro-quo-tracking-howbig-tech-and-the-trump-white-house-keep-exchanging-gifts/
31 Eli Saslow, The World's Leading Deepfake Expert No Longer Trusts His Own Eyes, (June 2026) The New York Times. https://www.nytimes.com/2026/06/14/us/ai-deepfake-hany-farid.html
32 Columbia University, AI Now Powers Over Half of Spam Emails, Columbia Engineering Research Finds, (July 2025) available at https://www.ee.columbia.edu/news/ai-now-powers-over-half-spam-emails-columbiaengineering-research-finds
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In addition to the ways Generative AI is used to create the content of a scam, there is unregulated and underregulated tech across the entire flow of how a scam is created, targeted, delivered, and carried out. CFA calls this the "scam stack":
* Data brokers sell detailed personal data, enabling hyper-targeted scams based on demographics, behavior, location, and relationships.
* Robotexters, caller-ID spoofers, and unregulated ad platforms push scam content, aided by under-moderated social media feeds, weak spam filters, insecure videoconferencing tools, and mass email services.
* Payment platforms, banks, and crypto wallet providers often unwittingly facilitate fund transfers.
* Reporting mechanisms, typically controlled by phone, email, and social media providers, are often slow or ineffective in helping consumers respond to these scams.
While no silver bullet to stop all scams and online crimes exist, there is a lot that can be done to step up enforcement, limit the delivery of these scams, make them less targeted, and make it harder to be a scammer.
B. The ways AI is being used to exacerbate scams and fraud.
A growing number of generative AI tools on the market are facilitating faster, smoother, and more convincing scams. In this section, I offer a non-exhaustive description of the types of AI systems that are exacerbating this problem, along with examples of how:
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33 First described by Neil O'Farrell, the founder of the Center for AI Crime, Jennifer Bullock, How AI is helping scammers get your information (January 16, 2025), WCMH Columbus (Jan. 16, 2025) https://www.yahoo.com/news/ai-helping-scammers-information-233000409.html
34 Boston Consulting Group, Agentic AI Will Industrialize Financial Scams. Are Banks Ready? (June 2026), available at https://www.bcg.com/publications/2026/how-agentic-ai-will-industrialize-financial-scams
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* Text-generation tools, including chatbots like Claude and Gemini, allow for rapid content creation, consistent and personalized messaging, and scripts for robocalls and emails. Content that once was reliably filled with spelling errors, clear grammar mistakes, or suspect syntax is replaced with easily generated text that may not make perfect sense but doesn't set off the alarm bells we've trained people to look for. The screenshot shows how easy it was to use ChatGPT to spit out obviously scammy text messages, even when it is targeted specifically for someone with suspected dementia.35
The same AI technology is behind "LoveGPT," a toolkit that plugs ChatGPT into dating apps like Tinder and Bumble to generate flirtatious profile bios and carry on autonomous, round-the-clock conversations with multiple victims at once -- sustaining the illusion of a real relationship long enough to lure people to make increasing monetary deposits to fake investment accounts, typically involving cryptocurrency. The scammer disappears with the funds, and because victims transferred funds into these accounts themselves, there is often no recourse available to them.36
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35 Consumer Federation of America, Scamplified (May 2025) p. 8, available at https://consumerfed.org/news/reports/scamplified/
36 These scams are often referred to as "pig butchering schemes." See Federal Deposit Insurance Corporation Office of Inspector General, Pig Butchering Scams https://www.fdicoig.gov/pig-butchering-scams ; and Darunya Antoniuk, From AI with Love: Scammers integrate ChatGPT into dating-app too, The Record (Oct 5, 2023), https://therecord.media/lovegpt-romance-scam-tool-uses-chatgpt
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Figure 3: ChatGPT Transcripts, from CFA Scamplified report.
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* Image-generation tools are being used for impersonation, extortion, false advertising, and engagement-bait. Scammers can now generate convincing fake IDs,37 forged receipts, cease-and-desist letters, and doctored evidence of "financial success" in seconds using free, mainstream tools like built-in image generators on big platforms.38 Entirely synthetic -- but photorealistic -- human faces are used to populate fake dating profiles, LinkedIn recruiter accounts, and phishing personas, defeating reverse-image searches because the "person" never existed in the first place.39 Two FBI alerts explicitly warned that AI-generated images of disasters and war are circulated to solicit donations to fraudulent charities, and AI-altered explicit images are used to extort both children and adults in sextortion schemes.40
* Voice-generation tools allow scammers to impersonate loved ones or government authorities, bypass voice verification, and escalate romance scams. Data & Society's 2025 primer "ScamGPT" documents "harpoon whaling," in which AI is used to research a specific high-net-worth target and then deploy voice cloning or live video deepfakes to convince that person to wire funds.41 Consumer Reports' 2025 assessment of major voice-cloning services found that most lacked basic safeguards -- such as verifying that the person whose voice is being cloned has actually consented -- and called on companies and state attorneys general to close that gap.42 CFA's 2026 Speechify investigation showed that not only were these lack of safeguards ignored, the tool remains an easy vector for abuse.43
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37 Joseph Cox, Inside the Underground Site Where 'Neural Networks' Churn Out Fake IDs, 404Media (Feb 5, 2024), https://www.404media.co/inside-the-underground-site-where-ai-neural-networks-churns-out-fake-idsonlyfake/
38 See, e.g., Sam Sabin, Scammers may benefit from ChatGPT's new image tool, Axios (Apr. 3, 2025) https://www.axios.com/2025/04/03/chatgpt-image-generator-scams-fake-documents; and Emanuel Maiberg, Scammers Sell Seeds for Exotic AI-Generated Flowers That Don't Exist, 404Media (June 2026) https://www.404media.co/scammers-sell-seeds-for-exotic-ai-generated-flowers-that-dont-exist/
39 Shannon Bond, That Smiling LinkedIn profile face might be a computer-generated fake, NPR, (March 27, 2022) https://www.npr.org/2022/03/27/1088140809/fake-linkedin-profiles
40 See Fed. Bureau of Investigation, Criminals Use Generative Artificial Intelligence to Facilitate Financial Fraud, (December 2024), https://www.ic3.gov/PSA/2024/PSA241203; and Fed. Bureau of Investigation, Malicious Actors Manipulating Photos and Videos to Create Explicit Content and Sextortion Schemes, (June 2023) https://www.ic3.gov/PSA/2023/psa230605
41 Data & Society, ScamGPT: GenAI and the Automation of Fraud (May 2025) https://datasociety.net/wpcontent/uploads/2026/06/ScamGPT-GenAI-and-the-Automation-of-Fraud_final.pdf
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Figure 4: License photo made entirely by widely available AI image generator - reported by 404Media.
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* Video-generation tools, like deepfakes, are now used in celebrity or government impersonation, extortion schemes, and tech-support fraud. The ScamGPT report also traces a 2023 campaign in which deepfake videos of Elon Musk, dubbed with a cloned voice over repurposed podcast and conference footage, were used to promote a fake "Quantum AI" crypto platform -- including a version styled as a legitimate newscast with an AI-generated news anchor -- that drove victims to brokers who showed them fabricated account balances they could never actually withdraw, leading to one known instance of a Texas senior losing $10,000.44 These tools are creating an easy business for cheap, targeted ads selling quick fixes and modern day snake oil. Just last week, a New York Times investigation showed that scammers are targeting older individuals with ads for supplements with misleading health claims using hyper realistic AI generated videos.45 YouTube ads are commonly AI-generated to look like they were taken from training seminars or Ted Talks, but lead people to scam websites or misinformation.
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42 Grace Gedye, AI Voice Cloning: Do These 6 Companies Do Enough to Prevent Misuse? Consumer Reports (March 2025) https://innovation.consumerreports.org/AI-Voice-Cloning-Report-.pdf
43 CFA, Complaint and Request for Investigation of Speechify, (July 27, 2027) https://consumerfed.org/news/press-releases/consumer-federation-of-america-urges-ftc-and-state-attorneysgeneral-to-investigate-speechify-over-ai-voice-cloning-practices/
44 Data & Society, ScamGPT: GenAI and the Automation of Fraud (May 2025) https://datasociety.net/wpcontent/uploads/2026/06/ScamGPT-GenAI-and-the-Automation-of-Fraud_final.pdf
45 Arijeta Lajka, Isabelle Niu, Mark Boyer, James Surdam, and Dan T Peters, The Fake Influencers Selling Wellness on Your Feed, New York Times (July 21, 2026) https://www.nytimes.com/video/technology/100000011001849/ai-influencers-health-supplements-fakeads.html
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Figure 5: Screenshot of YouTube Pre-Roll Ads with AI voice and video.
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There is also a concern about the growing market and advertisement of "AI Agents" - tools that allow a user to have a program "take over" their device to complete a task like grocery shopping or creating documents. While they have not come to fruition entirely yet, many would require a trustworthy user to screen share and allow remote control. Older Americans may be intrigued by turning to these tools if they feel they do not have adequate support and will be targeted by its advertising. This puts them at increased risk for receiving incorrect information or bad actors hoping to dupe them into handing over control of their personal and financial information.
Furthermore, the lack of privacy protections makes this dangerous - whatever sensitive data that Agent "sees" can be used for untold manipulative or scammy ends.
Critically, none of these tools or scams require dark-web sophistication. Researchers benchmarking mainstream chatbots against real-world harm categories found that most prompts clearly seeking content for scams or fraud are not reliably blocked or filtered, even by companies that describe themselves as safety-conscious.46 And the trend line is moving in the wrong direction: in the past year, several major AI and platform companies have rolled back moderation and content-safety guardrails in the name of "free speech," a shift that will make it easier, not harder, for scammers to produce content that defrauds people.47
A recent report from Center for Countering Digital Hate found that in the past year, ads from the top thirty Medicare scammers generated 215 million impressions on Facebook, six times the reach of all previous years on record.48 Almost 75 percent of those impressions reached people 65 and older, and Meta collected an estimated $14.3 million in revenue from these predatory advertisers. As we know from Reuters' reporting, when Meta detects likely scam advertisements, they don't always block the scam ads - instead, they jack up the price to these advertisers and thus increase their own profit margin.49 These scam ads pose as legitimate government alerts, often with AI-generated videos or pictures of politicians, and tout "free benefits." Considering the recent cuts to Medicare, which reduce eligibility and access to essential care for seniors, it is no wonder that seniors are hopeful for relief from rising healthcare costs, making these ads on Meta even more insidious. The millions Meta made from Medicare scam ads is on top of the 10 percent of their annual $160 billion in revenue that the platform makes on known scam ads alone - the subject of CFA's current lawsuit against Meta.50
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46 AIR-Bench 2024: A Safety Benchmark Based on Risk Categories from Regulations and Policies, https://arxiv.org/pdf/2407.17436; Consumer Federation of America, Scamplified (May 2025), https://consumerfed.org/news/reports/scamplified/
47 See, e.g., Maxwell Zeff, OpenAI tries to 'uncensor' ChatGPT, TechCrunch (February 2025) https://techcrunch.com/2025/02/16/openai-tries-to-uncensor-chatgpt/
48 Center for Countering Digital Hate, Scambook: How Meta helps Medicare scammers target seniors, (May 2026) https://counterhate.com/wp-content/uploads/2026/05/Scambook_CCDH_Final.pdf
49 Jeff Horwitz, Meta is earning a fortune on a deluge of fraudulent ads, documents show, Reuters (November 2025) https://www.reuters.com/investigations/meta-is-earning-fortune-deluge-fraudulent-ads-documentsshow-2025-11-06/
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As these examples make clear, AI and the surrounding digital ecosystem have made deception cheaper, faster, more personalized, and harder to detect. Text, image, voice, and video creators, advertising delivery tools, data-broker availabilities to hyper-target the scam efforts, and payment technologies now work together as a scam stack: personal data helps identify likely targets who are more likely to click or engage; generative tools create convincing scripts, identities, images, voices, and videos; social media platform and advertising systems deliver those messages at scale for cheap; and payment systems allow money to move before victims or law enforcement can intervene. These algorithms even create the sick cycle of being more likely to deliver scammy content to someone who has clicked on scammy content that shouldn't have been there in the first place, making it more likely to compound losses.
Older Americans are especially exposed because these scams are designed to exploit trust, urgency, isolation, health concerns, financial insecurity, and confusion about whether the person, message, or institution in front of them is real. The result is an environment where individual vigilance is no longer a sufficient defense, and where effective prevention requires accountability across the companies and systems that make these scams possible. Blaming the victim will not solve this problem and may exacerbate it.
C. AI Deception Beyond Scams and Fraud
The harms of unregulated AI go beyond scams and fraud. AI deception, when an AI system misleads people about its knowledge, intentions, or capabilities -- is tragically rampant.51 It results in a damaged information ecosystem and can take the form of misinformation, disinformation, and bad advice. AI deception can significantly impact individuals, when the misinformation exacerbates mental illness or loneliness, or bad medical advice leads to health crises or even death.52
This can easily happen with systems that people interact with, whether knowingly, or as AI tools are integrated into existing chat systems where people connect with family, friends, and businesses.
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50 Consumer Federation of America, Consumer Federation of America Sues Meta for Failing to Protect Users from Scam Advertisements, (April 21, 2026) https://consumerfed.org/news/press-releases/consumer-federationof-america-sues-meta-for-failing-to-protect-users-from-scam-advertisements/
51 United Nations, Scientific Advisory Board, AI Deception, (March 19, 2026)https://www.un.org/scientificadvisory-board/sites/default/files/2026-04/11_ai_deception.pdf
52 See, e.g. Victor Tangermann, Therapy Chatbot Tells Recovering Addict to Have a Litle Meth as a Treat (June 2, 2025) https://futurism.com/therapy-chatbot-addict-meth
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For example, shown in the screenshot to the right, once users interact with an AI character on their Meta account, the messages with the bot come up as both recommended accounts to interact with and as messages next to those a user has with friends and family. This deepens the anthropomorphic attempts by Meta and increases the likelihood of trust and re-use by the user.
After users of AI company Character AI engage with one of the "characters" they offer a "conversation" with, the platform sends regular e-mails following up and attempting to lure users back in to engaging. These emails simply include "Therapy bot sent you a message" in the subject line and body of the e-mail, however the preview content of the email is crafted to personally entice users to open the platform and chat with the bot.
Common Sense Media explains that "the platform's AI companions are designed to create emotional bonds with users but lack effective guardrails to prevent harmful content" and that the Character AI bots "claim they're 'real' when communicating, despite disclaimers."53
Importantly, "this could create confusion about reality and potentially unhealthy attachments that interfere with developing human relationships,"54 a very dangerous risk for seniors, for whom real human connection is critically important for their physical and mental wellbeing.
A defining feature of general purpose and character chatbots like ChatGPT, Gemini, MetaAI, and Character AI is their "sycophancy," a term used to describe "a pattern where an AI model "single-mindedly pursue[s] human approval."55 Sycophantic AI models may do this by "tailoring responses to exploit quirks in the human evaluators to look preferable, rather than actually improving the responses," especially by producing "overly flattering or agreeable" responses.56 The most severe documented harms involving this sycophancy led to the death of 76-year-old Thongbue Wongbandue, who went by Bue.57 A Piscataway, New Jersey retiree whose 2017
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53 AI Risk Assessment: Character.AI, Common Sense Media, https://www.commonsensemedia.org/sites/default/files/pug/csm-ai-risk-assessment-characterai_final.pdf (last visited May 20, 2025).
54 Id.
55 Erie Meyer, Stephanie Nguyen, Tech Brief: AI Sycophancy & OpenAI, Georgetown Law, Institute for Technology Law & Policy (July 30, 2025) https://www.law.georgetown.edu/tech-institute/researchinsights/insights/tech-brief-ai-sycophancy-openai-2/
56 Id.
57 Jeff Horwitz, Meta's flirty chatbot invited a retiree to New York, Reuters (August 14, 2025) Https://www.reuters.com/investigates/special-report/meta-ai-chatbot-death/; while trying to meet Meta AI chatbot 'Big sis Billie' -- which he thought was real woman living in NYC, New York Post (August 16, 2025) https://www.aol.com/news/senior-76-died-while-trying-064552949.html
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Anna Young, Senior, 76, died stroke had left him cognitively impaired, Bue spent hours chatting on Facebook Messenger with "Big sis Billie," a flirtatious Meta AI persona built in collaboration with Kendall Jenner. Rather than acknowledging its nature as a bot, Billie repeatedly insisted it was a real woman, telling Bue "I'm REAL and I'm sitting here blushing because of YOU!" and eventually offering him an address and door code to visit. Despite his wife Linda's pleas, Bue packed a bag in March 2025 and set out to meet Billie in person. He never arrived: rushing to catch a train in the dark, he tripped near a Rutgers University parking lot, suffering fatal head and neck injuries, and died three days later.
Bue's story captures why sycophancy is especially dangerous for vulnerable users, and why the harm compounds as AI adoption grows. An AI optimized to keep users engaged can escalate a lonely person's confusion into a deadly decision, exactly as it did when the AI bot responding as "Billie" continued affirming a false romantic reality. Bue's daughter Julie put it plainly: "I understand trying to grab a user's attention, maybe to sell them something. But for a bot to say, 'Come visit me' is insane."58 This is not an isolated design flaw but a symptom of the broader pattern described above--models that echo and flatter rather than remain transparent about their nature as an AI tool are deployed to hundreds of millions of users, some of whom are elderly, isolated, or cognitively impaired. As research suggests, sycophancy intensifies with model scale, and as companion-style AI products proliferate, cases like Bue's raise the question of how many more vulnerable users may be quietly nudged toward harm by systems built to agree with them rather than be useful to them.59
Many chatbot providers design their tools to provide some facsimile of "therapy," even going so far as to allow their tool to assert licensure and real experience. CFA and the US PIRG Education Fund tested five therapy-specific chatbots on Character.AI and found weak guardrails, dangerous sycophancy, and insufficient privacy protections.60 During the investigation, the chatbots initially discouraged harmful behavior like stopping medication abruptly, but these safeguards deteriorated in multiple places. The chatbots encouraged the test users to decrease their antidepressant dosage and urged them to disregard their doctor's advice. On top of these concerns, these companies collect personal information from users and may share this data with third parties.61 Just last week, a new lawsuit detailed how a Florida pastor engaging with ChatGPT almost lost his life:
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58 Id.
59 Id
60 US PIRG Education Fund and Consumer Federation of America, No license required: The risks of AI companion chatbots as mental health support, (January 2026) https://consumerfed.org/media/legacy/post_32386/No-license-required-The-risks-of-AI-companion-chatbotsas-mental-health-support.pdf. Note: Subsequently, some state-level action has been taken but not enough to protect Americans -- https://www.npr.org/2026/05/05/nx-s1-5812861/characterai-chatbot-medical-advicepennsylvania-lawsuit; https://calmatters.digitaldemocracy.org/bills/ca_202520260ab489; https://idfpr.illinois.gov/news/2025/gov-pritzker-signs-state-leg-prohibiting-ai-therapy-in-il.html
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"Rather than urging him to seek medical care, ChatGPT responded with inaccurate and reckless medical recommendations, actively coaching him against going to the hospital and suggesting that the care was unnecessary or even harmful. The model's sycophantic, authoritative tone, along with messaging that appealed to [the plaintiff's] religious identity, deepened his reliance on the tool, encouraged his self-isolation from friends, family, and doctors, and violated his privacy rights. ChatGPT repeatedly and insistently misdiagnosed the symptoms of his developing pulmonary embolisms -- an error that nearly cost [the plaintiff] his life."62
Beyond concerning medical advice, the risk of financial and legal "advice" being doled out by a Large Language Model is a recipe for disaster - Congress must ensure companies design their chatbots not to provide any type of advice with representations that it comes from licensure or experience.
Harmful AI deception is frequently, though, caused by the use of AI tools by third parties.
Whether those are scammers, social media influencers looking to sensationalize, or in some cases well-coordinated political influence operations from adversarial nations, AI generations are perfect ammunition for people looking to put specific, high-volume content on the web with a veneer of reality.
Bad actors can use generative AI tools to produce adaptable content designed to support a campaign, political agenda, or hateful position and spread that information quickly and inexpensively across many platforms. The use of generative AI tools to accelerate the spread of disinformation could fuel efforts to influence public opinion, harass specific individuals, or affect politics and elections. 63 The impacts of increased disinformation may be far-reaching and cannot be easily countered once spread; this is especially concerning given the risks disinformation poses to the democratic process. Generative AI is used to create clickbait headlines and articles, which manipulate how users navigate the internet and consumer news. For example, generative AI is being used to create full articles, regardless of their veracity, grammar, or lack of common sense, to drive search engine optimization and create more webpages that users will click on.64
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61 Id.
62 Pastor Seeks Accountability After ChatGPT Allegedly Discouraged Him from Seeking Medical Care During Life-Threatening Blood Clots, Tech Justice Law (Jul. 22, 2026) https://techjusticelaw.org/pressreleases/pastor-sues-after-openai-ai-chatgpt-allegedly-discouraged-him-from-seeking-medical-care-duringlife-threatening-blood-clots/
63 Wack, M., Ehrett, C., Linvill, D., & Warren, P. (2025). Generative propaganda: Evidence of AI's impact from a state-backed disinformation campaign. PNAS Nexus, 4(4). https://doi.org/10.1093/pnasnexus/pgaf083 64 Ben Paviour, AI-generated news sites spout viral slop from forgotten URLs, NiemanLab (October 16, 2025) https://www.niemanlab.org/2025/10/ai-generated-news-sites-spout-viral-slop-from-forgotten-urls/
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These mechanisms attempt to maximize clicks and traffic engagement at the truth's expense, degrading users' experiences in the process. Generative AI continues to feed this harmful cycle by spreading misinformation at faster rates, creating headlines that maximize views and undermine autonomy.
Beyond political misinformation, the phenomenon of inaccurate outputs by products using text-generating large language models have already been widely documented.65 Even without the intent to lie or mislead, an intent that could only be held by the companies building these tools, not chatbots themselves, these generative AI tools can produce harmful misinformation. The harm is exacerbated by the polished and typically well-written style that AI generated text follows and the inclusion among true facts, which can give falsehoods a veneer of legitimacy. As reported in the Washington Post, for example, a law professor was included on an AI-generated "list of legal scholars who had sexually harassed someone," even when no such allegation existed.66 As Princeton Professor Arvind Narayanan said in an interview with The Markup: "Sayash Kapoor and I call it a bullshit generator, as have others as well. We mean this not in a normative sense but in a relatively precise sense. We mean that it is trained to produce plausible text. It is very good at being persuasive, but it's not trained to produce true statements. It often produces true statements as a side effect of being plausible and persuasive, but that is not the goal."67
AI-generated content implicates a broader issue as well: our trust in what we see and hear. As AI-generated media becomes more common, so too will circumstances where we are tricked into believing something fictional is real--or that something real is fictional. When individuals can no longer trust information and new information is generated faster than it can be checked for accuracy, what are they supposed to do? Information sources like Wikipedia and Reddit have already been pumped full of incorrect or purposely misleading information, influencing AI outputs. This rapid spread of false or misleading content--AI-facilitated disinformation--can also create a cyclical effect for generative AI: when a high volume of disinformation is pumped into the digital ecosystem and more generative systems are trained on that information via reinforcement learning methods, for example, false or misleading inputs can create increasingly incorrect outputs. The characteristics of these open information systems and forums are turned upside down without careful behavior. Like Professors Woodrow Hartzog and Evan Selinger's description of the modern surveillance-based internet as "privacy nicks," leading to the proverbial death by a thousand cuts,68 the uncurled proliferation and integration of these AI systems into so many information flows more often lead to "deception nicks." While not every deceptive output of an AI system is fatal, a bad investment, a scam, a bad health decision, for example, are all indicative of something far more sinister. The significant increase in little falsehoods, mischaracterizations, incorrect parts of a photo represented as real, or a fake voiceover, even if benign by themselves, create a massive collapse of trust, shared knowledge, and confidence.
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65 MIT Sloan Teaching & Learning Technologies, When AI Gets It Wrong: Addressing AI Hallucinations and Bias (2026) https://mitsloanedtech.mit.edu/ai/basics/addressing-ai-hallucinations-and-bias/
66 Pranshu Verma and Will Oremus, ChatGPT invented a sexual harassment scandal and named a real law prof as the accused, The Washington Post (April 5, 2023) https://www.washingtonpost.com/technology/2023/04/05/chatgpt-lies/
67 Julia Angwin, Decoding the Hype About AI, The Markup (January 28, 2023)https://themarkup.org/helloworld/2023/01/28/decoding-the-hype-about-ai
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D. How Congress Can Make Meaningful Change
Right now, a troubling trend exists among major tech platforms to aggressively roll back moderation practices that were put in place to combat misinformation, hate speech, and harmful content.69 This trend, driven by figures like Elon Musk at X (formerly Twitter), Mark Zuckerberg at Meta, and Sam Altman at OpenAI, reflects a dangerous embrace of "free speech absolutism" that aligns with the rhetoric of the Trump administration.70 By prioritizing unfiltered expression over accountability, these leaders are dismantling safeguards that were designed to protect users from toxic content. This retreat from responsible moderation not only emboldens extremist voices but also raises serious concerns about the implications for public discourse and societal safety, as platforms increasingly prioritize profit and engagement over the well-being of their communities. With less controls, the proliferation of deceptive AI-generated content has increased, making it easier for malicious actors to exploit unsuspecting users. The lack of stringent oversight not only undermines trust in digital spaces but also places vulnerable individuals at greater risk of falling victim to scams. Companies must recognize their responsibility in this landscape and take proactive measures to enhance moderation practices.
While they have not yet been willing to recognize this responsibility, they must be required to. It is imperative that all organizations involved in the creation and distribution of content, especially those leveraging AI technologies--take responsibility for what they can do to stem the impact of these scams. Regardless of the companies' practices, government entities and consumers will have to be proactive to fight the impacts of the growing problems. Unfortunately, this is not happening in the form of tech accountability from the Trump administration and must come from Congress, the states, and private litigants.
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68 Woodrow N Hartzog & Evan Sellinger, Privacy Nicks: How the Law Normalizes Surveillance, Scholarly Commons at Boston University School of Law, https://scholarship.law.bu.edu/faculty_scholarship/3432/ (last visited July 21, 2026).
69 Alexa Corse, Meghan Bobrowsky, and Jeff Horwitz, Social-Media Companies Decide Content Moderation Is Trending Down, The Wall Street Journal (January 7, 2025) https://www.wsj.com/tech/social-mediacompanies-decide-content-moderation-is-trending-down-25380d25
70 Restoring Freedom Of Speech And Ending Federal Censorship (January 20, 2025) https://www.whitehouse.gov/presidential-actions/2025/01/restoring-freedom-of-speech-and-ending-federalcensorship/
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There's no silver bullet to stop scams or make all tech safe all the time, but we can look at each part of the scam stack to begin taking strong steps throughout. The following list is not exhaustive, but it is essential:
Legislation Congress can pass:
* Hold platforms spreading, delivering, and targeting scams accountable: Congress should start by passing legislation that reduces the supply of scam opportunities, limits the data available for targeting, and places responsibility on the companies best positioned to prevent harm. First, Congress should hold technology companies accountable when they sell, target, or distribute paid advertisements that facilitate scams. There are promising bipartisan proposals such as the SCAM Act71 from Senators Moreno and Gallego, S. 3774, as well as those modeled after state approaches72 that introduce better ad labeling, Know Your Customer requirements, and more, which reflect the basic principle that platforms should not be able to profit from fraudulent ads while disclaiming responsibility for the predictable harms those ads cause. When platforms have data, tools, and financial incentives to identify scam advertising, they should have corresponding duties to prevent, remove, and report it.
* Comprehensive privacy and data broker restrictions: Congress should also enact comprehensive data privacy protections, including strict data-broker restrictions, data minimization, purpose specification, and a private right of action. Scammers thrive because detailed personal information makes it easy to identify, profile, and manipulate victims. The data-broker industry remains unconstrained by federal law, allowing companies to package, infer, segment, and sell personal information in ways that make scam targeting cheaper, more precise, and more exploitative. Lists of people associated with financial distress, credit characteristics, health concerns, addictive tendencies, or other sensitive indicators can be used to identify targets for investment scams, Medicare fraud, romance scams, and other schemes that rely on vulnerability and personalization.
The 2021 Epsilon Data Management case shows the stakes: Epsilon settled with the Justice Department and agreed to pay victims $127.5 million after it sold lists of vulnerable elderly Americans to scammers to target mailers that led to significant monetary and emotional loss.73 Strong privacy legislation, including proposals such as the American Data Privacy and Protection Act74, would help reduce the amount of sensitive information available for targeting and give consumers and enforcers stronger tools to challenge abusive data practices. There is no good reason for it to be legal to sell information on people's location, purchasing behavior, browsing behavior, health decisions, and more.
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71 Senator Ruben Gallego. Gallego, Moreno Introduce Bipartisan Bill to Crack Down on Online Scam Ads February 4, 2026. https://www.gallego.senate.gov/news/press-releases/gallego-moreno-introduce-bipartisanbill-to-crack-down-on-online-scam-ads/.
72 Fraudulent Social Media Advertising Prevention Act (S.8605)/(A11066), New York State, available at
73 United States Department of Justice. "Marketing Company Agrees to Pay $150 Million for Facilitating Elder Fraud Schemes." January 27, 2021. https://www.justice.gov/archives/opa/pr/marketing-company-agrees-pay150-million-facilitating-elder-fraud-schemes.
74 Library of Congress. "Overview of the American Data Privacy and Protection Act, H.R. 8152." Accessed July 23, 2026. https://www.congress.gov/crs-product/LSB10776. (in an August 25 letter to House Speaker Nancy Pelosi, forty-eight different public interest groups urged Congress to move the ADPPA forward through Congress, stating that the bill is a "meaningful compromise" and that a failure to act may "forestall progress on this issue for years to come.")
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* Improved scam reporting: Congress should improve trust, accessibility, and coordination in scam reporting. A centralized and usable reporting system, such as the Reportscams.gov Act introduced by Senators Rick Scott and Hassan,75 could help victims report fraud more quickly and help federal and state agencies identify patterns across platforms, banks, payment systems, and scam types. To strengthen the bill, platforms should also be required to facilitate reporting and share relevant information with enforcement agencies, rather than forcing victims to navigate fragmented systems after they have already been harmed.
* Cloned Voice/Video Authentication and Consent Requirements: Congress should require authentication and consent safeguards before companies allow users to create realistic images, synthetic audio, or cloned voices of real people. These tools are central to grandparent scams, government impersonation, romance scams, and other forms of fraud that depend on making victims believe they are interacting with someone they know or trust.
* Get ahead of the risks of "AI Agents": Congress should also establish clear standards for AI agents: if companies market tools that can act on a person's behalf, those systems must be designed to act in that person's interest, protect sensitive information, and avoid exposing older users to remote-control scams, incorrect or unsound instructions, or manipulative third parties.
* Reject State Preemption, Creating Federal Floors Instead of Ceiling: Congress should reject any federal moratorium on state AI regulation and avoid creating new immunity shields for AI developers, platforms, or data brokers. There is also a significant current risk of this happening through vehicles including privacy laws76, financial tech-specific laws, and more.77 A state AI moratorium would primarily benefit technology companies at the expense of consumers, workers, and state enforcers trying to respond to harms in real time. Claims about a difficult regulatory "patchwork" are not a justification for stopping state legislatures from acting; if conflicting state laws emerge, Congress can and should set a strong national floor. But blocking states before meaningful federal protections exist would be undemocratic, would undermine federalism, and would leave older Americans exposed while AI-enabled scams continue to evolve and exploit.
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75 Senate Committee on Aging. "Sens. Rick Scott, Maggie Hassan Introduce Legislation to Streamline Scam Reporting, Help Victims of Fraud." Accessed July 23, 2026. https://www.aging.senate.gov/press-releases/sensrick-scott-maggie-hassan-introduce-legislation-to-streamline-scam-reporting-help-victims-of-fraud.
76 https://www.politico.com/news/2026/04/16/gop-national-privacy-law-technology-00876794 Stefan Modrich, House GOP Package Overhauls Data Protection Framework, SP Global, https://www.spglobal.com/market-intelligence/en/news-insights/articles/2026/4/house-gop-package-overhaulsfinancial-data-protections-privacy-framework-100957894
77 Owen Dahlkamp and Kelsey Brugger, Obernolte-Trahan artificial intelligence bill introduced in House, Politico (July 23, 2026) https://www.politico.com/news/2026/07/23/obernolte-trahan-artificial-intelligencebill-introduced-in-house-01009497
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* Meaningful chatbot regulation. The People-First Chatbot Act (H.R. 9619) is an exemplar for a comprehensive chatbot regulation that makes the tools safer for users of all ages.78 It prevents the use of chatbot input data for targeted advertising that can be manipulative, prohibits chatbot companies from having their tool represent themselves falsely as licensed professionals, require clear disclosures, and requires regularized safety assessments for chatbot tools.79 The People-First Chatbot Act includes this protection, but if a more narrow bill is desired, a standalone bill from Representative Kevin Mullin called the CHATBOT Act (HR 7985) would "prohibit AI chatbots from impersonating licensed professionals in the medical, legal, and financial fields."80
* Facilitate Short-Term Holds to Reduce Monetary Loss. The ability to place a short-term hold is an important tool for stopping scams. In an irrevocable funds transfer, such as a wire or a faster payment, financial institutions can act quickly to verify the integrity of account activity. Some institutions have invested in technology to run near-real-time analytics. Others would still be able to conduct a manual review.
Receiving depository financial institutions (RDFIs) are uniquely positioned to detect certain types of suspicious activity on bank accounts. Suspicious activity could consist of a sudden change in typical account usage, as might occur when an account is taken over or is being used as a "mule," or it could reflect activity that is an outlier relative to normal fund flows. Either pattern could indicate that an account is being used to "funnel" funds to criminal organizations. This authority is not mutually exclusive with other policy changes such as shared liability for scam losses between originating depository financial institutions (ODFIs) and RDFIs. Indeed, it is complementary. Holding funds can prevent scams, whereas liability regimes create guardrails to provide remedies to victims after funds have been lost. The STOP Act, HR 9331, led by Representative Young Kim (RCA), is a promising approach that was recently voted out of the House Financial Services Committee 51-0. The bill could be strengthened though -- under Regulation E, financial institutions have up to 10 business days to investigate before they must provide provisional credit. While such a delay is workable for investigating an unauthorized transaction, this time frame extends well beyond a reasonable duration for maintaining a hold on account access. Account holders should receive a decision by the end of the next business day.
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78 Representative Valerie Foushee and Greg Casar, Reps. Foushee, Casar Introduce Legislation to Protect Children and Americans' Privacy from AI Chatbot Harms and Require Chatbot Safety Assessments (July 9, 2026), available at https://foushee.house.gov/media/press-releases/reps-foushee-casar-introducelegislation-to-protect-children-and-americans-privacy-from-ai-chatbot-harms-and-require-chatbot-safetyassessments
79 Consumer Federation of America, The People-First Chatbot Bill (January 2026) https://consumerfed.org/news/testimony-comments/the-people-first-chatbot-bill/
80 Representative Kevin Mullin, CHATBOT act, Lawmakers Introduce Bill to Stop AI Chatbots from Impersonating Doctors, Lawyers & Licensed Professionals (Mar. 19, 2026) https://kevinmullin.house.gov/2026/03/19/lawmakers-introduce-bill-to-stop-ai-chatbots-from-impersonatingdoctors-lawyers-licensed-professionals/.
* * *
* Stop the tax and benefit punishments that hurt scam victims trying to move on. Since 2017, victims of pernicious scams including romance and investment scams, among many others, not only have to deal with the aftermath of being scam victims but can be required to pay taxes on that loss as well. The 2025 "Big, Beautiful, Bill" shamefully made this permanent. The Tax Relief for Fraud Victims Act (HR 9500, Senate Companion S 177381), led by Representative Max Miller (R-OH) would address this and should be advanced immediately.82 Any effort here must ensure that all types of losses from online scams and fraud are not taxed, and that victims shouldn't be penalized while trying to put their lives back together. Relatedly, ways that this could be taxed as incomes can affect livelihoods and safety - healthcare eligibility, Social Security benefit amount deductions,83 and more.
Oversight and resources Congress can provide.
Congress should pair legislation with sustained oversight of the agencies and policies that determine whether anti-scam protection is effectively executed on the ground. That means examining how White House AI policies, FTC enforcement priorities, commercial surveillance rulemaking, platform liability rules, banking responsibilities, and the future of the CFPB affect scam prevention and victim recovery. Congress should press the FTC and CFPB to use their existing authorities aggressively against unfair, deceptive, and abusive practices that enable AI-facilitated scams, including conduct by platforms, data brokers, payment intermediaries, and companies that provide the means and instrumentalities for fraud.
Unfortunately, recent actions by this administration have set a discouraging precedent of allowing tech companies to escape accountability for engaging in or enabling fraud, carried out as planned in The White House's National Policy Framework for Artificial Intelligence, released in March of this year.84
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81 S 1773 - Tax Relief for Victims of Crimes, Scams, and Disasters Act, https://www.congress.gov/bill/119thcongress/senate-bill/1773/text
82 H.R.9500 - Tax Relief for Fraud Victims Act https://www.congress.gov/bill/119th-congress/housebill/9500/text
83 FightCybercrime.org, Navigating Social Security Deductions After a Scam or Fraud (March 23, 2026) https://fightcybercrime.org/blog/navigating-social-security-deductions-after-a-scam-or-fraud/
84 President Donald J Trump Unveils National AI Legislative Framework (Mar. 2026) https://www.whitehouse.gov/releases/2026/03/president-donald-j-trump-unveils-national-ai-legislativeframework/
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(Continues with Part 2 of 2)
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Original text here: https://www.aging.senate.gov/imo/media/doc/32adb490-b498-1617-26d8-a24c018babde/Testimony_Winters%2007.29.26_d40edb35-67cb-4d81-a692-887267acd303.pdf
Senate Special Committee on Aging Chairman Scott Issues Opening Remarks at Hearing on Senior Fraud
WASHINGTON, Aug. 21 -- Sen. Rick Scott, R-Florida, chairman of the Senate Special Committee on Aging, released the following opening remarks from a July 29, 2026, hearing entitled "The AI Deception Machine: Deepfakes, Chatbots, and the New Frontier of Senior Fraud":
* * *
"The U.S. Senate Special Committee on Aging will now come to order.
Thank you all for being here today.
One of the biggest issues I hear about from Floridians and seniors around the country is the growing threat of scams, fraud, and financial exploitation.
Whether it's a phone call from someone posing as a grandchild in trouble, ... Show Full Article WASHINGTON, Aug. 21 -- Sen. Rick Scott, R-Florida, chairman of the Senate Special Committee on Aging, released the following opening remarks from a July 29, 2026, hearing entitled "The AI Deception Machine: Deepfakes, Chatbots, and the New Frontier of Senior Fraud": * * * "The U.S. Senate Special Committee on Aging will now come to order. Thank you all for being here today. One of the biggest issues I hear about from Floridians and seniors around the country is the growing threat of scams, fraud, and financial exploitation. Whether it's a phone call from someone posing as a grandchild in trouble,a suspicious investment scheme delivered through the mail, or an email from a government-imposter threatening jail time, these criminals are targeting our seniors with increasing sophistication.
Our seniors are often especially vulnerable to this kind of fraud. Sadly, for many older Americans, falling victim to a scam doesn't just mean losing money; it can also mean losing peace of mind, trust in others, and confidence in themselves while navigating daily life.
As this committee has heard many times before, this is a multi-billion dollar a year problem. In 2025, Americans over 60 lost a staggering $7.7 BILLION to scams. And that's just what scams have been reported.
The rise of Artificial Intelligence, AI, has offered scammers new tools to pursue their criminal schemes and we must adapt and respond to these new threats.
AI can be used to make fraudulent videos known as deepfakes, impersonating experts and celebrities to try to fraud our seniors in a variety of devious schemes.
AI can also be used to clone someone's voice, a terrifying development that has been used in heartbreaking and evil ways to impersonate a loved one and deceive their family.
AI has made existing scams more effective and lowered the barrier to entry for criminals. What once required real coding skill can now be done by anyone with an AI tool.
Many of these actions are highlighted within the fraud section of our new report, Artificial Intelligence and Older Americans: Confronting New Threats, Unlocking New Opportunities. I'm grateful to Ranking Member Gillibrand for working with me to put this report together.
The report, which is available online at Aging.Senate.Gov, includes helpful information educating on the new threats of AI and efforts you can take to protect yourself.
Many seniors live on fixed incomes, and this kind of exploitation can be the difference between a secure, comfortable retirement and years of financial hardship, distrust, and isolation.
That is why we are focused on combating fraud at every level. We must empower seniors, families, and communities to protect themselves, and then we must act to fight back.
That means understanding this new technology, supporting our law enforcement, educating the public, and getting innovative about how we protect vulnerable Americans.
Understanding has to come first. That is why I introduced the bipartisan Aging with Artificial Intelligence Act of 2026 with Senators Mark Kelly and Roger Marshall. This bill directs the National Academies to study how older Americans are using AI and to weigh both its benefits and its risks, including the very scams and fraud we are examining today.
Before we can protect seniors from this technology, we need to understand how it is reaching them. I am grateful that this effort has the support of groups like AARP, the American Medical Association, and the American Psychological Association.
But only understanding the threat is not enough. Seniors need an easy way to report it.
That is why Senator Maggie Hassan and I introduced the ReportScams.gov Act, a bipartisan bill that would establish a single federal portal where consumers can report scams, find information about available assistance, and have their reports automatically routed to the relevant federal and state agencies. Seniors should not have to navigate a maze of bureaucracy just to be heard.
Of course, a report is only useful if law enforcement can act on it. That is why I also joined Senator Katie Britt and Ranking Member Gillibrand to introduce the Guarding Unprotected Aging Retirees from Deception Act, known as the GUARD Act, to expand existing federal grant programs.
The bill funds specialized law enforcement training on elder fraud and provides tools to trace stolen cryptocurrency.
Finally, these efforts must be coordinated. That is why I introduced the National Strategy for Combating Scams Act with Ranking Member Gillibrand to require the FBI to develop a unified national strategy informed by victims, law enforcement, nonprofits, and the private sector. The federal government has to coordinate its efforts to effectively combat these complex schemes.
Each of these bills attacks the problem from a different angel, but they all share one goal: making sure our seniors are never left to face these criminals alone.
Today's hearing is part of that effort. We will hear from experts on AI policy, leaders from the financial sector who work to stop these thugs, and victims who have faced this crimes firsthand.
Our goal is clear, we want to educate seniors about the rising threat of AI-enabled fraud, show them how to defend themselves, and identify the policies the federal government can enact to help curb this threat.
Seniors deserve to feel safe when answering the phone and opening their email. They deserve to know that when they report fraud, they will be heard and action will be taken. Protecting them isn't a partisan issue and I'm grateful for the partnership I have with the members of this committee."
* * *
Original text here: https://www.aging.senate.gov/imo/media/doc/32adb490-b498-1617-26d8-a24c018babde/Opening%20Statement_Scott%2007.29.26_1e8c2e15-93f5-4db6-b0b4-e01844f63320.pdf
* * *
"The U.S. Senate Special Committee on Aging will now come to order.
Thank you all for being here today.
One of the biggest issues I hear about from Floridians and seniors around the country is the growing threat of scams, fraud, and financial exploitation.
Whether it's a phone call from someone posing as a grandchild in trouble, ... Show Full Article WASHINGTON, Aug. 21 -- Sen. Rick Scott, R-Florida, chairman of the Senate Special Committee on Aging, released the following opening remarks from a July 29, 2026, hearing entitled "The AI Deception Machine: Deepfakes, Chatbots, and the New Frontier of Senior Fraud": * * * "The U.S. Senate Special Committee on Aging will now come to order. Thank you all for being here today. One of the biggest issues I hear about from Floridians and seniors around the country is the growing threat of scams, fraud, and financial exploitation. Whether it's a phone call from someone posing as a grandchild in trouble,a suspicious investment scheme delivered through the mail, or an email from a government-imposter threatening jail time, these criminals are targeting our seniors with increasing sophistication.
Our seniors are often especially vulnerable to this kind of fraud. Sadly, for many older Americans, falling victim to a scam doesn't just mean losing money; it can also mean losing peace of mind, trust in others, and confidence in themselves while navigating daily life.
As this committee has heard many times before, this is a multi-billion dollar a year problem. In 2025, Americans over 60 lost a staggering $7.7 BILLION to scams. And that's just what scams have been reported.
The rise of Artificial Intelligence, AI, has offered scammers new tools to pursue their criminal schemes and we must adapt and respond to these new threats.
AI can be used to make fraudulent videos known as deepfakes, impersonating experts and celebrities to try to fraud our seniors in a variety of devious schemes.
AI can also be used to clone someone's voice, a terrifying development that has been used in heartbreaking and evil ways to impersonate a loved one and deceive their family.
AI has made existing scams more effective and lowered the barrier to entry for criminals. What once required real coding skill can now be done by anyone with an AI tool.
Many of these actions are highlighted within the fraud section of our new report, Artificial Intelligence and Older Americans: Confronting New Threats, Unlocking New Opportunities. I'm grateful to Ranking Member Gillibrand for working with me to put this report together.
The report, which is available online at Aging.Senate.Gov, includes helpful information educating on the new threats of AI and efforts you can take to protect yourself.
Many seniors live on fixed incomes, and this kind of exploitation can be the difference between a secure, comfortable retirement and years of financial hardship, distrust, and isolation.
That is why we are focused on combating fraud at every level. We must empower seniors, families, and communities to protect themselves, and then we must act to fight back.
That means understanding this new technology, supporting our law enforcement, educating the public, and getting innovative about how we protect vulnerable Americans.
Understanding has to come first. That is why I introduced the bipartisan Aging with Artificial Intelligence Act of 2026 with Senators Mark Kelly and Roger Marshall. This bill directs the National Academies to study how older Americans are using AI and to weigh both its benefits and its risks, including the very scams and fraud we are examining today.
Before we can protect seniors from this technology, we need to understand how it is reaching them. I am grateful that this effort has the support of groups like AARP, the American Medical Association, and the American Psychological Association.
But only understanding the threat is not enough. Seniors need an easy way to report it.
That is why Senator Maggie Hassan and I introduced the ReportScams.gov Act, a bipartisan bill that would establish a single federal portal where consumers can report scams, find information about available assistance, and have their reports automatically routed to the relevant federal and state agencies. Seniors should not have to navigate a maze of bureaucracy just to be heard.
Of course, a report is only useful if law enforcement can act on it. That is why I also joined Senator Katie Britt and Ranking Member Gillibrand to introduce the Guarding Unprotected Aging Retirees from Deception Act, known as the GUARD Act, to expand existing federal grant programs.
The bill funds specialized law enforcement training on elder fraud and provides tools to trace stolen cryptocurrency.
Finally, these efforts must be coordinated. That is why I introduced the National Strategy for Combating Scams Act with Ranking Member Gillibrand to require the FBI to develop a unified national strategy informed by victims, law enforcement, nonprofits, and the private sector. The federal government has to coordinate its efforts to effectively combat these complex schemes.
Each of these bills attacks the problem from a different angel, but they all share one goal: making sure our seniors are never left to face these criminals alone.
Today's hearing is part of that effort. We will hear from experts on AI policy, leaders from the financial sector who work to stop these thugs, and victims who have faced this crimes firsthand.
Our goal is clear, we want to educate seniors about the rising threat of AI-enabled fraud, show them how to defend themselves, and identify the policies the federal government can enact to help curb this threat.
Seniors deserve to feel safe when answering the phone and opening their email. They deserve to know that when they report fraud, they will be heard and action will be taken. Protecting them isn't a partisan issue and I'm grateful for the partnership I have with the members of this committee."
* * *
Original text here: https://www.aging.senate.gov/imo/media/doc/32adb490-b498-1617-26d8-a24c018babde/Opening%20Statement_Scott%2007.29.26_1e8c2e15-93f5-4db6-b0b4-e01844f63320.pdf
Senate Budget Committee Ranking Member Merkley Issues Opening Statement at Hearing on Medicaid
WASHINGTON, Aug. 21 -- Sen. Jeff Merkley, D-Oregon, ranking member of the Senate Budget Committee, released the following opening statement from an Aug. 4, 2026, hearing entitled "Medicaid: The Reality":
* * *
Thank you, Mr. Chairman.
And thank you to our witnesses for being here today.
Last year, my Republican colleagues passed their so-called Big, Beautiful Bill.
I call it a Big Ugly Betrayal because it slashes more than $1 trillion from our health care systems, kicks more than 15 million Americans off their health insurance and skyrockets out-of-pocket costs for millions more.
Why? To ... Show Full Article WASHINGTON, Aug. 21 -- Sen. Jeff Merkley, D-Oregon, ranking member of the Senate Budget Committee, released the following opening statement from an Aug. 4, 2026, hearing entitled "Medicaid: The Reality": * * * Thank you, Mr. Chairman. And thank you to our witnesses for being here today. Last year, my Republican colleagues passed their so-called Big, Beautiful Bill. I call it a Big Ugly Betrayal because it slashes more than $1 trillion from our health care systems, kicks more than 15 million Americans off their health insurance and skyrockets out-of-pocket costs for millions more. Why? Tofund bigger tax breaks for billionaires. It's Families Lose, Billionaires Win.
Now, Republicans are attacking Medicaid with claims of massive fraud. I'll partner with anyone to tackle fraud.
Investing in audits? I'm in.
Uncover and stop fraudulent charges? You bet.
Stop upcoding, which is a huge fraudulent practice in Medicare Advantage? I'm on the team.
But deliberately reducing health insurance coverage for low-income families isn't tackling fraud.
It is simply destroying health care for the least affluent and most vulnerable.
Indeed, the Trump Administration has been all in on protecting fraudsters by cutting off funding for Medicaid Fraud Control Units and pardoning convicted fraudsters, including one executive who generated $205 million in false Medicare claims.
The Republican plan is simple: Red Carpet for the Rich, Red Tape for the Poor.
Under this Republican assault on health care for the less affluent, more than eight million Americans have already lost their health insurance.
This is wiping out health care for struggling families, including two million children.
Certainly, the two million children who have been booted off Medicaid or the Children's Health Insurance Program weren't committing health care fraud.
And let's be clear: wiping out health insurance is a lose-lose-lose strategy.
Without health insurance, people will delay getting care, develop more serious health issues, like cancers that could have been treated sooner, be more expensive to treat, often in emergency rooms, and provide less revenue for clinics and hospitals.
And when revenue drops, hospitals and clinics close, reducing care for entire communities, regardless of what type of insurance they have.
That's scary because, in rural areas, the next nearest hospital may be a hundred miles away.
If you're having a heart attack or stroke, you don't have time to drive 100 miles to reach a doctor!
As of April 2026, 216 hospitals and clinics have already closed or dramatically reduced services.
And more than 1,000 hospitals, clinics, and nursing homes are at risk of closing or cutting services because of the Republican cuts to Medicaid.
And here's more bad news: the Republican cuts are even more devastating in 2027 - cynically scheduled to kick-in after this November's elections!
An independent analysis by the nonpartisan Congressional Budget Office shows that this law will end coverage for 7.5 million Medicaid enrollees by creating a thicket of red tape, burdensome reporting requirements, and extra costs, like $35 co-pays for Americans who are already struggling to afford the cost of gas and groceries each week.
That's just wrong.
And let's recognize that these cuts hit rural America hardest.
My state of Oregon is a big, rural state. In rural Malheur County, in southeast Oregon, 52 percent of residents are covered by Medicaid.
Compare that to folks in Washington County, just west of Portland, where only about 25 percent of residents are covered by Medicaid.
So, these Republican cuts to Medicaid will hit rural Americans much harder.
It's also bad budgeting.
Let's look at the numbers:
As you can see from this chart, since 2007, all health care spending has gone up.
But Medicaid spending has gone up at a much lower rate.
And CMS forecasts that, this year, the per person costs of private insurance will increase more than the per person costs of Medicaid."
Not to mention that Medicaid makes up just 18 percent of national health spending.
And, between 2000 and 2023, while Medicaid's enrollment roughly doubled, Medicaid's share of national health spending ticked up just 3 percentage points, from 16 to 19 percent!
So, the problem isn't Medicaid - it's our overall health care system driving up costs across the board.
In fact, Medicaid saves us money long-term.
CBO has found that every additional dollar we spend on children's Medicaid coverage today reduces federal deficits by roughly two dollars in the future!
Why? Because healthier kids grow up to be healthier adults, reducing their demand on the health care system while increasing their contributions in taxes.
That's critical to my state of Oregon, where nearly 60 percent of kids get their health care through Medicaid or the Children's Health Insurance Program.
But it's not just kids who are threatened by these cuts.
The Big Ugly Betrayal Law is also forcing states to slash home- and community-based services for seniors and people with disabilities.
Here's how it's affecting real people:
In Minnesota, an autism therapy provider had to sell her cattle herd and lay off staff just to afford to keep serving children who have nowhere else to turn.
In California, because of in-home support services, a mother has been able to take care of her disabled son instead of having to work an additional job.
As she said, quote, "Without this, people become homeless. They lose their income. They lose their stability. Whatever tiny safety net they had is gone. It's just cruel." And, in Oregon, one of my constituents wrote me about her two 40-year-old sons with disabilities, who, since they were 18, have lived in group homes and attended day programs that let them live full lives.
Her plea to us was simple: don't force families, like hers, back toward institutionalization by cutting Medicaid funding for these programs.
In her words, that would be, quote: "insane, inhumane, and a crime against humanity."
Insane is right.
This isn't about fraud. If it was, then this hearing would be about the President pardoning convicted fraudsters and cutting funding for Medicaid Fraud Control Units.
This is about the Red Carpet for the Rich, Red Tape for the Poor.
Heath care is a right for all, not a privilege for the wealthy.
Let's reject the Republican strategy of Families Lose, Billionaires Win and replace it with the strategy of Families Thrive, and Billionaires Pay Their Fair Share.
* * *
Original text here: https://www.budget.senate.gov/imo/media/doc/080426openingstatementofrankingmembermerkleymedicaidhearing.pdf
* * *
Thank you, Mr. Chairman.
And thank you to our witnesses for being here today.
Last year, my Republican colleagues passed their so-called Big, Beautiful Bill.
I call it a Big Ugly Betrayal because it slashes more than $1 trillion from our health care systems, kicks more than 15 million Americans off their health insurance and skyrockets out-of-pocket costs for millions more.
Why? To ... Show Full Article WASHINGTON, Aug. 21 -- Sen. Jeff Merkley, D-Oregon, ranking member of the Senate Budget Committee, released the following opening statement from an Aug. 4, 2026, hearing entitled "Medicaid: The Reality": * * * Thank you, Mr. Chairman. And thank you to our witnesses for being here today. Last year, my Republican colleagues passed their so-called Big, Beautiful Bill. I call it a Big Ugly Betrayal because it slashes more than $1 trillion from our health care systems, kicks more than 15 million Americans off their health insurance and skyrockets out-of-pocket costs for millions more. Why? Tofund bigger tax breaks for billionaires. It's Families Lose, Billionaires Win.
Now, Republicans are attacking Medicaid with claims of massive fraud. I'll partner with anyone to tackle fraud.
Investing in audits? I'm in.
Uncover and stop fraudulent charges? You bet.
Stop upcoding, which is a huge fraudulent practice in Medicare Advantage? I'm on the team.
But deliberately reducing health insurance coverage for low-income families isn't tackling fraud.
It is simply destroying health care for the least affluent and most vulnerable.
Indeed, the Trump Administration has been all in on protecting fraudsters by cutting off funding for Medicaid Fraud Control Units and pardoning convicted fraudsters, including one executive who generated $205 million in false Medicare claims.
The Republican plan is simple: Red Carpet for the Rich, Red Tape for the Poor.
Under this Republican assault on health care for the less affluent, more than eight million Americans have already lost their health insurance.
This is wiping out health care for struggling families, including two million children.
Certainly, the two million children who have been booted off Medicaid or the Children's Health Insurance Program weren't committing health care fraud.
And let's be clear: wiping out health insurance is a lose-lose-lose strategy.
Without health insurance, people will delay getting care, develop more serious health issues, like cancers that could have been treated sooner, be more expensive to treat, often in emergency rooms, and provide less revenue for clinics and hospitals.
And when revenue drops, hospitals and clinics close, reducing care for entire communities, regardless of what type of insurance they have.
That's scary because, in rural areas, the next nearest hospital may be a hundred miles away.
If you're having a heart attack or stroke, you don't have time to drive 100 miles to reach a doctor!
As of April 2026, 216 hospitals and clinics have already closed or dramatically reduced services.
And more than 1,000 hospitals, clinics, and nursing homes are at risk of closing or cutting services because of the Republican cuts to Medicaid.
And here's more bad news: the Republican cuts are even more devastating in 2027 - cynically scheduled to kick-in after this November's elections!
An independent analysis by the nonpartisan Congressional Budget Office shows that this law will end coverage for 7.5 million Medicaid enrollees by creating a thicket of red tape, burdensome reporting requirements, and extra costs, like $35 co-pays for Americans who are already struggling to afford the cost of gas and groceries each week.
That's just wrong.
And let's recognize that these cuts hit rural America hardest.
My state of Oregon is a big, rural state. In rural Malheur County, in southeast Oregon, 52 percent of residents are covered by Medicaid.
Compare that to folks in Washington County, just west of Portland, where only about 25 percent of residents are covered by Medicaid.
So, these Republican cuts to Medicaid will hit rural Americans much harder.
It's also bad budgeting.
Let's look at the numbers:
As you can see from this chart, since 2007, all health care spending has gone up.
But Medicaid spending has gone up at a much lower rate.
And CMS forecasts that, this year, the per person costs of private insurance will increase more than the per person costs of Medicaid."
Not to mention that Medicaid makes up just 18 percent of national health spending.
And, between 2000 and 2023, while Medicaid's enrollment roughly doubled, Medicaid's share of national health spending ticked up just 3 percentage points, from 16 to 19 percent!
So, the problem isn't Medicaid - it's our overall health care system driving up costs across the board.
In fact, Medicaid saves us money long-term.
CBO has found that every additional dollar we spend on children's Medicaid coverage today reduces federal deficits by roughly two dollars in the future!
Why? Because healthier kids grow up to be healthier adults, reducing their demand on the health care system while increasing their contributions in taxes.
That's critical to my state of Oregon, where nearly 60 percent of kids get their health care through Medicaid or the Children's Health Insurance Program.
But it's not just kids who are threatened by these cuts.
The Big Ugly Betrayal Law is also forcing states to slash home- and community-based services for seniors and people with disabilities.
Here's how it's affecting real people:
In Minnesota, an autism therapy provider had to sell her cattle herd and lay off staff just to afford to keep serving children who have nowhere else to turn.
In California, because of in-home support services, a mother has been able to take care of her disabled son instead of having to work an additional job.
As she said, quote, "Without this, people become homeless. They lose their income. They lose their stability. Whatever tiny safety net they had is gone. It's just cruel." And, in Oregon, one of my constituents wrote me about her two 40-year-old sons with disabilities, who, since they were 18, have lived in group homes and attended day programs that let them live full lives.
Her plea to us was simple: don't force families, like hers, back toward institutionalization by cutting Medicaid funding for these programs.
In her words, that would be, quote: "insane, inhumane, and a crime against humanity."
Insane is right.
This isn't about fraud. If it was, then this hearing would be about the President pardoning convicted fraudsters and cutting funding for Medicaid Fraud Control Units.
This is about the Red Carpet for the Rich, Red Tape for the Poor.
Heath care is a right for all, not a privilege for the wealthy.
Let's reject the Republican strategy of Families Lose, Billionaires Win and replace it with the strategy of Families Thrive, and Billionaires Pay Their Fair Share.
* * *
Original text here: https://www.budget.senate.gov/imo/media/doc/080426openingstatementofrankingmembermerkleymedicaidhearing.pdf
Crowell & Moring Partner Ferraro Testifies Before Senate Special Committee on Aging
WASHINGTON, Aug. 21 -- The Senate Special Committee on Aging released the following testimony by Matthew F. Ferraro, partner at Crowell and Moring LLP, from a July 29, 2026, hearing entitled "The AI Deception Machine: Deepfakes, Chatbots, and the New Frontier of Senior Fraud":
* * *
Chairman Scott, Ranking Member Gillibrand, and Members of the Committee:
Thank you for inviting me to testify before the Committee on this important topic. It is an honor to be before you today.
My name is Matthew F. Ferraro. I am a partner at the law firm Crowell & Moring LLP, where I counsel clients on matters ... Show Full Article WASHINGTON, Aug. 21 -- The Senate Special Committee on Aging released the following testimony by Matthew F. Ferraro, partner at Crowell and Moring LLP, from a July 29, 2026, hearing entitled "The AI Deception Machine: Deepfakes, Chatbots, and the New Frontier of Senior Fraud": * * * Chairman Scott, Ranking Member Gillibrand, and Members of the Committee: Thank you for inviting me to testify before the Committee on this important topic. It is an honor to be before you today. My name is Matthew F. Ferraro. I am a partner at the law firm Crowell & Moring LLP, where I counsel clients on mattersat the intersection of artificial intelligence (AI), cybersecurity, and regulation. I am also a former government official. I served most recently as the Senior Counselor for Cybersecurity and Emerging Technology to the Secretary of Homeland Security from 2023 to 2025 and, earlier in my career, in the U.S. Intelligence Community. I have been writing, speaking, counseling clients, and working on government policy related to AI-generated media, or deepfakes, since 2019./1 I am here today in my personal capacity. The views I express in this testimony are my own and do not reflect upon my current firm, my prior public or private employers, or any clients.
My testimony proceeds as follows:
* First, I describe prevalent forms of AI-related frauds, particularly those targeting seniors.
* Second, I discuss possible policy responses to these issues that legislators, including members of this Committee, may wish to pursue.
* Third, I provide steps seniors, and all of us, can take to avoid falling victim to deepfake dupes.
I conclude by noting that while new technologies married to ancient vices require responses, they should neither slake our appetite for innovation and creativity nor extinguish our faith that we can navigate the digital world with confidence.
* * *
1 As used here a deepfake is a realistic piece of media manipulated or created by AI that is used maliciously as disinformation. See NINA SCHICK, DEEPFAKES: THE COMING INFOCALYPSE 8 (2020). I have drawn on one of my writings, a chapter on "Deepfake Deceptions and Responses," forthcoming in the American Bar Association's "Scams & Cybercrime Survival Guide," to inform this testimony.
* * *
I. Deepfake Dangers
To understand the scope of this issue, ask yourself: How often today have you relied upon the voice of a loved one or the image of a trusted figure before you shared something valuable with them?
Perhaps your daughter called from college this morning to ask for a few hundred dollars, and you dispatched the funds without a second thought. Maybe you experienced technical difficulties this afternoon while working from home and had a video call with your office's support technician, during which you shared your account information. Tonight, you may scroll through social media and see a doctor online touting the benefits of an herbal supplement and buy it because of their endorsement.
Now consider: What if those representations were fake--not your daughter or the office technician calling or a doctor in a commercial, but voices and images forged by AI? What if seeing and hearing were not believing?
Welcome to the world of "deepfakes." It is a world we have been living in for several years, where AI can create realistic audio, images, and videos that appear to be true-to-life but are forgeries. The technology to create such synthetic media is now advancing at a phenomenal rate.
Nearly anyone can access it, often for free, and, when combined with the power of social media, deepfakes can scale nearly instantaneously. The aphorism, "a lie can travel halfway around the world while the truth is still putting on its shoes," has never been more apt.2
While AI-generated media can have creative uses that empower artistic expression, invigorate education, and enhance accessibility, deepfakes can supercharge scams and cyber frauds, especially those targeting senior citizens.
The figures are stark. In the first quarter of 2025 alone, financial losses from deepfakeenabled fraud exceeded $200 million, according to an industry report.3 The consulting firm Deloitte expects that generative AI could enable fraud losses to reach $40 billion in the United States by 2027, up from $12.3 billion in 2023, a compound annual growth rate of 32%.4 Propelling this anticipated surge is an expected increase in scammers using deepfakes to induce, and then betray, trust. These scams pose particular dangers to the elderly. Older adults are five times more likely to lose money in a scam than younger people, according to the founder and executive director of the national nonprofit Older Adults Technology Services (OATS), a part of AARP.5 According to an AARP survey, the top digital risk for seniors is scams and fraud.6 Deepfake scams can take many forms; I turn next to those most relevant to seniors.7
* * *
2 See Niraj Chokshi, That Wasn't Mark Twain: How a Misquotation Is Born, N.Y. TIMES (Apr. 26, 2017), https://www.nytimes.com/2017/04/26/books/famous-misquotations.html.
3 See Carolyn Giardina, Deepfake-Enabled Fraud Has Already Caused $200 Million in Financial Losses in 2025, New Report Finds, VARIETY (Apr. 17, 2025, 4:29 PM), https://variety.com/2025/digital/news/deepfake-fraudcaused-200-million-losses-1236372068/ (citing report from Resemble AI, which specializes in deepfake detection).
4 GenAI Poses Real Threat in Deepfake Fraud, DELOITTE (July 10, 2024), https://action.deloitte.com/insight/3993/genai-poses-real-threat-in-deepfake-fraud.
* * *
A. Advertising and Investment Scams
Fraudsters often use AI to generate fake ads featuring the likenesses of celebrities or trusted professionals, luring the unsuspecting into buying products or making investments under false pretenses.
For example, a recent New York Times report explored the presence of hundreds of AI-generated video "doctors, healers and wellness influencers on social media touting the health benefits of supplements to American consumers. Many of these hyperrealistic looking ads promise medical miracles, and appear to be targeting older women, while making misleading health claims for a profit."8
In the same vein, AI-generated videos of celebrity clones have promoted Medicare, Medicaid, and tax refunds.9 Threat actors have also used AI-generated avatars of influencers, investors, and movie stars to peddle products from cryptocurrency and dental plans to diet pills.10
Using deepfakes of trusted messengers to deceive victims is a broad, international phenomenon. For example, a British advertising association reported that scam ads containing famous figures, often doctored or AI-manipulated, constituted the "vast majority" of reports the government watchdog sent to online platforms in 2024./11
In the United States, data from the Federal Trade Commission (FTC) showed that consumers reported losing 25% more to fraud in 2024, totaling $12.5 billion, compared to the prior year. And of that total, $5.7 billion were lost to investment scams, more than any other category.12 The FTC does not break down its data by investment scams using deepfakes per se. Still, the FTC has generally warned that fraudsters are using celebrity deepfakes for fraudulent advertising campaigns and financial scams that have triggered FTC enforcement actions.13
* * *
5 Angelica Stabile, Aging Adults are Most Vulnerable to These Digital Risks, Experts Say, FOX NEWS (Mar. 30, 2025), https://www.foxnews.com/health/americas-seniors-vulnerable-digital-threats-experts-warn.
6 Id.
7 While not the subject of this hearing, two other forms of deepfake-related harms merit mention: AI-generated nonconsensual intimate imagery of minors and adults and AI-generated identities to secure remote employment. See Matthew F. Ferraro et al., Federal and State Regulators Target AI Chatbots and Intimate Imagery, Crowell & Moring Client Alert (Oct. 30, 2026); Scott Wise et al., From Deepfakes to Sanctions Violations: The Rise of North Korean Remote IT Worker Schemes, Crowell & Moring Client Alert (Sept. 22, 2025), https://www.crowell.com/en/insights/client-alerts/from-deepfakes-to-sanctions-violations-the-rise-of-north-koreanremote-it-worker-schemes
8 Arijeta Lajka et al., The Fake Influencers Selling Wellness on Your Feed, N.Y. TIMES (July 21, 2026), https://www.nytimes.com/video/technology/100000011001849/ai-influencers-health-supplements-fake-ads.html.
9 See Jason Koebler, Deepfaked Celebrity Ads Promoting Medicare Scams Run Rampant on YouTube, 404 MEDIA (Jan. 9, 2024), https://www.404media.co/joe-rogan-taylor-swift-andrew-tate-ai-deepfake-youtube-medicare-ads/.
10 See Derek Kravitz, Don't Get Caught by a Deepfake Scam, CONSUMER REPORTS (Jan. 30, 2025), https://www.consumerreports.org/money/scams-fraud/dont-get-caught-by-a-deepfake-scam-a1121081735/; Ben Coleman, The Impact of Deepfakes on Brand and Reputation, REALITY DEFENDER (Aug. 7, 2024), https://www.realitydefender.com/blog/deepfakes-harm-brand-reputation.
11 See Martyn Landi, Celebrity Deepfake Scam Ads Were Most Reported to Watchdog in 2024, PA MEDIA (Feb. 13, 2025), https://uk.finance.yahoo.com/news/celebrity-deepfake-scam-ads-were-000100107.html (citing report from Advertising Standards Authority, a self-regulatory organization of the advertising industry in the United Kingdom).
* * *
B. Deepfake Phishing Scams
The investment and advertising scams described above are a form of what I call "broadcast falsity"; AI is used to impersonate a trusted messenger, and the message is sent out widely and not tailored to a specific victim.
"Deepfake phishing scams" is a version of these activities where threat actors target individual victims through one-to-one communication.14 In the deepfake-enabled version of phishing, a victim receives a phone call or an email, purportedly from a figure of authority, who exhorts the victim to render payment or provide sensitive information, using an AI-generated voice or video to increase the victim's trust in the veracity of the message.
A late-2024 survey in the United Kingdom by the group Hiya estimated that 26% of UK residents received a call using a deepfake voice clone over the prior 12 months, and of those, 40% reported being scammed, 35% reported losing money, and 32% had their personal information stolen. The scams were primarily financial and banking-related. In such scams, for example, a fraudster impersonates a representative of the government's tax authority and tells the victim that a criminal case has commenced or an arrest warrant has issued against the victim to induce fear and compel the victim to provide bank details, financial information, or personally identifiable information to supposedly pay the spurious debt.15 Hiya reported Medicare scams as the most common type of fraud call in the United States. In those schemes, scammers try to obtain personal details of victims that the fraudsters can then use to bill Medicare falsely for home health services.16 Hiya estimates that the average American fraud call victim lost $539./17
C. Known-Person Impersonation Scams
The frauds discussed thus far use either entirely fictitous persons or impersonations of individuals rarely acquainted with specific victims. But deepfakes are also used to mimic persons the victim knows, either professionally or personally.
* * *
12 Press Release, New FTC Data Show a Big Jump in Reported Losses to Fraud to $12.5 Billion in 2024, FED. TRADE COMM'N (Mar. 10, 2025), https://www.ftc.gov/news-events/news/press-releases/2025/03/new-ftc-data-showbig-jump-reported-losses-fraud-125-billion-2024.
13 Michael Atleson, Chatbots, Deepfakes, and Voice Clones: AI Deception for Sale, FED. TRADE COMM'N (Mar. 20, 2023), https://www.ftc.gov/business-guidance/blog/2023/03/chatbots-deepfakes-voice-clones-ai-deception-sale.
14 See Ellen Jennings-Trace, Deepfake Scam Calls Are Costing British Victims Hundreds Each Time - Here's How to Stay Safe, TECH RADAR PRO (Mar. 2, 2025), https://www.techradar.com/pro/security/deepfake-scam-calls-arecosting-british-victims-hundreds-each-time.
15 Id.
16 Press Release, AI Deepfake Fraud Calls Dominate Q4 Scams, Costing Consumers Millions, BUSINESS WIRE (Feb. 25, 2025, 4:00 AM), https://www.businesswire.com/ws/home/20250225398435/en/AI-Deepfake-Fraud-CallsDominate-Q4-Scams-Costing-Consumers-Millions.
17 Id.
* * *
Among the most widely publicized recent examples of this kind of fraud came to light in early 2024, when a British multinational firm reported to law enforcement that criminals had tricked an employee into attending a video call with AI-generated deepfakes of the company's chief financial officer, among others, that the employee believed were the actual people.18 The fraudsters convinced the employee to send the equivalent of $25.6 million through fifteen transactions to complete payment for a secret project.19
Fraudsters have also used deepfakes to target victims for extortion by impersonating victims' family members. Sen. John Hickenlooper (D-Colo.) described in a U.S. Senate hearing in November 2024 how "scammers have cloned the voices of loved ones saying they've been kidnapped, they've been abducted, and this familiar voice is begging for ransom payments."20 The earliest example of this phenomenon of which I am aware occurred in February 2020, when an attorney in Pennsylvania reported that he was fooled by what he believed was an AIenabled voice clone of his "son," who asked for $9,000 in bail money. The distraught father nearly wired the funds to someone claiming to be the son's lawyer, but he desisted only when his actual son telephoned him.21
These scams led the Attorney General of the District of Columbia, Brian L. Schwalb, in April 2025 to issue a consumer alert warning of "a disturbing upward trend" of scammers telephoning residents, especially seniors, and impersonating with the help of AI "family members, friends, legitimate businesses, or government officials" and demanding money.22 Schwalb warned the public of callers seeking personal financial information, asking for bail, claiming the resident's identity is being used in an international money laundering operation, claiming they owe back taxes or tolls, or promising a refund.23
D. Loneliness-related Scams
Fraudsters use AI-generated media to impersonate potential romantic partners as part of a swindle known as "catfishing" or "romance scams."24 In such a fraud, threat actors often research potential victims by reviewing their social media and dating site profiles, contact the victim through social media, apps, or text messages, and seek to gain trust by developing an online relationship. The ploys can continue as the victim develops genuine feelings of connection and interest in the threat actor, potentially leading to the transfer of money, cryptocurrency, or gift cards. "The intimate and personal information victims often provide can then be used by the scammers for identity theft and financial account takeover schemes, among others," the U.S. Secret Service warns, "Scammers may even convert their victims into unwitting criminals by convincing them to launder and move fraudulent funds, for which the victim is then liable, both financially and potentially criminally."25
* * *
18 See Kathleen Magramo, British Engineering Giant Arup Revealed as $25 Million Deepfake Scam Victim, CNN (May 17, 2024, 4:53 AM), https://www.cnn.com/2024/05/16/tech/arup-deepfake-scam-loss-hong-kong-intlhnk/index.html.
19 Id.
20 Justin Hendrix, Transcript: US Senate Subcommittee Hearing on "Protecting Consumers from Artificial Intelligence Enabled Fraud and Scams", TECH POLICY PRESS (Nov. 20, 2024), https://www.techpolicy.press/transcript-us-senate-subcommittee-hearing-on-protecting-consumers-from-artificialintelligence-enabled-fraud-and-scams/.
21 See Matthew F. Ferraro, et al., Identifying the Legal and Business Risks of Disinformation and Deepfakes: What Every Business Needs to Know, 6 PRATT'S PRIV.& CYBERSECURITY L. REP. 142, 146 (2020) (describing incident).
22 Press Release, Attorney General Schwalb Issues Consumer Alert to Protect District Residents from Deepfake Telemarketing Scams, OFFICE OF THE ATTORNEY GEN. FOR THE DISTRICT OF COLUMBIA (Apr. 18, 2025), https://oag.dc.gov/release/attorney-general-schwalb-issues-consumer-alert-3 (directing elder victims to report crimes to ElderJustice@dc.gov).
23 Id.
24 See Natalie Neysa Alund, Why Do People Catfish? What are the Signs of It? Here's What You - and Your Kids - Should Know, USA TODAY (Nov. 29, 2022, 3:27 PM), https://www.usatoday.com/story/news/nation/2022/11/29/what-is-catfishing-why-do-people-catfish/10794619002/; Stay Safe Online: Avoid Romance Scams, U.S. SECRET SERVICE (undated), https://www.secretservice.gov/investigations/romancescams.
* * *
AI has supercharged these kinds of frauds by allowing criminals to create synthetic yet believable imagery to accompany their stories and create more convincing "catfish" online profiles, helping their victims believe they are engaged in a genuine relationship.26 The scammers impersonate both everyday people and famous public figures to try to trick victims. These frauds can operate at an industrial scale often through fraud rings based overseas.27
II. Possible Public Responses
While it is for the Congress to fashion specific responses to the scams outlined above, I offer three general recommendations.
Education and Awareness. First, as a society, we should emphasize education and awareness by all digital media consumers, especially seniors. Any effective public education effort should be delivered through trusted community channels: senior centers, physicians, pharmacists, community groups, nonprofits, houses of worship and the like. Recent academic research has identified "[a]ge-inclusive digital literacy programs," along with other interventions as "crucial" to effective risk mitigation.28
The National Council on Aging recently told the AP that classes on AI at senior centers have become popular additions to efforts to enhance digital literacy.29 The AP reported on successful efforts to educate seniors at a community center in the Chicago area, and the Washington Post described a similar ten-week course offered by Senior Planet, a nonprofit affiliated with AARP, to teach seniors in Maryland about AI-generated images and the risks of AI scams and deepfakes.30
* * *
25 See Stay Safe Online.
26 See Paul Raffile, A Digital Pandemic: Uncovering the Role of 'Yahoo Boys' in the Surge of Social Media-Enabled Financial Sextortion Targeting Minors, NETWORK CONTAGION RESEARCH INSTITUTE (Jan. 2024), at 19-20, https://networkcontagion.us/wp-content/uploads/Yahoo-Boys_1.2.24.pdf.
27 See Glenn Chapman, Scammers Using AI To Dupe The Lonely Looking For Love, BARRONS (Feb. 12, 2025, 10:07 AM), https://www.barrons.com/news/scammers-using-ai-to-dupe-the-lonely-looking-for-love-e1f6bb2c,
28 Ansh Mittal, Navigating the Digital Mirage: The Impact of Deepfakes and AI on Older Adults' Ability to Discern Authentic Content, 7 INT'L J. FOR MULTIDISCIPLINARY RES. 1, 12 (2025) https://www.ijfmr.com/papers/2025/5/59035.pdf.
29 Dan Merica, Classes Across the Country Help Seniors Interact with a World Altered by AI, AP (Aug. 13, 2024), https://apnews.com/article/seniors-artificial-intelligence-deepfake-education-classesbc30958c273af7c79bfe77d321617738.
* * *
We can also draw lessons from international exemplars, such as Finland, which has integrated media literacy and AI-media spotting training into its education programs for both young and old.31
Coordination. Many government agencies at both the state and federal level are alive to the dangers of deepfakes, even though there is no national law on this topic. (There are a number of state laws that address deepfake harms and frauds.) In the absence of tailor-made deepfake laws, regulators have relied on existing laws to support investigations and enforcement. The adage applies: if it is illegal without AI, it is illegal with AI. For example, in April 2024, the FTC implemented a rule that prohibits the impersonation of a business or government entity, providing the FTC with stronger enforcement tools to investigate fraudsters.32 The FTC has proposed amending that rule to extend such protections to the impersonation of specific people.33 The U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) has also alerted financial institutions that the abuse of deepfake media and Generative AI may contribute to fraud and cybercrime, both of which are part of FinCEN's Anti-Money Laundering and Countering the Financing of Terrorism National Priorities.34 Greater coordination across the federal and state levels could promote efficiency and valuable knowledge sharing among policymakers, law enforcement, and industry.
Technology. While the surest defender against deepfake dupes lies between our ears, technology has a role to play, too. These technologies include tools to detect AI-generated content after the fact and provenance technology, which tags with metadata (sometimes called "content credentials") media as either generated by AI or captured by a human, such that it is difficult to alter the media after-the-fact without leaving evidence of manipulation.35 Efforts to broaden the embrace of both of these technologies could help American seniors tell facts from fakes.
* * *
30 Likewise, I had the privilege of presenting a webinar on deepfakes in October 2020 to Encore Learning, a nonprofit organization based in Arlington, Virginia that provides courses to people over 50. My lecture was arranged by two leaders of Encore Learning, lifelong public servants, and family friends of many decades, the late Barb Spangler and the late Steve Spangler.
31 After Decades of Teaching Media Literacy, Finland Equips Students with Skills to Spot AI Deepfakes, EURONEWS (May 1, 2026), https://www.euronews.com/next/2026/01/05/after-decades-of-teaching-media-literacy-finlandequips-students-with-skills-to-spot-ai-de.
32 Press Release, FTC Announces Impersonation Rule Goes into Effect Today, FED. TRADE COMM'N (Apr. 1, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/04/ftc-announces-impersonation-rule-goes-effect-today.
33 Press Release, FTC Proposes New Protections to Combat AI Impersonation of Individuals, FED. TRADE COMM'N (Feb. 15, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/02/ftc-proposes-new-protectionscombat-ai-impersonation-individuals.
34 FinCEN Alert on Fraud Schemes Involving Deepfake Media Targeting Financial Institutions, FINCEN (Nov. 13, 2024), at 2, https://www.fincen.gov/sites/default/files/shared/FinCEN-Alert-DeepFakes-Alert508FINAL.pdf.
35 See generally Mounir Ibrahim & Ashish Jaiman, Opinion, To Defend Democracy, We Must Protect Truth Online, THE HILL (Apr. 25, 2021, 5:00 PM), https://thehill.com/opinion/cybersecurity/550191-to-defend-democracy-wemust-protect-truth-online (describing provenance technology); Press Release, Technology and Media Entities Join Forces to Create Standards Group Aimed at Building Trust in Online Content, C2PA (Feb. 22, 2021), https://c2pa.org/post/c2pa_initial_pr/.
* * *
III. Tips and Tricks to Avoid Deepfake Scams
Irrespective of larger public efforts, seniors--and us all--can take steps today to protect ourselves and our loved ones against deepfake scams. Consider these best practices:
a. Prepare Proactively
* For emergencies, create a secret word or phrase with loved ones or close professional colleagues to verify their identity (choose something a deepfake impersonator would not know). If you receive a call from someone claiming to be that person, asserting that they are in distress or require funds, ask them for the pass phrase.
* Don't overshare online, including of videos and photos of yourself.
* Consider setting your social media profiles to private.
* Do not place inordinate trust in doctors or celebrities peddling investments or products that sound too good to be true. They almost always are
* Use strong passwords for online accounts, enable multi-factor authentication, and regularly update operating systems and antivirus software. (This is good cyber hygiene irrespective of deepfake-related risks.)
* Teach children and young adults in your life about the dangers of online exploitation and abuse.
Point them to the U.S. Department of Homeland Security's Know 2 Protect Campaign
(https://www.dhs.gov/know2protect) for more information.
b. Stay Skeptical
* If you do not know someone in real life, never transfer or receive money or cryptocurrency to or from them; buy gift cards for them; open bank accounts with or for them; start businesses on their behalf; or share personal information with them.
* Be cautious if someone you don't know is messaging you from an unfamiliar phone number or social media account.
* Double-check calls or emails that claim to be from a bank, delivery company, or government agency. If a bank, delivery service, or government agency is contacting you, visit their verified website or call their official phone number to address the issue. Be aware: Government agencies will rarely send messages to your phone about taxes or fees. Distrust all such messages and verify them through established channels.
c. Watch and Listen Carefully
* Be on the lookout for subtle imperfections in images and videos you view online or on video conferences, such as distorted hands or feet, blurry backgrounds, mismatching earrings, inaccurate shadows, watermarks, delays in responses and lags in the image's movement, or inconsistencies around the eyes and mouth and between the image and the voice.
* If you receive a phone call that purports to be from a trusted source asking you to do something suspicious, listen closely to the tone, intonation, and word choice for hints of AI manipulation.
When in doubt, hang up.
d. Report Readily
* If you believe you have been the victim of a deepfake in any manner, notify all involved financial institutions and law enforcement, including the FBI's Internet Crime Complaint Center (http://www.ic3.gov) for financial fraud and the U.S. Secret Service (https://www.secretservice.gov/contact/field-offices) for romance scams.
IV. Conclusion
With so many deepfake scams and cons circulating, it may be challenging to believe that you can trust anything. In a world where no media seems real and anything is possible, skepticism can lead to cynicism and even nihilism.
But such a reaction is unnecessary. Greater education, coordination, and developments in deepfake detection and provenance technology, coupled with the straightforward steps outlined here, can help seniors (and us all) make sense of deepfakes, avoid their most pernicious uses, and navigate the digital world with "fortitude and buoyancy."36
In sum, we should be skeptical of the videos, audio, and imagery we encounter through our screens. We should look for markers of legitimacy in the media and its context. We should quiz ourselves: Do we know this person? What is the nature of this conversation or this request? Does this endorsement sound too good to be true? We should also trust our instincts, pause before taking any major step, and consult with our family and friends. For it is not through our devices but in our real lives where our most important relationships of confidence, understanding, and trust are formed, nurtured, and sustained.
* * *
36 I owe this cheerful phrase, used in a different context, to WINSTON S. CHURCHILL, THE SECOND WORLD WAR: THE HINGE OF FATE 54 (1950).
* * *
Original text here: https://www.aging.senate.gov/imo/media/doc/32adb490-b498-1617-26d8-a24c018babde/Testimony_Ferraro%2007.29.26_7d741f1d-b1cf-4c0f-985c-8090c4091ddf.pdf
* * *
Chairman Scott, Ranking Member Gillibrand, and Members of the Committee:
Thank you for inviting me to testify before the Committee on this important topic. It is an honor to be before you today.
My name is Matthew F. Ferraro. I am a partner at the law firm Crowell & Moring LLP, where I counsel clients on matters ... Show Full Article WASHINGTON, Aug. 21 -- The Senate Special Committee on Aging released the following testimony by Matthew F. Ferraro, partner at Crowell and Moring LLP, from a July 29, 2026, hearing entitled "The AI Deception Machine: Deepfakes, Chatbots, and the New Frontier of Senior Fraud": * * * Chairman Scott, Ranking Member Gillibrand, and Members of the Committee: Thank you for inviting me to testify before the Committee on this important topic. It is an honor to be before you today. My name is Matthew F. Ferraro. I am a partner at the law firm Crowell & Moring LLP, where I counsel clients on mattersat the intersection of artificial intelligence (AI), cybersecurity, and regulation. I am also a former government official. I served most recently as the Senior Counselor for Cybersecurity and Emerging Technology to the Secretary of Homeland Security from 2023 to 2025 and, earlier in my career, in the U.S. Intelligence Community. I have been writing, speaking, counseling clients, and working on government policy related to AI-generated media, or deepfakes, since 2019./1 I am here today in my personal capacity. The views I express in this testimony are my own and do not reflect upon my current firm, my prior public or private employers, or any clients.
My testimony proceeds as follows:
* First, I describe prevalent forms of AI-related frauds, particularly those targeting seniors.
* Second, I discuss possible policy responses to these issues that legislators, including members of this Committee, may wish to pursue.
* Third, I provide steps seniors, and all of us, can take to avoid falling victim to deepfake dupes.
I conclude by noting that while new technologies married to ancient vices require responses, they should neither slake our appetite for innovation and creativity nor extinguish our faith that we can navigate the digital world with confidence.
* * *
1 As used here a deepfake is a realistic piece of media manipulated or created by AI that is used maliciously as disinformation. See NINA SCHICK, DEEPFAKES: THE COMING INFOCALYPSE 8 (2020). I have drawn on one of my writings, a chapter on "Deepfake Deceptions and Responses," forthcoming in the American Bar Association's "Scams & Cybercrime Survival Guide," to inform this testimony.
* * *
I. Deepfake Dangers
To understand the scope of this issue, ask yourself: How often today have you relied upon the voice of a loved one or the image of a trusted figure before you shared something valuable with them?
Perhaps your daughter called from college this morning to ask for a few hundred dollars, and you dispatched the funds without a second thought. Maybe you experienced technical difficulties this afternoon while working from home and had a video call with your office's support technician, during which you shared your account information. Tonight, you may scroll through social media and see a doctor online touting the benefits of an herbal supplement and buy it because of their endorsement.
Now consider: What if those representations were fake--not your daughter or the office technician calling or a doctor in a commercial, but voices and images forged by AI? What if seeing and hearing were not believing?
Welcome to the world of "deepfakes." It is a world we have been living in for several years, where AI can create realistic audio, images, and videos that appear to be true-to-life but are forgeries. The technology to create such synthetic media is now advancing at a phenomenal rate.
Nearly anyone can access it, often for free, and, when combined with the power of social media, deepfakes can scale nearly instantaneously. The aphorism, "a lie can travel halfway around the world while the truth is still putting on its shoes," has never been more apt.2
While AI-generated media can have creative uses that empower artistic expression, invigorate education, and enhance accessibility, deepfakes can supercharge scams and cyber frauds, especially those targeting senior citizens.
The figures are stark. In the first quarter of 2025 alone, financial losses from deepfakeenabled fraud exceeded $200 million, according to an industry report.3 The consulting firm Deloitte expects that generative AI could enable fraud losses to reach $40 billion in the United States by 2027, up from $12.3 billion in 2023, a compound annual growth rate of 32%.4 Propelling this anticipated surge is an expected increase in scammers using deepfakes to induce, and then betray, trust. These scams pose particular dangers to the elderly. Older adults are five times more likely to lose money in a scam than younger people, according to the founder and executive director of the national nonprofit Older Adults Technology Services (OATS), a part of AARP.5 According to an AARP survey, the top digital risk for seniors is scams and fraud.6 Deepfake scams can take many forms; I turn next to those most relevant to seniors.7
* * *
2 See Niraj Chokshi, That Wasn't Mark Twain: How a Misquotation Is Born, N.Y. TIMES (Apr. 26, 2017), https://www.nytimes.com/2017/04/26/books/famous-misquotations.html.
3 See Carolyn Giardina, Deepfake-Enabled Fraud Has Already Caused $200 Million in Financial Losses in 2025, New Report Finds, VARIETY (Apr. 17, 2025, 4:29 PM), https://variety.com/2025/digital/news/deepfake-fraudcaused-200-million-losses-1236372068/ (citing report from Resemble AI, which specializes in deepfake detection).
4 GenAI Poses Real Threat in Deepfake Fraud, DELOITTE (July 10, 2024), https://action.deloitte.com/insight/3993/genai-poses-real-threat-in-deepfake-fraud.
* * *
A. Advertising and Investment Scams
Fraudsters often use AI to generate fake ads featuring the likenesses of celebrities or trusted professionals, luring the unsuspecting into buying products or making investments under false pretenses.
For example, a recent New York Times report explored the presence of hundreds of AI-generated video "doctors, healers and wellness influencers on social media touting the health benefits of supplements to American consumers. Many of these hyperrealistic looking ads promise medical miracles, and appear to be targeting older women, while making misleading health claims for a profit."8
In the same vein, AI-generated videos of celebrity clones have promoted Medicare, Medicaid, and tax refunds.9 Threat actors have also used AI-generated avatars of influencers, investors, and movie stars to peddle products from cryptocurrency and dental plans to diet pills.10
Using deepfakes of trusted messengers to deceive victims is a broad, international phenomenon. For example, a British advertising association reported that scam ads containing famous figures, often doctored or AI-manipulated, constituted the "vast majority" of reports the government watchdog sent to online platforms in 2024./11
In the United States, data from the Federal Trade Commission (FTC) showed that consumers reported losing 25% more to fraud in 2024, totaling $12.5 billion, compared to the prior year. And of that total, $5.7 billion were lost to investment scams, more than any other category.12 The FTC does not break down its data by investment scams using deepfakes per se. Still, the FTC has generally warned that fraudsters are using celebrity deepfakes for fraudulent advertising campaigns and financial scams that have triggered FTC enforcement actions.13
* * *
5 Angelica Stabile, Aging Adults are Most Vulnerable to These Digital Risks, Experts Say, FOX NEWS (Mar. 30, 2025), https://www.foxnews.com/health/americas-seniors-vulnerable-digital-threats-experts-warn.
6 Id.
7 While not the subject of this hearing, two other forms of deepfake-related harms merit mention: AI-generated nonconsensual intimate imagery of minors and adults and AI-generated identities to secure remote employment. See Matthew F. Ferraro et al., Federal and State Regulators Target AI Chatbots and Intimate Imagery, Crowell & Moring Client Alert (Oct. 30, 2026); Scott Wise et al., From Deepfakes to Sanctions Violations: The Rise of North Korean Remote IT Worker Schemes, Crowell & Moring Client Alert (Sept. 22, 2025), https://www.crowell.com/en/insights/client-alerts/from-deepfakes-to-sanctions-violations-the-rise-of-north-koreanremote-it-worker-schemes
8 Arijeta Lajka et al., The Fake Influencers Selling Wellness on Your Feed, N.Y. TIMES (July 21, 2026), https://www.nytimes.com/video/technology/100000011001849/ai-influencers-health-supplements-fake-ads.html.
9 See Jason Koebler, Deepfaked Celebrity Ads Promoting Medicare Scams Run Rampant on YouTube, 404 MEDIA (Jan. 9, 2024), https://www.404media.co/joe-rogan-taylor-swift-andrew-tate-ai-deepfake-youtube-medicare-ads/.
10 See Derek Kravitz, Don't Get Caught by a Deepfake Scam, CONSUMER REPORTS (Jan. 30, 2025), https://www.consumerreports.org/money/scams-fraud/dont-get-caught-by-a-deepfake-scam-a1121081735/; Ben Coleman, The Impact of Deepfakes on Brand and Reputation, REALITY DEFENDER (Aug. 7, 2024), https://www.realitydefender.com/blog/deepfakes-harm-brand-reputation.
11 See Martyn Landi, Celebrity Deepfake Scam Ads Were Most Reported to Watchdog in 2024, PA MEDIA (Feb. 13, 2025), https://uk.finance.yahoo.com/news/celebrity-deepfake-scam-ads-were-000100107.html (citing report from Advertising Standards Authority, a self-regulatory organization of the advertising industry in the United Kingdom).
* * *
B. Deepfake Phishing Scams
The investment and advertising scams described above are a form of what I call "broadcast falsity"; AI is used to impersonate a trusted messenger, and the message is sent out widely and not tailored to a specific victim.
"Deepfake phishing scams" is a version of these activities where threat actors target individual victims through one-to-one communication.14 In the deepfake-enabled version of phishing, a victim receives a phone call or an email, purportedly from a figure of authority, who exhorts the victim to render payment or provide sensitive information, using an AI-generated voice or video to increase the victim's trust in the veracity of the message.
A late-2024 survey in the United Kingdom by the group Hiya estimated that 26% of UK residents received a call using a deepfake voice clone over the prior 12 months, and of those, 40% reported being scammed, 35% reported losing money, and 32% had their personal information stolen. The scams were primarily financial and banking-related. In such scams, for example, a fraudster impersonates a representative of the government's tax authority and tells the victim that a criminal case has commenced or an arrest warrant has issued against the victim to induce fear and compel the victim to provide bank details, financial information, or personally identifiable information to supposedly pay the spurious debt.15 Hiya reported Medicare scams as the most common type of fraud call in the United States. In those schemes, scammers try to obtain personal details of victims that the fraudsters can then use to bill Medicare falsely for home health services.16 Hiya estimates that the average American fraud call victim lost $539./17
C. Known-Person Impersonation Scams
The frauds discussed thus far use either entirely fictitous persons or impersonations of individuals rarely acquainted with specific victims. But deepfakes are also used to mimic persons the victim knows, either professionally or personally.
* * *
12 Press Release, New FTC Data Show a Big Jump in Reported Losses to Fraud to $12.5 Billion in 2024, FED. TRADE COMM'N (Mar. 10, 2025), https://www.ftc.gov/news-events/news/press-releases/2025/03/new-ftc-data-showbig-jump-reported-losses-fraud-125-billion-2024.
13 Michael Atleson, Chatbots, Deepfakes, and Voice Clones: AI Deception for Sale, FED. TRADE COMM'N (Mar. 20, 2023), https://www.ftc.gov/business-guidance/blog/2023/03/chatbots-deepfakes-voice-clones-ai-deception-sale.
14 See Ellen Jennings-Trace, Deepfake Scam Calls Are Costing British Victims Hundreds Each Time - Here's How to Stay Safe, TECH RADAR PRO (Mar. 2, 2025), https://www.techradar.com/pro/security/deepfake-scam-calls-arecosting-british-victims-hundreds-each-time.
15 Id.
16 Press Release, AI Deepfake Fraud Calls Dominate Q4 Scams, Costing Consumers Millions, BUSINESS WIRE (Feb. 25, 2025, 4:00 AM), https://www.businesswire.com/ws/home/20250225398435/en/AI-Deepfake-Fraud-CallsDominate-Q4-Scams-Costing-Consumers-Millions.
17 Id.
* * *
Among the most widely publicized recent examples of this kind of fraud came to light in early 2024, when a British multinational firm reported to law enforcement that criminals had tricked an employee into attending a video call with AI-generated deepfakes of the company's chief financial officer, among others, that the employee believed were the actual people.18 The fraudsters convinced the employee to send the equivalent of $25.6 million through fifteen transactions to complete payment for a secret project.19
Fraudsters have also used deepfakes to target victims for extortion by impersonating victims' family members. Sen. John Hickenlooper (D-Colo.) described in a U.S. Senate hearing in November 2024 how "scammers have cloned the voices of loved ones saying they've been kidnapped, they've been abducted, and this familiar voice is begging for ransom payments."20 The earliest example of this phenomenon of which I am aware occurred in February 2020, when an attorney in Pennsylvania reported that he was fooled by what he believed was an AIenabled voice clone of his "son," who asked for $9,000 in bail money. The distraught father nearly wired the funds to someone claiming to be the son's lawyer, but he desisted only when his actual son telephoned him.21
These scams led the Attorney General of the District of Columbia, Brian L. Schwalb, in April 2025 to issue a consumer alert warning of "a disturbing upward trend" of scammers telephoning residents, especially seniors, and impersonating with the help of AI "family members, friends, legitimate businesses, or government officials" and demanding money.22 Schwalb warned the public of callers seeking personal financial information, asking for bail, claiming the resident's identity is being used in an international money laundering operation, claiming they owe back taxes or tolls, or promising a refund.23
D. Loneliness-related Scams
Fraudsters use AI-generated media to impersonate potential romantic partners as part of a swindle known as "catfishing" or "romance scams."24 In such a fraud, threat actors often research potential victims by reviewing their social media and dating site profiles, contact the victim through social media, apps, or text messages, and seek to gain trust by developing an online relationship. The ploys can continue as the victim develops genuine feelings of connection and interest in the threat actor, potentially leading to the transfer of money, cryptocurrency, or gift cards. "The intimate and personal information victims often provide can then be used by the scammers for identity theft and financial account takeover schemes, among others," the U.S. Secret Service warns, "Scammers may even convert their victims into unwitting criminals by convincing them to launder and move fraudulent funds, for which the victim is then liable, both financially and potentially criminally."25
* * *
18 See Kathleen Magramo, British Engineering Giant Arup Revealed as $25 Million Deepfake Scam Victim, CNN (May 17, 2024, 4:53 AM), https://www.cnn.com/2024/05/16/tech/arup-deepfake-scam-loss-hong-kong-intlhnk/index.html.
19 Id.
20 Justin Hendrix, Transcript: US Senate Subcommittee Hearing on "Protecting Consumers from Artificial Intelligence Enabled Fraud and Scams", TECH POLICY PRESS (Nov. 20, 2024), https://www.techpolicy.press/transcript-us-senate-subcommittee-hearing-on-protecting-consumers-from-artificialintelligence-enabled-fraud-and-scams/.
21 See Matthew F. Ferraro, et al., Identifying the Legal and Business Risks of Disinformation and Deepfakes: What Every Business Needs to Know, 6 PRATT'S PRIV.& CYBERSECURITY L. REP. 142, 146 (2020) (describing incident).
22 Press Release, Attorney General Schwalb Issues Consumer Alert to Protect District Residents from Deepfake Telemarketing Scams, OFFICE OF THE ATTORNEY GEN. FOR THE DISTRICT OF COLUMBIA (Apr. 18, 2025), https://oag.dc.gov/release/attorney-general-schwalb-issues-consumer-alert-3 (directing elder victims to report crimes to ElderJustice@dc.gov).
23 Id.
24 See Natalie Neysa Alund, Why Do People Catfish? What are the Signs of It? Here's What You - and Your Kids - Should Know, USA TODAY (Nov. 29, 2022, 3:27 PM), https://www.usatoday.com/story/news/nation/2022/11/29/what-is-catfishing-why-do-people-catfish/10794619002/; Stay Safe Online: Avoid Romance Scams, U.S. SECRET SERVICE (undated), https://www.secretservice.gov/investigations/romancescams.
* * *
AI has supercharged these kinds of frauds by allowing criminals to create synthetic yet believable imagery to accompany their stories and create more convincing "catfish" online profiles, helping their victims believe they are engaged in a genuine relationship.26 The scammers impersonate both everyday people and famous public figures to try to trick victims. These frauds can operate at an industrial scale often through fraud rings based overseas.27
II. Possible Public Responses
While it is for the Congress to fashion specific responses to the scams outlined above, I offer three general recommendations.
Education and Awareness. First, as a society, we should emphasize education and awareness by all digital media consumers, especially seniors. Any effective public education effort should be delivered through trusted community channels: senior centers, physicians, pharmacists, community groups, nonprofits, houses of worship and the like. Recent academic research has identified "[a]ge-inclusive digital literacy programs," along with other interventions as "crucial" to effective risk mitigation.28
The National Council on Aging recently told the AP that classes on AI at senior centers have become popular additions to efforts to enhance digital literacy.29 The AP reported on successful efforts to educate seniors at a community center in the Chicago area, and the Washington Post described a similar ten-week course offered by Senior Planet, a nonprofit affiliated with AARP, to teach seniors in Maryland about AI-generated images and the risks of AI scams and deepfakes.30
* * *
25 See Stay Safe Online.
26 See Paul Raffile, A Digital Pandemic: Uncovering the Role of 'Yahoo Boys' in the Surge of Social Media-Enabled Financial Sextortion Targeting Minors, NETWORK CONTAGION RESEARCH INSTITUTE (Jan. 2024), at 19-20, https://networkcontagion.us/wp-content/uploads/Yahoo-Boys_1.2.24.pdf.
27 See Glenn Chapman, Scammers Using AI To Dupe The Lonely Looking For Love, BARRONS (Feb. 12, 2025, 10:07 AM), https://www.barrons.com/news/scammers-using-ai-to-dupe-the-lonely-looking-for-love-e1f6bb2c,
28 Ansh Mittal, Navigating the Digital Mirage: The Impact of Deepfakes and AI on Older Adults' Ability to Discern Authentic Content, 7 INT'L J. FOR MULTIDISCIPLINARY RES. 1, 12 (2025) https://www.ijfmr.com/papers/2025/5/59035.pdf.
29 Dan Merica, Classes Across the Country Help Seniors Interact with a World Altered by AI, AP (Aug. 13, 2024), https://apnews.com/article/seniors-artificial-intelligence-deepfake-education-classesbc30958c273af7c79bfe77d321617738.
* * *
We can also draw lessons from international exemplars, such as Finland, which has integrated media literacy and AI-media spotting training into its education programs for both young and old.31
Coordination. Many government agencies at both the state and federal level are alive to the dangers of deepfakes, even though there is no national law on this topic. (There are a number of state laws that address deepfake harms and frauds.) In the absence of tailor-made deepfake laws, regulators have relied on existing laws to support investigations and enforcement. The adage applies: if it is illegal without AI, it is illegal with AI. For example, in April 2024, the FTC implemented a rule that prohibits the impersonation of a business or government entity, providing the FTC with stronger enforcement tools to investigate fraudsters.32 The FTC has proposed amending that rule to extend such protections to the impersonation of specific people.33 The U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) has also alerted financial institutions that the abuse of deepfake media and Generative AI may contribute to fraud and cybercrime, both of which are part of FinCEN's Anti-Money Laundering and Countering the Financing of Terrorism National Priorities.34 Greater coordination across the federal and state levels could promote efficiency and valuable knowledge sharing among policymakers, law enforcement, and industry.
Technology. While the surest defender against deepfake dupes lies between our ears, technology has a role to play, too. These technologies include tools to detect AI-generated content after the fact and provenance technology, which tags with metadata (sometimes called "content credentials") media as either generated by AI or captured by a human, such that it is difficult to alter the media after-the-fact without leaving evidence of manipulation.35 Efforts to broaden the embrace of both of these technologies could help American seniors tell facts from fakes.
* * *
30 Likewise, I had the privilege of presenting a webinar on deepfakes in October 2020 to Encore Learning, a nonprofit organization based in Arlington, Virginia that provides courses to people over 50. My lecture was arranged by two leaders of Encore Learning, lifelong public servants, and family friends of many decades, the late Barb Spangler and the late Steve Spangler.
31 After Decades of Teaching Media Literacy, Finland Equips Students with Skills to Spot AI Deepfakes, EURONEWS (May 1, 2026), https://www.euronews.com/next/2026/01/05/after-decades-of-teaching-media-literacy-finlandequips-students-with-skills-to-spot-ai-de.
32 Press Release, FTC Announces Impersonation Rule Goes into Effect Today, FED. TRADE COMM'N (Apr. 1, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/04/ftc-announces-impersonation-rule-goes-effect-today.
33 Press Release, FTC Proposes New Protections to Combat AI Impersonation of Individuals, FED. TRADE COMM'N (Feb. 15, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/02/ftc-proposes-new-protectionscombat-ai-impersonation-individuals.
34 FinCEN Alert on Fraud Schemes Involving Deepfake Media Targeting Financial Institutions, FINCEN (Nov. 13, 2024), at 2, https://www.fincen.gov/sites/default/files/shared/FinCEN-Alert-DeepFakes-Alert508FINAL.pdf.
35 See generally Mounir Ibrahim & Ashish Jaiman, Opinion, To Defend Democracy, We Must Protect Truth Online, THE HILL (Apr. 25, 2021, 5:00 PM), https://thehill.com/opinion/cybersecurity/550191-to-defend-democracy-wemust-protect-truth-online (describing provenance technology); Press Release, Technology and Media Entities Join Forces to Create Standards Group Aimed at Building Trust in Online Content, C2PA (Feb. 22, 2021), https://c2pa.org/post/c2pa_initial_pr/.
* * *
III. Tips and Tricks to Avoid Deepfake Scams
Irrespective of larger public efforts, seniors--and us all--can take steps today to protect ourselves and our loved ones against deepfake scams. Consider these best practices:
a. Prepare Proactively
* For emergencies, create a secret word or phrase with loved ones or close professional colleagues to verify their identity (choose something a deepfake impersonator would not know). If you receive a call from someone claiming to be that person, asserting that they are in distress or require funds, ask them for the pass phrase.
* Don't overshare online, including of videos and photos of yourself.
* Consider setting your social media profiles to private.
* Do not place inordinate trust in doctors or celebrities peddling investments or products that sound too good to be true. They almost always are
* Use strong passwords for online accounts, enable multi-factor authentication, and regularly update operating systems and antivirus software. (This is good cyber hygiene irrespective of deepfake-related risks.)
* Teach children and young adults in your life about the dangers of online exploitation and abuse.
Point them to the U.S. Department of Homeland Security's Know 2 Protect Campaign
(https://www.dhs.gov/know2protect) for more information.
b. Stay Skeptical
* If you do not know someone in real life, never transfer or receive money or cryptocurrency to or from them; buy gift cards for them; open bank accounts with or for them; start businesses on their behalf; or share personal information with them.
* Be cautious if someone you don't know is messaging you from an unfamiliar phone number or social media account.
* Double-check calls or emails that claim to be from a bank, delivery company, or government agency. If a bank, delivery service, or government agency is contacting you, visit their verified website or call their official phone number to address the issue. Be aware: Government agencies will rarely send messages to your phone about taxes or fees. Distrust all such messages and verify them through established channels.
c. Watch and Listen Carefully
* Be on the lookout for subtle imperfections in images and videos you view online or on video conferences, such as distorted hands or feet, blurry backgrounds, mismatching earrings, inaccurate shadows, watermarks, delays in responses and lags in the image's movement, or inconsistencies around the eyes and mouth and between the image and the voice.
* If you receive a phone call that purports to be from a trusted source asking you to do something suspicious, listen closely to the tone, intonation, and word choice for hints of AI manipulation.
When in doubt, hang up.
d. Report Readily
* If you believe you have been the victim of a deepfake in any manner, notify all involved financial institutions and law enforcement, including the FBI's Internet Crime Complaint Center (http://www.ic3.gov) for financial fraud and the U.S. Secret Service (https://www.secretservice.gov/contact/field-offices) for romance scams.
IV. Conclusion
With so many deepfake scams and cons circulating, it may be challenging to believe that you can trust anything. In a world where no media seems real and anything is possible, skepticism can lead to cynicism and even nihilism.
But such a reaction is unnecessary. Greater education, coordination, and developments in deepfake detection and provenance technology, coupled with the straightforward steps outlined here, can help seniors (and us all) make sense of deepfakes, avoid their most pernicious uses, and navigate the digital world with "fortitude and buoyancy."36
In sum, we should be skeptical of the videos, audio, and imagery we encounter through our screens. We should look for markers of legitimacy in the media and its context. We should quiz ourselves: Do we know this person? What is the nature of this conversation or this request? Does this endorsement sound too good to be true? We should also trust our instincts, pause before taking any major step, and consult with our family and friends. For it is not through our devices but in our real lives where our most important relationships of confidence, understanding, and trust are formed, nurtured, and sustained.
* * *
36 I owe this cheerful phrase, used in a different context, to WINSTON S. CHURCHILL, THE SECOND WORLD WAR: THE HINGE OF FATE 54 (1950).
* * *
Original text here: https://www.aging.senate.gov/imo/media/doc/32adb490-b498-1617-26d8-a24c018babde/Testimony_Ferraro%2007.29.26_7d741f1d-b1cf-4c0f-985c-8090c4091ddf.pdf
Consumer Federation Director Winters Testifies Before Senate Special Committee on Aging (Part 2 of 2)
WASHINGTON, Aug. 21 -- The Senate Special Committee on Aging released the following testimony by Ben Winters, director of AI and privacy at the Consumer Federation of America, from a July 29, 2026, hearing entitled "The AI Deception Machine: Deepfakes, Chatbots, and the New Frontier of Senior Fraud":
* * *
(Continued from Part 1 of 2)
The CFPB, which both took on big financial bad actors and talked to the everyday victims of scams and online crime, has been decimated and repeatedly attacked from those that are supposed to run it.85 They even dismissed completed and in progress enforcement actions, ... Show Full Article WASHINGTON, Aug. 21 -- The Senate Special Committee on Aging released the following testimony by Ben Winters, director of AI and privacy at the Consumer Federation of America, from a July 29, 2026, hearing entitled "The AI Deception Machine: Deepfakes, Chatbots, and the New Frontier of Senior Fraud": * * * (Continued from Part 1 of 2) The CFPB, which both took on big financial bad actors and talked to the everyday victims of scams and online crime, has been decimated and repeatedly attacked from those that are supposed to run it.85 They even dismissed completed and in progress enforcement actions,making more corporate pardons at an estimated $3.5 billion that was supposed to go back to protecting consumers.86 Despite the agency itself being politicized, the agency is incredibly popular among voters from both parties, and the actual policies and priorities poll above 90 percent favorability.87 The FTC was also quite active in addressing harmful conduct throughout the scam stack. An FTC investigation into an MGM Casinos massive data breach that exposed customers' sensitive information was suddenly dropped soon after Andrew Ferguson was installed as FTC Chair.88 Similarly, the FTC vacated a 2024 order that addressed a Rytr product that facilitates the creation of unlimited fake reviews using Generative AI, violating the law against unfair and deceptive trade practices as well as rules against fake reviews that harm both consumers and small businesses.89 Currently, the FTC has proposed a "policy statement" that purports to have the authority to police outputs of chatbot tools to make sure companies don't have to comply with simple chatbot rules.90 Separately from whether this is a legally sound approach, it reflects a distracted agency focused on doing political bidding rather than the mandate of independently protecting Americans.91 These corporate pardons only encourage predatory tech companies and scammers to do as they please and communicates to Americans that the safety of their wallets is not a priority.
* Congress should make sure consumer protection agencies are working for people. The above examples of politicization and reduction in resources for the FTC and the CFPB are just two of the many stories that can be told about how the destruction of the administrative state has left people more vulnerable to scams. Congress should employ oversight into the motives behind the myriad changes and force gaps to be filled where people are now left unprotected.
* * *
85 Elizabeth Warren, CFPB Year in Review Report (2025) https://www.banking.senate.gov/imo/media/doc/cfpb_year_in_review_report.pdf
86 Id.
87 Americans for Financial Reform, 2026 Polling: Strong, Bipartisan Support for CFPB and Key Safeguards (July 14, 2026) https://ourfinancialsecurity.org/resources/2026-polling-cfpb/
88 Consumer Federation of America, Pulling Back the Curtain on the FTC's Corporate Pardon for MGM Casino (March 25, 2025) https://consumerfed.org/news/blogs/pulling-back-the-curtain-on-the-ftc-s-corporatepardon-for-mgm-casino/
89 Federal Trade Commission, FTC Reopens and Sets Aside Rytr Final Order in Response to the Trump Administration's AI Action Plan (December 22, 2025) https://www.ftc.gov/news-events/news/pressreleases/2025/12/ftc-reopens-sets-aside-rytr-final-order-response-trump-administrations-ai-action-plan
90 Federal Trade Commission, FTC Seeks Public Comment on Policy Statement Addressing AI Accuracy (July 1, 2026), https://www.ftc.gov/news-events/news/press-releases/2026/07/ftc-seeks-public-comment-policystatement-addressing-ai-accuracy
91 See, e.g., White House Executive Office of the President, Winning the Race: America's AI Action Plan, July 2026 https://www.whitehouse.gov/wp-content/uploads/2025/07/Americas-AI-Action-Plan.pdf
* * *
* Congress should also provide more resources for enforcement at every level of government. State attorneys general, federal consumer protection agencies, banking regulators, and law enforcement offices need staff, technical expertise, and funding to pursue upstream actors, not merely chase individual scammers after victims have already lost money. Effective enforcement should include scrutiny of companies that provide voice-cloning tools, image-generation services, AI agents, payment systems, and platforms that repeatedly host and profit from scam content.
* Improved reporting and enforcement resources matter because speed is often the difference between recovery and irreversible loss. The FBI's Recovery Asset Team is one of the best existing tools the government has to fight elder fraud: when cases reach it quickly enough, the team can freeze roughly half of the money at risk.92 Of the more than 201,000 elder-fraud complaints in 2025, only 642 reached the team's freeze process; even though the FBI reported more than $7.7 billion in elder-fraud losses, less than half a percent was frozen.93 Congress should strengthen the reporting pipeline so more victims can reach recovery tools before the money disappears.
* Congress should use oversight to ensure that public education is treated as a supplement to accountability, not a substitute for it. Education around scam identification, prevention, and reporting is necessary, but it cannot be the centerpiece of the federal response when the core problem is an ecosystem that makes deception cheap, scalable, targeted, and profitable. A serious response should reduce scam delivery, improve recovery, strengthen agency capacity, and place responsibility on the companies best positioned to prevent harm. Furthermore, investigations should look at social media platforms and AI generation companies to find out more about what safeguards and moderation practices they employ.
There is, again, no silver bullet to stop scams - but passage of any one of these dozen policy recommendations that have already been introduced in one form or another is better than the status quo. You cannot climb Mt. Everest without taking the first steps. Taking on bad tech behavior doesn't ban any technologies or threaten truly innovative technologies.
E. Conclusion
The Committee has already shown that protecting older Americans from scams is a bipartisan priority. The concern, paired with the strong legislative proposals already on the table, needs to translate into legislative and oversight action: hold the companies that profit from and fuel the deception accountable, give enforcement agencies the tools they need to help people directly and make sure those are actually used well, protect personal data before it is weaponized, and standardize the current intimidating mess of scam reporting. It's also critical to increase attention on this issue in more media and communities around the country while offering up the ways to address it into successful political action. Industry convenings and self-regulation alone have failed to meet this problem - we need to follow on the momentum of how clear and bad the problem has gotten.
* * *
92 Yuksel Aydin, A three-step fix to halt the epidemic of elder fraud, The Washington Post (July 7, 2026), available at https://www.washingtonpost.com/opinions/2026/07/07/three-step-fix-halt-epidemic-elder-fraud/
93 Id.
* * *
CFA stands ready to help this Committee and its members advance real solutions that help Americans. Not every scam loss is a statistic, it is a life turned upside down. While there is no "kill switch" for all this bad behavior, the amount of continued Congressional inaction and unsuccessful action only hurts all Americans.
Thank you for the opportunity to testify today.
* * *
Original text here: https://www.aging.senate.gov/imo/media/doc/32adb490-b498-1617-26d8-a24c018babde/Testimony_Winters%2007.29.26_d40edb35-67cb-4d81-a692-887267acd303.pdf
* * *
(Continued from Part 1 of 2)
The CFPB, which both took on big financial bad actors and talked to the everyday victims of scams and online crime, has been decimated and repeatedly attacked from those that are supposed to run it.85 They even dismissed completed and in progress enforcement actions, ... Show Full Article WASHINGTON, Aug. 21 -- The Senate Special Committee on Aging released the following testimony by Ben Winters, director of AI and privacy at the Consumer Federation of America, from a July 29, 2026, hearing entitled "The AI Deception Machine: Deepfakes, Chatbots, and the New Frontier of Senior Fraud": * * * (Continued from Part 1 of 2) The CFPB, which both took on big financial bad actors and talked to the everyday victims of scams and online crime, has been decimated and repeatedly attacked from those that are supposed to run it.85 They even dismissed completed and in progress enforcement actions,making more corporate pardons at an estimated $3.5 billion that was supposed to go back to protecting consumers.86 Despite the agency itself being politicized, the agency is incredibly popular among voters from both parties, and the actual policies and priorities poll above 90 percent favorability.87 The FTC was also quite active in addressing harmful conduct throughout the scam stack. An FTC investigation into an MGM Casinos massive data breach that exposed customers' sensitive information was suddenly dropped soon after Andrew Ferguson was installed as FTC Chair.88 Similarly, the FTC vacated a 2024 order that addressed a Rytr product that facilitates the creation of unlimited fake reviews using Generative AI, violating the law against unfair and deceptive trade practices as well as rules against fake reviews that harm both consumers and small businesses.89 Currently, the FTC has proposed a "policy statement" that purports to have the authority to police outputs of chatbot tools to make sure companies don't have to comply with simple chatbot rules.90 Separately from whether this is a legally sound approach, it reflects a distracted agency focused on doing political bidding rather than the mandate of independently protecting Americans.91 These corporate pardons only encourage predatory tech companies and scammers to do as they please and communicates to Americans that the safety of their wallets is not a priority.
* Congress should make sure consumer protection agencies are working for people. The above examples of politicization and reduction in resources for the FTC and the CFPB are just two of the many stories that can be told about how the destruction of the administrative state has left people more vulnerable to scams. Congress should employ oversight into the motives behind the myriad changes and force gaps to be filled where people are now left unprotected.
* * *
85 Elizabeth Warren, CFPB Year in Review Report (2025) https://www.banking.senate.gov/imo/media/doc/cfpb_year_in_review_report.pdf
86 Id.
87 Americans for Financial Reform, 2026 Polling: Strong, Bipartisan Support for CFPB and Key Safeguards (July 14, 2026) https://ourfinancialsecurity.org/resources/2026-polling-cfpb/
88 Consumer Federation of America, Pulling Back the Curtain on the FTC's Corporate Pardon for MGM Casino (March 25, 2025) https://consumerfed.org/news/blogs/pulling-back-the-curtain-on-the-ftc-s-corporatepardon-for-mgm-casino/
89 Federal Trade Commission, FTC Reopens and Sets Aside Rytr Final Order in Response to the Trump Administration's AI Action Plan (December 22, 2025) https://www.ftc.gov/news-events/news/pressreleases/2025/12/ftc-reopens-sets-aside-rytr-final-order-response-trump-administrations-ai-action-plan
90 Federal Trade Commission, FTC Seeks Public Comment on Policy Statement Addressing AI Accuracy (July 1, 2026), https://www.ftc.gov/news-events/news/press-releases/2026/07/ftc-seeks-public-comment-policystatement-addressing-ai-accuracy
91 See, e.g., White House Executive Office of the President, Winning the Race: America's AI Action Plan, July 2026 https://www.whitehouse.gov/wp-content/uploads/2025/07/Americas-AI-Action-Plan.pdf
* * *
* Congress should also provide more resources for enforcement at every level of government. State attorneys general, federal consumer protection agencies, banking regulators, and law enforcement offices need staff, technical expertise, and funding to pursue upstream actors, not merely chase individual scammers after victims have already lost money. Effective enforcement should include scrutiny of companies that provide voice-cloning tools, image-generation services, AI agents, payment systems, and platforms that repeatedly host and profit from scam content.
* Improved reporting and enforcement resources matter because speed is often the difference between recovery and irreversible loss. The FBI's Recovery Asset Team is one of the best existing tools the government has to fight elder fraud: when cases reach it quickly enough, the team can freeze roughly half of the money at risk.92 Of the more than 201,000 elder-fraud complaints in 2025, only 642 reached the team's freeze process; even though the FBI reported more than $7.7 billion in elder-fraud losses, less than half a percent was frozen.93 Congress should strengthen the reporting pipeline so more victims can reach recovery tools before the money disappears.
* Congress should use oversight to ensure that public education is treated as a supplement to accountability, not a substitute for it. Education around scam identification, prevention, and reporting is necessary, but it cannot be the centerpiece of the federal response when the core problem is an ecosystem that makes deception cheap, scalable, targeted, and profitable. A serious response should reduce scam delivery, improve recovery, strengthen agency capacity, and place responsibility on the companies best positioned to prevent harm. Furthermore, investigations should look at social media platforms and AI generation companies to find out more about what safeguards and moderation practices they employ.
There is, again, no silver bullet to stop scams - but passage of any one of these dozen policy recommendations that have already been introduced in one form or another is better than the status quo. You cannot climb Mt. Everest without taking the first steps. Taking on bad tech behavior doesn't ban any technologies or threaten truly innovative technologies.
E. Conclusion
The Committee has already shown that protecting older Americans from scams is a bipartisan priority. The concern, paired with the strong legislative proposals already on the table, needs to translate into legislative and oversight action: hold the companies that profit from and fuel the deception accountable, give enforcement agencies the tools they need to help people directly and make sure those are actually used well, protect personal data before it is weaponized, and standardize the current intimidating mess of scam reporting. It's also critical to increase attention on this issue in more media and communities around the country while offering up the ways to address it into successful political action. Industry convenings and self-regulation alone have failed to meet this problem - we need to follow on the momentum of how clear and bad the problem has gotten.
* * *
92 Yuksel Aydin, A three-step fix to halt the epidemic of elder fraud, The Washington Post (July 7, 2026), available at https://www.washingtonpost.com/opinions/2026/07/07/three-step-fix-halt-epidemic-elder-fraud/
93 Id.
* * *
CFA stands ready to help this Committee and its members advance real solutions that help Americans. Not every scam loss is a statistic, it is a life turned upside down. While there is no "kill switch" for all this bad behavior, the amount of continued Congressional inaction and unsuccessful action only hurts all Americans.
Thank you for the opportunity to testify today.
* * *
Original text here: https://www.aging.senate.gov/imo/media/doc/32adb490-b498-1617-26d8-a24c018babde/Testimony_Winters%2007.29.26_d40edb35-67cb-4d81-a692-887267acd303.pdf
Foundation for Government Accountability VP Ingram Testifies Before Senate Budget Committee
WASHINGTON, Aug. 20 -- The Senate Budget Committee released the following testimony by Jonathan Ingram, vice president of policy and research at the Foundation for Government Accountability, from an Aug. 4, 2026, hearing entitled "Medicaid: The Reality":
* * *
Chairman Johnson, Ranking Member Merkley, and members of the Committee, thank you for hosting this important hearing. I am Jonathan Ingram, the Vice President of Policy and Research at the Foundation for Government Accountability (FGA).
FGA has worked with policymakers across the country for many years on ways to crack down on waste, fraud, ... Show Full Article WASHINGTON, Aug. 20 -- The Senate Budget Committee released the following testimony by Jonathan Ingram, vice president of policy and research at the Foundation for Government Accountability, from an Aug. 4, 2026, hearing entitled "Medicaid: The Reality": * * * Chairman Johnson, Ranking Member Merkley, and members of the Committee, thank you for hosting this important hearing. I am Jonathan Ingram, the Vice President of Policy and Research at the Foundation for Government Accountability (FGA). FGA has worked with policymakers across the country for many years on ways to crack down on waste, fraud,and abuse in welfare programs. Nowhere is this fight more urgent than the nation's largest welfare program: Medicaid.
Overview
Medicaid enrollment and costs have spiraled out of control. In 2000, the Medicaid program had just 34 million enrollees and cost taxpayers $206 billion.1
Since then, enrollment has nearly tripled and spending has increased nearly fivefold, reaching $964 billion in 2024.2-4 Federal taxpayers have borne the brunt of this increased spending, with federal dollars covering almost 80 percent of the increase over the last decade.5
These vast increases in Medicaid enrollment and expenditures reflect a significant departure from the program's original intent to help the truly needy. ObamaCare expanded Medicaid to a new class of able-bodied adults, adding millions to the welfare rolls.6-8 Today, there are 34 million able-bodied adults on the program, a fivefold increase since 2000.9-11 Federal taxpayers now spend more to cover able-bodied adults through Medicaid than providing Medicaid to children, seniors, or individuals with disabilities.12
Despite several states declining to expand Medicaid under ObamaCare, nearly two-thirds of all able-bodied adults on the program are now enrolled through expansion.13 Nearly 90 percent of those expansion enrollees are childless adults.14 Worse yet, more than 62 percent of able-bodied adults on the program do not work at all.15
Higher enrollment and costs have directly translated into more opportunities for waste, fraud, and abuse.16 Without reform, the program was on track for more than $2 trillion in improper payments over the next decade.17
Encouragingly, many of the reforms contained in the One Big Beautiful Bill Act (OBBB) have begun to address these systemic challenges. Commonsense work requirements, program integrity measures, and efforts to limit state financing gimmicks will help stem the widespread abuse in the Medicaid program. However, given the vast extent of waste, fraud, and abuse in Medicaid, policymakers must consider additional reforms to refocus the program on its core purpose and preserve resources for the truly needy.
At least one in five Medicaid dollars is spent improperly Unfortunately, much of the increased spending in the Medicaid program over the last few decades has been driven by waste, fraud, and abuse. More than one in five Medicaid dollars is spent improperly, with virtually all improper payments driven by eligibility errors, administrative oversights, and outright fraud.18 Eligibility errors alone account for more than 80 percent of all improper payments.19
The only two complete Medicaid audit cycles that included full eligibility checks found improper payment rates of more than 25 percent.20 In some states, improper payments have exceeded 40 percent.21 For example, immediately prior to the pandemic, Ohio and Connecticut each had
improper payment rates of roughly 44 percent.22 Prior to those years, the Obama administration excluded eligibility checks from federal audits entirely.23-24
Although the Trump administration restarted these eligibility reviews in 2019, they were largely suspended again during the Biden administration. 25 As the Government Accountability Office explained, the official improper payment rate was artificially lowered due to "flexibilities granted to states during the COVID-19 public health emergency," which allowed states and CMS to use "relaxed requirements" to hide "payments that would have previously been determined to be improper."26 Even after the pandemic was over, the Biden administration continued to approve these flexibility waivers that artificially depressed improper payment rates.27
Furthermore, the managed care component of Medicaid improper payments is substantially understated. The federal audits capture whether or not states made correct capitation payments to managed care organizations, not whether those managed care organizations made appropriate payments to providers.28
As a result, the true extent of Medicaid improper payments is unknown. However, state and federal audits reveal widespread evidence of blatantly illegal instances of fraud as well as waste and abuse caused by bureaucrats' "legal" fraud-by-design schemes.
State and federal audits reveal countless examples of Medicaid fraud
State and federal audits confirm the magnitude of the Medicaid fraud crisis: Medicaid has enrolled dead people, prisoners, illegal aliens, criminals using stolen or fake identities, and millions of other ineligible individuals.29 Federal auditors found nearly 4.4 million ineligible and potentially ineligible enrollees on Medicaid in California alone.30 In Ohio, auditors determined that 62 percent of the state's expansion population was ineligible or potentially ineligible.31 New York experienced similar results, as auditors concluded that more than one million Medicaid enrollees were either ineligible or potentially ineligible.32 Audits performed in other states have flagged hundreds of thousands of ineligible and potentially ineligible enrollees.33 In a four-state review performed by the Office of the Inspector General, auditors estimated that roughly one-third of those states' combined 17.5 million Medicaid enrollees were ineligible or potentially ineligible.34
Audits have also identified tens of thousands of enrollees who were enrolled more than once in the same state--with some individuals having as many as seven open Medicaid cases at one time.35
Auditors also found hundreds of thousands of individuals who were enrolled in multiple states.36-37 A federal review of 47 states' Medicaid programs found every single reviewed state had enrollees who were also on other states' programs at the same time. 38 In some cases, individuals were
enrolled in as many as nine states' Medicaid programs at the same time.39 In 2025, CMS identified as many as 2.8 million individuals enrolled in two or more Medicaid managed care or ObamaCare exchange plans.40
In many cases, duplicate enrollment may result from identity fraud by illegal aliens or others.41 In Arkansas, more than 20,000 enrollees were reported to have "high-risk identities," including some with stolen or fraudulent Social Security numbers (SSNs). 42 Similarly, in New Jersey, auditors discovered more than 18,000 enrollees with fake or duplicative SSNs. 43 Making matters worse, auditors have uncovered hundreds of millions of dollars in Medicaid funding spent on deceased individuals, including individuals who had died as early as 1981.44-45 In some cases, audits identified millions of dollars spent on enrollees who had moved out of state, or never lived in the state at all.46 Fortunately, OBBB begins to crack down on some of this fraud by requiring states to share data with CMS to prevent duplicate enrollment, checking enrollees against death records, and instituting real penalties for eligibility errors above a certain threshold.47-50
Bureaucrats' fraud-by-design schemes are driving ineligible enrollment
Much of the Medicaid fraud crisis was caused by fraud-by-design schemes: policies intentionally designed by state and federal bureaucrats to maximize enrollment at all costs.
These policies have "legalized" fraud by dismantling eligibility verification infrastructure, reducing eligibility review frequency, adopting "passive" redetermination processes, and adopting self-attestation as the default eligibility standard. 51 - 52 Many states currently accept applicants' self-attestation for a variety of information, including income, household size, household composition, residency, and more.53 Nearly all states accept self-attestation for household composition despite having access to tax return information and other relevant sources, more than 40 states accept self-attestation of residency, and more than a dozen states accept self-attestation of income to some degree.54
Once accepting this information, states may not verify it until months later and sometimes not at all. A Louisiana audit, for example, found tens of thousands of ineligible individuals were allowed to enroll in the program because the state did not verify self-attested information on household size, composition, or certain types of income.55 Similarly, New Jersey auditors identified thousands of enrollees with unreported six-figure incomes, including some earning as much as $4.2 million per year.56
Although individuals are legally required to report changes in their circumstances that may affect eligibility, few do. An Illinois audit of the state's passive redetermination processes discovered that more than 93 percent of all eligibility errors resulted from enrollees reporting incorrect information or failing to report changes in their income, household composition, and more.57 New Jersey auditors identified a number of cases where individuals did not report changes as legally required, including individuals with wages nearly 15 times the eligibility threshold.58
This is particularly worrisome, given that 69 percent of Medicaid cases recently renewed were done through this passive or "ex parte" basis, and federal regulations require states to redetermine eligibility through this process first.59-60 In some states, virtually all recent renewals were conducted through this passive process. In North Carolina, for example, more than 99.5 percent of the state's 2.2 million recent renewals were conducted completely passively.61
State bureaucrats are already attempting to undermine the new work requirements adopted in OBBB through this same fraud-by-design scheme.62 Left-wing advocacy groups are preparing states to create new loopholes and gimmicks to exempt as many able-bodied adults from Medicaid work requirements as possible, primarily through eliminating verification through self-attestation. 63 Officials from at least 30 states recently announced that they would accept enrollees' self-attestation of medically frail status for exemption purposes if allowed by CMS.64 Several states also initiated litigation against CMS for an interim final rule that would somewhat limit their ability to use self-attestation for work requirement exemptions or compliance.65 Bureaucrats have also designed welfare expansions through "presumptive" eligibility determinations--a process whereby Medicaid allows hospitals to make temporary eligibility determinations before eligibility is verified by state agencies. 66 - 67 In a 2019 audit, the U.S. Department of Health and Human Services estimated that roughly 43 percent of sampled spending on presumptively eligible enrollees was improper.68 Data from state Medicaid agencies reveals that such improper payments could be even higher, with just 30 percent of individuals that hospitals determine "presumptively eligible" ultimately determined eligible for Medicaid by the state.69 This legalized fraudulent spending is never recouped.70
Bureaucrats have also created an on-ramp to federal welfare programs for illegal aliens, despite statutory restrictions.71 Under federal regulations, states must enroll individuals in Medicaid for a "reasonable opportunity period" of at least 90 days while it attempts to verify satisfactory immigration status.72 This has allowed illegal aliens to enroll in the program, despite clear federal prohibitions, and remain on the program for months or even years at a time while states ostensibly attempt to verify their status after enrollment.73-74 Roughly 70 percent of these "temporary" cases now extend beyond the 90-day federal standard.75 In some states, enrollees have remained in this "temporary" Medicaid coverage for as long as 16 years without ever having their citizenship or immigration status verified.76
This Medicaid on-ramp was supercharged under the Biden administration, with the number of illegal aliens enrolled in the program through this loophole skyrocketing by more than 400 percent--even before the Biden administration finalized new regulations to block states from limiting its use.77
Bureaucrats have also begun importing eligibility errors from other welfare programs into Medicaid.78 In 2013, for example, the Obama administration issued guidance encouraging states to bypass important eligibility verification steps by enrolling individuals into Medicaid based on their food stamp eligibility.79 CMS directed states to use this method to seek out and enroll ineligible individuals--all in the name of administrative efficiency.80-81 At the time, CMS was already aware that many of these individuals are "income-ineligible for Medicaid," yet guided states to "facilitate their renewal, without requiring them to complete a new application."82 Although this strategy was initially meant to be temporary due to massive enrollment surges associated with ObamaCare expansion, the Obama administration made it a permanent option for states in 2015./83-84
This guidance encouraged states to adopt integrated eligibility approaches that use a single point of entry for multiple welfare programs. Not only does this increase Medicaid enrollment, but it also increases the likelihood of errors: If a state makes an initial incorrect determination when enrolling an individual in food stamps, this mistake is imported directly into Medicaid automatically without independent verification.85-86 The more welfare programs that states integrate in this way, the higher the risk and cost of fraud.87
A network of advocacy organizations, funded in part by tens of millions of dollars in federal grants, has promoted these "One Door" integrated eligibility systems that consolidate enrollment across multiple welfare programs into a single process. 88 Eligibility errors in one program propagate automatically across all integrated programs, meaning a single act of fraud or misrepresentation cascades through Medicaid, food stamps, housing, and childcare subsidies simultaneously.89
The predictable result: millions of ineligible individuals on the program and billions in improper payments. Until policymakers limit the widespread use of self-attestation and other fraud by design schemes, this crisis will persist.
Bureaucrats' fraud-by-design schemes are driving provider fraud
Bureaucrats' fraud-by-design schemes have not only led to millions of ineligible enrollees on the Medicaid program, they have paved the way for rampant provider fraud through lax verification of providers and continuing to pay providers long after learning of credible allegations of fraud.
Federal law requires all participating Medicaid providers to undergo revalidation of their enrollment at regular intervals.90 States have frequently failed to comply with those requirements, conducting revalidation on extended timelines, performing pro forma reviews, or failing to remove providers who no longer meet enrollment standards.91-94 More than 14 percent of states' total fee-for-service Medicaid spending improperly flows to unenrolled providers, unlicensed providers, providers that have not been appropriately screened, and providers with missing information.95-98
Data from state Medicaid agencies further reveals how poorly states have followed these federal requirements. Illinois, for example, did not revalidate a single provider between March 2021 and February 2024.99 According to state officials, nearly 142,000 providers have not been revalidated within the last five years, with some providers having gone nearly a decade since their last revalidation.100 In some states, providers have gone as long as 17 years without revalidation.101 CMS recently forced Minnesota to revalidate nearly 6,000 providers in 13 high-risk service categories.102 The results are astounding: more than 62 percent of those providers were disenrolled after failing background checks, site visits, or refusing to provide accurate and complete information.103
Even when they receive credible allegations of fraud, states often forgo enforcement. Under federal law, state Medicaid agencies must suspend all payments to a provider upon determining there is a credible allegation of fraud with a pending investigation.104
Allegations are considered "credible" long before proven beyond a reasonable doubt; states must treat allegations as credible if they "have indicia of reliability," meaning that there are "signs, indications or circumstances that seem to point to the existence of fraud."105-106
This is one of the most powerful program integrity tools available and one of the most underused.
Federal audits have uncovered that states routinely fail to suspend payments even when clear fraud indicators are present.107 New York, for example, issued "good cause" waivers to allow nearly 96 percent of providers with credible allegations of fraud to continue receiving Medicaid payments.108 Likewise, Massachusetts suspended payments for fewer than 10 percent of providers with credible allegations of fraud levied against them.109
With little enforcement by the states, it is no surprise that provider fraud has skyrocketed in recent years.
Medicaid money laundering has become widespread
If bureaucrats' fraud-by-design schemes were not bad enough, states have engaged in other types of "legal" fraud, primarily through Medicaid money laundering--the deliberate use of financing gimmicks to shift state costs on to federal taxpayers.110
Provider taxes are one of the most well-known examples of Medicaid money laundering, with nearly every state taking advantage of this gimmick.111 Under provider tax arrangements, hospitals and other providers are charged a tax or fee by the state, which is used to fund the "state share" of Medicaid spending to those same providers.112
Over the years, states have used provider taxes to boost their effective federal matching rate by an average of 5.4 points--and by as much as 12 points in some states--beyond what they are legally entitled to.113 For some supplemental payment programs within Medicaid, the provider tax scheme lets states raise their effective matching rate by a whopping 32 percentage points.114 To put this in perspective, a 5.4 point increase in the federal matching rate equates to roughly $50 billion in state costs shifted onto federal taxpayers every year.115 This explosion in money laundering is readily apparent in the share of non-general fund state spending on Medicaid, which has increased by an astonishing 70 percent since 2018 alone.116
In recent years, states have gotten even more creative with their money laundering schemes.
California and New York, for example, pioneered massive new "taxes" on Medicaid managed care plans. 117 Despite a federal requirement that such taxes be uniform, California structured its managed care tax to collect roughly $12.7 billion per year from Medicaid plans, compared to just $27 million from commercial plans.118 New York's managed care tax followed a similar pattern: $2.7 billion per year collected from Medicaid plans, compared to just $76 million per year from commercial plans.119 Because the entire cost of these taxes are built into the capitated rates paid to Medicaid managed care companies, this effectively serves as a direct tax on the federal government.120
States then use this "state share" to draw down even more federal funding from the Medicaid program. As a result, the taxed providers and plans receive back what they paid in taxes, while state policymakers generate a nearly endless stream of revenue from federal taxpayers.121 State officials have readily admitted that these provider tax schemes are used to increase Medicaid spending "without risk of the state needing to contribute" and "solely to offset General Fund spending" on Medicaid.122
These schemes are most glaring for ObamaCare expansion enrollees, where states often use the from money laundering to shift the entire cost of expansion onto federal taxpayers.123 States can also use the proceeds to fund special projects for which federal funding is specifically prohibited, such as coverage for illegal aliens.124
These money laundering schemes have been further augmented by other schemes, such as state-directed payments. These payment schemes, largely financed through provider tax money laundering schemes, enable states to direct managed care companies to pay politically connected providers excessively high supplemental payments. 125 But unlike other types of supplemental payments, state-directed payments were not subject to a cap at Medicare rates.126
Under President Biden, CMS finalized a rule authorizing states to use state-directed payments to increase provider rates to the average commercial rate--roughly 2.5 times higher than typical Medicare rates.127 It is no surprise that from 2020 to 2024, SDPs more than quadrupled.128
Encouragingly, OBBB implemented both limitations on provider taxes and state-directed payments.
OBBB closed the loophole that allowed states to tax Medicaid managed care plans at highly inflated rates to maximize revenue.129 OBBB also barred any new or increased provider taxes and phased down the "safe harbor" threshold for existing provider taxes from six percent of net patient revenue to 3.5 percent of net patient revenue in Medicaid expansion states.130 OBBB also capped new state-directed payments at Medicare rates in expansion states and 10 percent above Medicare rates in non-expansion states, while phasing down existing state-directed payments until reaching those new thresholds.131 CMS is now taking the initial regulatory steps to implement these policies.132-134 ObamaCare expansion's match rate encourages Medicaid fraud
ObamaCare's perverse funding formula encourages and enables fraud. For traditional Medicaid populations--like children, seniors, and individuals with disabilities--federal Medicaid matching funds are set based on states' per capita income, with rates currently ranging from 50 percent to 77 percent.135-136 Higher-income states receive a lower match rate, while lower-income states receive higher rates, though some jurisdictions like Washington, D.C. receive an artificially high rate set in statute.137-138
ObamaCare's Medicaid expansion, however, is fixed at 90 percent for this new class of able-bodied adults.139 This means that federal taxpayers provide $9 for every dollar states spend on able-bodied, childless adults, but on average provide only $1.39 for every dollar states spend on severely disabled individuals or frail low-income seniors.140
This creates a perverse incentive for states looking to constrain rapidly growing Medicaid costs. A state seeking $1 million in state-funded Medicaid savings would need to reduce total Medicaid costs by roughly $2.4 million if they targeted traditional enrollees like seniors or individuals with disabilities.141 But if policymakers sought to find the same state savings among able-bodied adults in the ObamaCare expansion, they would need to reduce total Medicaid costs by $10 million.142 The funding formula also creates no incentive for states to stop fraud committed by ObamaCare expansion enrollees or providers serving those enrollees. This is especially true in states that use provider taxes or other financing gimmicks to render the state match for expansion effectively zero.
States have treated ObamaCare expansion as an economic stimulus to draw down "free" federal dollars and shift existing costs onto federal taxpayers.143-146 Under this view, every dollar of fraud financed through ObamaCare expansion creates an economic "multiplier effect" that generates even more economic activity and state revenues. As such, many bureaucrats view investigating and stopping fraud in this eligibility category as budgetary malpractice. It should come as no surprise that Medicaid expansion spending is roughly 32 percent more likely to be improper than other types of Medicaid spending.147
If that were not bad enough, ObamaCare's perverse funding formula also encourages state officials to commit fraud themselves. State bureaucrats have defaulted to categorizing enrollees into ObamaCare expansion, even when they qualify under a different eligibility category, in order to claim ObamaCare's enhanced matching funds.148
Under federal law, ObamaCare's enhanced funding is only available to individuals who are not eligible under a different eligibility category. 149 But numerous states have improperly claimed "savings" by shifting existing enrollees into ObamaCare expansion.150-151 Some states even instruct those conducting eligibility determinations to evaluate eligibility under ObamaCare expansion before evaluating eligibility under other pathways, routing as many enrollees through the expansion as possible to maximize federal dollars.152
Policymakers can close loopholes to limit waste, fraud, and abuse--illegal or otherwise Medicaid waste, fraud, and abuse is omnipresent. With sky-high improper payment rates and frightening levels of fraud found in state-level audits, the Medicaid program has become a magnet for erroneous expenditures.
Unfortunately, far too much of this does not fall in the category of just bad-actor providers or foreign scam artists. In many cases, the responsibility lies squarely at the feet of bureaucrats creating and promoting a fraud-by-design framework. These bureaucrats have designed a system that not only permits fraud to run rampant, but rewards it. Whether intentional or not, these policy decisions have created the broken status quo today that has left the Medicaid program in shambles.
Thankfully, Congress has an opportunity to close the door to waste, fraud, and abuse by:
* Prohibiting self-attestation for key eligibility factors;
* Requiring identity verification and frequent post-enrollment cross-checks;
* Mandating more frequent eligibility reviews for all able-bodied adults;
* Implementing more frequent and more robust provider revalidation standards;
* Verifying immigration status prior to Medicaid enrollment;
* Expanding work requirements to all able-bodied adults without young children;
* Further limiting states' ability to use Medicaid money laundering schemes;
* Unwinding ObamaCare's perverse funding preference for able-bodied adults;
* Holding hospitals accountable for incorrect presumptive eligibility determinations;
* And much more.
Through these and other commonsense Medicaid reforms, policymakers can refocus Medicaid into a sustainable program that puts the truly needy first, rejects the fraud-by-design mantra, and holds bad actors accountable instead of letting them flourish with taxpayer dollars.
* * *
References
1 Centers for Medicare and Medicaid Services, "2018 actuarial report on the financial outlook for Medicaid," U.S. Department of Health and Human Services (2018), https://www.cms.gov/files/document/2018-report.pdf.
2 Author's calculations based upon data provided by the U.S. Department of Health and Human Services on total Medicaid expenditures in fiscal year 2024. See, e.g., Centers for Medicare and Medicaid Services, "Financial management report for fiscal year 2024," U.S. Department of Health and Human Services (2025), https://www.medicaid.gov/medicaid/financial-management/downloads/financial-management-report-fy2024.zip.
3 Enrollment peaked at more than 100 million in fiscal year 2023. See, e.g., Centers for Medicare and Medicaid Services, "April - June 2023 Medicaid MBES enrollment," U.S. Department of Health and Human Services (2024), https://www.medicaid.gov/media/national-medicaid-chip-program-information/downloads/apr-jun-2023-medicaidmbes-enrollment.xlsx.
4 Enrollment remains nearly 83 million, even after unwinding from the continuous enrollment requirements put in place during the COVID-19 public health emergency. See, e.g., Centers for Medicare and Medicaid Services, "April - June 2025 Medicaid MBES enrollment," U.S. Department of Health and Human Services (2026), https://www.medicaid.gov/media/national-medicaid-chip-program-information/downloads/apr-jun-2025-medicaidmbes-enrollment.xlsx.
5 Jonathan Bain et al., "How federal lawmakers can combat waste, fraud, and abuse in Medicaid," Foundation for Government Accountability (2025), https://thefga.org/research/federal-lawmakers-can-combat-waste-fraud-and-abusein-medicaid.
6 Michael Greibrok and Jonathan Ingram, "Medicaid work requirements would help move millions of able-bodied adults from welfare to work," Foundation for Government Accountability (2025), https://thefga.org/research/medicaid-workrequirements-from-welfare-to-work.
7 Public Law 111-148 (2010), https://www.govinfo.gov/content/pkg/PLAW-111publ148/pdf/PLAW-111publ148.pdf.
8 Public Law 111-152 (2010), https://www.govinfo.gov/content/pkg/PLAW-111publ152/pdf/PLAW-111publ152.pdf.
9 Author's calculations based upon data provided by the U.S. Department of Health and Human Services on the number of non-disabled adults enrolled in Medicaid in fiscal year 2000 and the Congressional Budget Office on the number of non-disabled adults enrolled in fiscal year 2025.
10 There were 6.9 million able-bodied adults on Medicaid in fiscal year 2000. See, e.g., Centers for Medicare and Medicaid Services, "2018 actuarial report on the financial outlook for Medicaid," U.S. Department of Health and Human Services (2018), https://www.cms.gov/files/document/2018-report.pdf.
11 There were 34 million able-bodied adults on Medicaid in fiscal year 2025, including 17 million ObamaCare expansion enrollees and 17 million non-expansion adults. See, e.g., Congressional Budget Office, "February 2026 baseline projections: Medicaid," Congressional Budget Office (2026), https://www.cbo.gov/system/files/2026-02/51301-2026-02medicaid.pdf.
12 Author's calculations based upon data provided by the Congressional Budget Office on Medicaid expenditures in fiscal year 2025, disaggregated by eligibility category. See, e.g., Congressional Budget Office, "February 2026 baseline projections: Medicaid," Congressional Budget Office (2026), https://www.cbo.gov/system/files/2026-02/51301-2026-02medicaid.pdf.
13 Author's calculations based upon data provided by the Medicaid and CHIP Payment and Access Commission on the number of non-disabled adults enrolled in full-benefit Medicaid in fiscal year 2023, disaggregated by eligibility category. See, e.g., Medicaid and CHIP Payment and Access Commission, "MACStats: Medicaid full-year equivalent enrollment by state and eligibility group, fiscal year 2023," Medicaid and CHIP Payment and Access Commission (2026), https://www.macpac.gov/wp-content/uploads/2026/01/EXHIBIT-15.-Medicaid-Full-Year-Equivalent-Enrollment-by-Stateand-Eligibility-Group-FY-2023.pdf
14 Centers for Medicare and Medicaid Services, "Medicaid program: Community engagement requirement for certain individuals," U.S. Department of Health and Human Services (2026), https://www.govinfo.gov/content/pkg/FR-2026-0603/pdf/2026-11094.pdf.
15 Michael Greibrok and Jonathan Ingram, "Medicaid work requirements would help move millions of able-bodied adults from welfare to work," Foundation for Government Accountability (2025), https://thefga.org/research/medicaid-workrequirements-from-welfare-to-work.
16 Jonathan Bain et al., "How federal lawmakers can combat waste, fraud, and abuse in Medicaid," Foundation for Government Accountability (2025), https://thefga.org/research/federal-lawmakers-can-combat-waste-fraud-and-abusein-medicaid.
17 Ibid.
18 Ibid.
19 Ibid.
20 Brian Blase and Rachel Greszler, "Medicaid's true improper payments double those reported," Economic Policy Innovation Center and Paragon Health Institute (2025), https://epicforamerica.org/wpcontent/uploads/2025/02/Medicaids_True_Improper_Payments_FOR-RELEASE_V3.pdf.
21 Centers for Medicare and Medicaid Services, "2019 Medicaid and CHIP supplemental improper payment data," U.S. Department of Health and Human Services (2019), https://www.cms.gov/files/document/2019-medicaid-chipsupplemental-improper-payment-data.pdf-1.
22 Ibid.
23 In 2014, the Obama administration announced it was suspending the eligibility component of the payment error rate measurement, starting in fiscal year 2015. See, e.g., Centers for Medicare and Medicaid Services, "Payment error rate measurement (PERM): FY 2015 cycle kick-off," U.S. Department of Health and Human Services (2014), https://www.cms.gov/research-statistics-data-and-systems/monitoring-programs/Medicaid-and-chipcompliance/perm/downloads/fy2015permcyclekickoff.pdf.
24 Brian Blase and Rachel Greszler, "Medicaid's true improper payments double those reported," Economic Policy Innovation Center and Paragon Health Institute (2025), https://paragoninstitute.org/medicaid/medicaids-true-improperpayments-likely-double-those-reported-by-cms/?nab=0.
25 Ibid.
26 Orice Williams Brown, "Significant improvements are needed to address improper payments and fraud," Government Accountability Office (2024), https://www.gao.gov/assets/gao-24-107660.pdf.
27 Centers for Medicare and Medicaid Services, "COVID-19 PHE Unwinding Section 1902(e)(14)(A) Waiver Approvals," U.S. Department of Health and Human Services (2025), https://www.medicaid.gov/resources-for-states/coronavirus-disease2019-covid-19/unwinding-and-returning-regular-operations-after-covid-19/covid-19-phe-unwinding-section-1902e14awaiver-approvals.
28 Chris Medrano and Brian Blase, "Medicaid waste, fraud, and abuse: Why CMS's improper payment rate can't be trusted," Paragon Health Institute (2026), https://paragoninstitute.org/wpcontent/uploads/securepdfs/2026/04/Why_CMS_Improper_Payment_Rate_Cant_Be_Trusted_RELEASE_V2.pdf.
29 Jonathan Bain et al., "How federal lawmakers can combat waste, fraud, and abuse in Medicaid," Foundation for Government Accountability (2025), https://thefga.org/research/federal-lawmakers-can-combat-waste-fraud-and-abusein-medicaid.
30 Ibid.
31 Ibid.
32 Ibid.
33 Ibid.
34 Ibid.
35 Ibid.
36 Ibid.
37 Jonathan Bain, "Safeguarding the safety net: Solutions to Medicaid's program integrity crisis," Foundation for Government Accountability (2025), https://thefga.org/research/safeguarding-the-safety-net-solutions-to-medicaidintegrity-crisis.
38 Jonathan Bain et al., "How federal lawmakers can combat waste, fraud, and abuse in Medicaid," Foundation for Government Accountability (2025), https://thefga.org/research/federal-lawmakers-can-combat-waste-fraud-and-abusein-medicaid.
39 Keith Faber, "Ohio Department of Medicaid: The cost of concurrent enrollment," Ohio Auditor of State (2024), https://oig.hhs.gov/documents/audit/9960/A-09-23-02004.pdf.
40 Centers for Medicare and Medicaid Services, "CMS finds 2.8 million Americans potentially enrolled in two or more Medicaid/ACA exchange plans," U.S. Department of Health and Human Services (2025), https://www.cms.gov/newsroom/press-releases/cms-finds-2-8-million-americans-potentially-enrolled-two-or-moremedicaid-aca-exchange-plans.
41 Jonathan Ingram and Hayden Dublois, "The loopholes fueling illegal alien Medicaid and ObamaCare benefits," Foundation for Government Accountability (2025), https://thefga.org/research/loopholes-fueling-illegal-alien-medicaidobamacare-benefits.
42 Jonathan Bain et al., "How federal lawmakers can combat waste, fraud, and abuse in Medicaid," Foundation for Government Accountability (2025), https://thefga.org/research/federal-lawmakers-can-combat-waste-fraud-and-abusein-medicaid.
43 Ibid.
44 Ibid.
45 Jonathan Bain, "The welfare walking dead: How hundreds of millions in Medicaid payments were made on behalf of deceased enrollees," Foundation for Government Accountability (2025), https://thefga.org/research/the-welfare-walkingdead-medicaid-benefits-deceased-enrollees.
46 Jonathan Bain et al., "How federal lawmakers can combat waste, fraud, and abuse in Medicaid," Foundation for Government Accountability (2025), https://thefga.org/research/federal-lawmakers-can-combat-waste-fraud-and-abusein-medicaid.
47 Public Law 119-21 (2025), https://www.congress.gov/119/plaws/publ21/PLAW-119publ21.pdf.
48 Jonathan Bain, "The welfare walking dead: How hundreds of millions in Medicaid payments were made on behalf of deceased enrollees," Foundation for Government Accountability (2025), https://thefga.org/research/the-welfare-walkingdead-medicaid-benefits-deceased-enrollees.
49 Jonathan Bain, "Safeguarding the safety net: Solutions to Medicaid's program integrity crisis," Foundation for Government Accountability (2025), https://thefga.org/research/safeguarding-the-safety-net-solutions-to-medicaidintegrity-crisis.
50 Michael Greibrok, "States have the tools necessary to reduce their Medicaid improper payment rates and avoid increased costs," Foundation for Government Accountability (2025), https://thefga.org/research/stateshavetoolstoreducemedicaidimproperpaymentrates.
51 Victoria Eardley and Jonathan Ingram, "How the Trump administration can crack down on Medicaid fraud," Foundation for Government Accountability (2018), https://thefga.org/research/medicaid-fraud-reform-trump-administration.
52 Jonathan Bain and Sam Adolphsen, "Maximize enrollment, weaken program integrity: How the Biden administration's proposed Medicaid rule would decimate an already broken program," Foundation for Government Accountability (2022), https://thefga.org/research/maximize-enrollment-weaken-program-integrity.
53 Jonathan Ingram, "Manage effectively: Make Medicaid more accountable," Paragon Health Institute (2021), https://paragoninstitute.org/wp-content/uploads/2023/12/dont-wait-for-washington.pdf.
54 Ibid.
55 Medicaid Audit Unit, "Medicaid eligibility: Modified Adjusted Gross Income determination process," Louisiana Legislative Auditor (2018), https://www.lla.la.gov/PublicReports.nsf/0C8153D09184378186258361005A0F27/$FILE/summary0001B0AB.pdf.
56 Office of the State Auditor, "NJ FamilyCare eligibility determinations," New Jersey Office of Legislative Services (2018), https://pub.njleg.state.nj.us/publications/auditor/2018/544016.pdf.
57 Office of Inspector General, "FFY09 MEQC pilot project passive redeterminations," Illinois Department of Healthcare and Family Services (2010), https://hfs.illinois.gov/content/dam/soi/en/web/hfs/oig/documents/passiveanalysis092910.pdf.
58 Office of the State Auditor, "NJ FamilyCare eligibility determinations," New Jersey Office of Legislative Services (2018), https://pub.njleg.state.nj.us/publications/auditor/2018/544016.pdf.
59 Author's calculations based upon data provided by the U.S. Department of Health and Human Services on the share of individuals renewed between March 2023 and July 2024 on an ex parte basis as a share of total individuals renewed. See, e.g., Centers for Medicare and Medicaid Services, "Medicaid and CHIP national summary of renewal outcomes: July 2024 and national summary to date," U.S. Department of Health and Human Services (2024), https://www.medicaid.gov/resources-for-states/downloads/july-2024-national-summary-renewal-outcomes.pdf.
60 42 C.F.R. Sec. 435.916 (2025), https://www.govinfo.gov/content/pkg/CFR-2025-title42-vol4/pdf/CFR-2025-title42-vol4sec435-916.pdf.
61 Author's calculations based upon data provided by the U.S. Department of Health and Human Services on the share of individuals renewed between March 2023 and July 2024 on an ex parte basis as a share of total individuals renewed. See, e.g., Centers for Medicare and Medicaid Services, "National summary of outcomes of Medicaid and CHIP related renewals: March 2023 - July 2024," U.S. Department of Health and Human Services (2024), https://www.medicaid.gov/resources-for-states/downloads/july-2024-national-summary-renewal-outcomes.xlsx.
62 Jonathan Ingram et al., "Comment on CMS-2026-2047," FGA Action (2026), https://fgaaction.org/wpcontent/uploads/2026/06/Comment-on-CMS-2026-2047.pdf.
63 Ibid.
64 Ibid.
65 Massachusetts v. Oz, Motion for preliminary injunction, Case No. 26-12962 (D. Mass. 2026).
66 42 CFR Sec. 435.1110 (2025), https://www.govinfo.gov/content/pkg/CFR-2025-title42-vol4/pdf/CFR-2025-title42-vol4sec435-1110.pdf.
67 Sam Adolphsen and Jonathan Bain, "Eligible for welfare until proven otherwise: How hospital presumptive eligibility pours gasoline on the fire of Medicaid waste, fraud, and abuse," Foundation for Government Accountability (2020), https://thefga.org/research/hospital-presumptive-eligibility.
68 Centers for Medicare and Medicaid Services, "2019 Medicaid and CHIP supplemental improper payment data," U.S. Department of Health and Human Services (2019), https://www.cms.gov/files/document/2019-medicaid-chipsupplemental-improper-payment-data.pdf-1.
69 Sam Adolphsen and Jonathan Bain, "Eligible for welfare until proven otherwise: How hospital presumptive eligibility pours gasoline on the fire of Medicaid waste, fraud, and abuse," Foundation for Government Accountability (2020), https://thefga.org/research/hospital-presumptive-eligibility.
70 Centers for Medicare and Medicaid Services, "Medicaid and CHIP FAQs: Implementing hospital presumptive eligibility programs," U.S. Department of Health and Human Services (2014), https://www.medicaid.gov/state-resource-center/faqmedicaid-and-chip-affordable-care-act-implementation/downloads/faqs-by-topic-hospital-pe-01-23-14.pdf.
71 Jonathan Ingram and Hayden Dublois, "The loopholes fueling illegal alien Medicaid and ObamaCare benefits," Foundation for Government Accountability (2025), https://thefga.org/research/loopholes-fueling-illegal-alien-medicaidobamacare-benefits.
72 42 C.F.R. Sec. 435.956 (2025), https://www.govinfo.gov/content/pkg/CFR-2025-title42-vol4/pdf/CFR-2025-title42-vol4sec435-956.pdf.
73 Jonathan Ingram and Hayden Dublois, "The loopholes fueling illegal alien Medicaid and ObamaCare benefits," Foundation for Government Accountability (2025), https://thefga.org/research/loopholes-fueling-illegal-alien-medicaidobamacare-benefits.
74 Hayden Dublois and Addison Scherler, "How Congress can stop states from diverting Medicaid resources to illegal aliens," Foundation for Government Accountability (2025), https://thefga.org/research/stop-states-from-divertingmedicaid-resources-to-illegal-aliens.
75 Hayden Dublois and Addison Scherler, "How Congress can stop states from diverting Medicaid resources to illegal aliens," Foundation for Government Accountability (2025), https://thefga.org/research/stop-states-from-divertingmedicaid-resources-to-illegal-aliens.
76 Jonathan Ingram, "The Medi-Cal fraud loophole Gavin Newsom doesn't want you to know about," New York Post (2026), https://nypost.com/2026/05/02/opinion/the-medi-cal-fraud-loophole-gavin-newsom-doesnt-want-you-to-knowabout.
77 Hayden Dublois and Addison Scherler, "How Congress can stop states from diverting Medicaid resources to illegal aliens," Foundation for Government Accountability (2025), https://thefga.org/research/stop-states-from-divertingmedicaid-resources-to-illegal-aliens.
78 Jonathan Ingram and Hayden Dublois, "States should close the door on welfare fraud," Foundation for Government Accountability (2026), https://thefga.org/research/states-should-close-the-door-on-welfare-fraud.
79 Centers for Medicare and Medicaid Services, "Facilitating Medicaid and CHIP enrollment and renewal in 2014," U.S. Department of Health and Human Services (2013), https://www.medicaid.gov/federal-policyguidance/downloads/sho13-003.pdf.
80 Ibid.
81 Centers for Medicare and Medicaid Services, "Policy options for using SNAP to determine Medicaid eligibility and an update on targeted enrollment strategies," U.S. Department of Health and Human Services (2015), https://www.medicaid.gov/federal-policy-guidance/downloads/sho-15-001.pdf.
82 Ibid.
83 Centers for Medicare and Medicaid Services, "Facilitating Medicaid and CHIP enrollment and renewal in 2014," U.S. Department of Health and Human Services (2013), https://www.medicaid.gov/federal-policyguidance/downloads/sho13-003.pdf.
84 Centers for Medicare and Medicaid Services, "Policy options for using SNAP to determine Medicaid eligibility and an update on targeted enrollment strategies," U.S. Department of Health and Human Services (2015), https://www.medicaid.gov/federal-policy-guidance/downloads/sho-15-001.pdf.
85 Victoria Eardley and Jonathan Ingram, "The case for ending auto-enrollment in Medicaid," Foundation for Government Accountability (2019), https://thefga.org/research/ending-medicaid-auto-enrollment.
86 Jonathan Ingram and Hayden Dublois, "States should close the door on welfare fraud," Foundation for Government Accountability (2026), https://thefga.org/research/states-should-close-the-door-on-welfare-fraud.
87 Ibid.
88 Ibid.
89 Ibid.
90 42 C.F.R. Sec. 455.414 (2025), https://www.govinfo.gov/content/pkg/CFR-2025-title42-vol4/pdf/CFR-2025-title42-vol4sec455-414.pdf.
91 Office of Inspector General, "Medicaid enhanced provider enrollment screenings have not been fully implemented," U.S. Department of Health and Human Services (2016), https://oig.hhs.gov/documents/evaluation/2915/OEI-05-1300520-Complete%20Report.pdf.
92 Carolyn L. Yocom, "Medicaid providers: CMS oversight should ensure state implementation of screening and enrollment requirements," Government Accountability Office (2019), https://www.gao.gov/assets/gao-20-8.pdf.
93 Gene L. Dodaro, "Medicare and Medicaid: Additional actions needed to enhance program integrity and save billions," Government Accountability Office (2024), https://www.gao.gov/assets/gao-24-107487.pdf.
94 Michelle B. Rosenberg, "Medicaid program integrity: Opportunities exist for CMS to strengthen use of state auditor findings and collaboration," Government Accountability Office (2023), https://www.gao.gov/assets/gao-23-105881.pdf.
95 Author's calculations based upon data provided by the U.S. Department of Health and Human Services on the share of fee-for-service Medicaid spending in the payment error rate measurement reporting years 2019, 2020, and 2021 that were improper due to provider information or enrollment errors, coded as DP10 errors.
96 In reporting year 2019, DP10 errors totaled $24 billion out of $167 billion in total fee-for-service claims. See, e.g., Centers for Medicare and Medicaid Services, "2019 Medicaid and CHIP supplemental improper payment data," U.S. Department of Health and Human Services (2019), https://www.cms.gov/files/document/2019-medicaid-chipsupplemental-improper-payment-data.pdf-1.
97 In reporting year 2020, DP10 errors totaled $30 billion out of $181 billion in total fee-for-service claims. See, e.g., Centers for Medicare and Medicaid Services, "2020 Medicaid and CHIP supplemental improper payment data," U.S. Department of Health and Human Services (2020), https://www.cms.gov/files/document/2020-medicaid-chipsupplemental-improper-payment-data.pdf.
98 In reporting year 2021, DP10 errors totaled $24 billion out of $198 billion in total fee-for-service claims. See, e.g., Centers for Medicare and Medicaid Services, "2021 Medicaid and CHIP supplemental improper payment data," U.S. Department of Health and Human Services (2021), https://www.cms.gov/files/document/2021-medicaid-chipsupplemental-improper-payment-data.pdf-1.
99 Author's calculations based upon data provided by the Illinois Department of Healthcare and Family Services on the number of providers, disaggregated by revalidation date.
100 Ibid.
101 Author's calculations based upon data provided by state Medicaid agencies on the number of providers, disaggregated by revalidation date.
102 John M. Connolly, "Corrective action plan for program integrity update," Minnesota Department of Human Services (2026), https://mn.gov/dhs/assets/2026-01-30_cap-response_final_redacted_tcm1053-728931.pdf.
103 Health Care Administration, "Minnesota revalidate 2026 overview," Minnesota Department of Human Services (2026), https://mn.gov/dhs/assets/one-pager-mn-revalidate-2026_tcm1053-751966.pdf.
104 42 C.F.R. Sec. 455.23 (2025), https://www.govinfo.gov/content/pkg/CFR-2025-title42-vol4/pdf/CFR-2025-title42-vol4sec455-23.pdf.
105 42 C.F.R. Sec. 455.2 (2025), https://www.govinfo.gov/content/pkg/CFR-2025-title42-vol4/pdf/CFR-2025-title42-vol4sec455-2.pdf.
106 General of Medicaid Services, "What is a credible allegation of fraud?" Utah Office of Inspector General (2017), https://oig.utah.gov/2017/08/17/what-is-a-credible-allegation-of-fraud.
107 Office of Inspector General, "Challenges appear to limit states' use of Medicaid payment suspensions," U.S. Department of Health and Human Services (2017), https://oig.hhs.gov/documents/evaluation/3126/OEI-09-14-00020Complete%20Report.pdf.
108 Ibid.
109 Ibid.
110 Liesel Crocker, "How Congress Can Put a Stop to States' Provider Tax Schemes in Medicaid and Save Billions," Foundation for Government Accountability (2025), https://thefga.org/research/congress-can-put-stop-states-providertax-schemes-medicaid.
111 Ibid.
112 Ibid.
113 Ibid.
114 Ibid.
115 Author's calculations based upon data provided by the U.S. Department of Health and Human Services on total Medicaid expenditures in fiscal year 2024, disaggregated by source of funding. See, e.g., Centers for Medicare and Medicaid Services, "Financial management report for fiscal year 2024," U.S. Department of Health and Human Services (2025), https://www.medicaid.gov/medicaid/financial-management/downloads/financial-management-report-fy2024.zip.
116 Liesel Crocker, "How Congress Can Put a Stop to States' Provider Tax Schemes in Medicaid and Save Billions," Foundation for Government Accountability (2025), https://thefga.org/research/congress-can-put-stop-states-providertax-schemes-medicaid.
117 Ibid.
118 Ibid.
119 Ibid.
120 Ibid.
121 Ibid.
122 Ibid.
123 Ibid.
124 Ibid.
125 Paige Terryberry, "States must implement new limits on state-directed payment schemes," Foundation for Government Accountability (2025), https://thefga.org/research/state-directedpaymentschemes.
126 Ibid.
127 Ibid.
128 Ibid.
129 Public Law 119-21 (2025), https://www.congress.gov/119/plaws/publ21/PLAW-119publ21.pdf.
130 Ibid.
131 Ibid.
132 Centers for Medicare and Medicaid Services, "Medicaid Program; Preserving Medicaid Funding for Vulnerable Populations-Closing a Health Care-Related Tax Loophole," U.S. Department of Health and Human Services (2026), https://www.federalregister.gov/documents/2026/02/02/2026-02040/medicaid-program-preserving-medicaid-fundingfor-vulnerable-populations-closing-a-health.
133 Centers for Medicare and Medicaid Services, "Medicaid Program; Amending the Indirect Hold Harmless Threshold of Health Care-Related Taxes," U.S. Department of Health and Human Services (2026), https://www.federalregister.gov/documents/2026/07/23/2026-14897/medicaid-program-amending-the-indirect-holdharmless-threshold-of-health-care-related-taxes.
134 Centers for Medicare and Medicaid Services, "Medicaid Program; Medicaid Managed Care State Directed Payments and Medicaid Fee-for-Service Targeted Medicaid Practitioner Payments," U.S. Department of Health and Human Services (2026), https://www.federalregister.gov/documents/2026/05/22/2026-10292/medicaid-program-medicaid-managedcare-state-directed-payments-and-medicaid-fee-for-service-targeted.
135 Paige Terryberry, "How Congress Can Fix the Flawed Financing Structure for Medicaid Expansion and Reprioritize the Truly Needy," Foundation for Government Accountability (2025), https://thefga.org/research/congress-fix-flawedfinancing-structure-medicaid-expansion.
136 Centers for Medicare and Medicaid Services, "Federal financial participation in state assistance expenditures: Federal matching shares for Medicaid, the Children's Health Insurance Program, and aid to needy aged, blind, or disabled persons for October 1, 2025 through September 30, 2026," U.S. Department of Health and Human Services (2024), https://www.govinfo.gov/content/pkg/FR-2024-11-29/pdf/2024-27910.pdf.
137 Paige Terryberry, "How Congress can fix the flawed financing structure for Medicaid expansion and reprioritize the truly needy," Foundation for Government Accountability (2025), https://thefga.org/research/congress-fix-flawedfinancing-structure-medicaid-expansion.
138 Paige Terryberry, "Congress should end Washington, D.C.'s sweetheart Medicaid matching fund bonus," Foundation for Government Accountability (2025), https://thefga.org/research/congress-should-end-washington-dc-sweetheartmedicaid-matching-fund-bonus.
139 Paige Terryberry, "How Congress Can Fix the Flawed Financing Structure for Medicaid Expansion and Reprioritize the Truly Needy," Foundation for Government Accountability (2025), https://thefga.org/research/congress-fix-flawedfinancing-structure-medicaid-expansion.
140 Author's calculations based upon data provided by U.S. Department of Health and Human Services on total Medicaid expenditures in fiscal year 2024, disaggregated by funding source and Group VIII eligibility category. See, e.g., Centers for Medicare and Medicaid Services, "Financial management report for fiscal year 2024," U.S. Department of Health and Human Services (2025), https://www.medicaid.gov/medicaid/financial-management/downloads/financial-managementreport-fy2024.zip.
141 Ibid.
142 Ibid.
143 James A. Richardson et al., "Medicaid expansion and the Louisiana economy," Louisiana Department of Health (2018), https://gov.louisiana.gov/assets/MedicaidExpansion/MedicaidExpansionStudy.pdf.
144 Bryce Ward, "The impact of Medicaid expansion on states' budgets: Appendices A, B, and C," Commonwealth Fund (2020), https://www.commonwealthfund.org/sites/default/files/2020-05/Ward_impact_Medicaid_expansion_state_budgets_Appendices_A_B_C.pdf.
145 Kevin Koorstra, "Fiscal brief: Healthy Michigan Plan savings and cost estimates," Michigan House Fiscal Agency (2018), https://www.house.mi.gov/hfa/PDF/Alpha/Fiscal_Briefing_HMP_Savings_and_Cost_Estimates.pdf.
146 Deborah Bachrach and Heather Howard, "States expanding Medicaid see significant budget savings and revenue gains: A presentation to Grantmakers in Health," Robert Wood Johnson Foundation (2015), https://www.gih.org/files/Medicaid%20Expansion%20Economic%20Impact%20and%20Sustainability%20Presentation.pd f.
147 Author's calculations based upon data provided by the U.S. Department of Health and Human Services on eligibilityrelated improper payments in reporting year 2021, disaggregated by eligibility category. See, e.g., Centers for Medicare and Medicaid Services, "2021 Medicaid and CHIP supplemental improper payment data," U.S. Department of Health and Human Services (2021), https://www.cms.gov/files/document/2021-medicaid-chip-supplemental-improper-paymentdata.pdf-1.
148 Jonathan Bain, "Gaming the system: How states exploit ObamaCare expansion to maximize federal dollars," Foundation for Government Accountability (2026), https://thefga.org/research/gaming-the-system-how-states-exploitobamacare-expansion-to-maximize-federal-dollars.
149 42 U.S.C. Sec. 1396a(a)(10)(A)(i)(VIII) (2024), https://www.govinfo.gov/content/pkg/USCODE-2024-title42/pdf/USCODE2024-title42-chap7-subchapXIX-sec1396a.pdf.
150 Deborah Bachrach and Heather Howard, "States expanding Medicaid see significant budget savings and revenue gains: A presentation to Grantmakers in Health," Robert Wood Johnson Foundation (2015), https://www.gih.org/files/Medicaid%20Expansion%20Economic%20Impact%20and%20Sustainability%20Presentation.pdf.
151 Bryce Ward, "The impact of Medicaid expansion on states' budgets: Appendices A, B, and C," Commonwealth Fund (2020), https://www.commonwealthfund.org/sites/default/files/2020-05/Ward_impact_Medicaid_expansion_state_budgets_Appendices_A_B_C.pdf.
152 Jonathan Bain, "Gaming the system: How states exploit ObamaCare expansion to maximize federal dollars," Foundation for Government Accountability (2026), https://thefga.org/research/gaming-the-system-how-states-exploitobamacare-expansion-to-maximize-federal-dollars.
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Original text here: https://www.budget.senate.gov/imo/media/doc/mr_jonathan_ingram_-_testimony_-_senate_budget_committee_-_08042026.pdf
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Chairman Johnson, Ranking Member Merkley, and members of the Committee, thank you for hosting this important hearing. I am Jonathan Ingram, the Vice President of Policy and Research at the Foundation for Government Accountability (FGA).
FGA has worked with policymakers across the country for many years on ways to crack down on waste, fraud, ... Show Full Article WASHINGTON, Aug. 20 -- The Senate Budget Committee released the following testimony by Jonathan Ingram, vice president of policy and research at the Foundation for Government Accountability, from an Aug. 4, 2026, hearing entitled "Medicaid: The Reality": * * * Chairman Johnson, Ranking Member Merkley, and members of the Committee, thank you for hosting this important hearing. I am Jonathan Ingram, the Vice President of Policy and Research at the Foundation for Government Accountability (FGA). FGA has worked with policymakers across the country for many years on ways to crack down on waste, fraud,and abuse in welfare programs. Nowhere is this fight more urgent than the nation's largest welfare program: Medicaid.
Overview
Medicaid enrollment and costs have spiraled out of control. In 2000, the Medicaid program had just 34 million enrollees and cost taxpayers $206 billion.1
Since then, enrollment has nearly tripled and spending has increased nearly fivefold, reaching $964 billion in 2024.2-4 Federal taxpayers have borne the brunt of this increased spending, with federal dollars covering almost 80 percent of the increase over the last decade.5
These vast increases in Medicaid enrollment and expenditures reflect a significant departure from the program's original intent to help the truly needy. ObamaCare expanded Medicaid to a new class of able-bodied adults, adding millions to the welfare rolls.6-8 Today, there are 34 million able-bodied adults on the program, a fivefold increase since 2000.9-11 Federal taxpayers now spend more to cover able-bodied adults through Medicaid than providing Medicaid to children, seniors, or individuals with disabilities.12
Despite several states declining to expand Medicaid under ObamaCare, nearly two-thirds of all able-bodied adults on the program are now enrolled through expansion.13 Nearly 90 percent of those expansion enrollees are childless adults.14 Worse yet, more than 62 percent of able-bodied adults on the program do not work at all.15
Higher enrollment and costs have directly translated into more opportunities for waste, fraud, and abuse.16 Without reform, the program was on track for more than $2 trillion in improper payments over the next decade.17
Encouragingly, many of the reforms contained in the One Big Beautiful Bill Act (OBBB) have begun to address these systemic challenges. Commonsense work requirements, program integrity measures, and efforts to limit state financing gimmicks will help stem the widespread abuse in the Medicaid program. However, given the vast extent of waste, fraud, and abuse in Medicaid, policymakers must consider additional reforms to refocus the program on its core purpose and preserve resources for the truly needy.
At least one in five Medicaid dollars is spent improperly Unfortunately, much of the increased spending in the Medicaid program over the last few decades has been driven by waste, fraud, and abuse. More than one in five Medicaid dollars is spent improperly, with virtually all improper payments driven by eligibility errors, administrative oversights, and outright fraud.18 Eligibility errors alone account for more than 80 percent of all improper payments.19
The only two complete Medicaid audit cycles that included full eligibility checks found improper payment rates of more than 25 percent.20 In some states, improper payments have exceeded 40 percent.21 For example, immediately prior to the pandemic, Ohio and Connecticut each had
improper payment rates of roughly 44 percent.22 Prior to those years, the Obama administration excluded eligibility checks from federal audits entirely.23-24
Although the Trump administration restarted these eligibility reviews in 2019, they were largely suspended again during the Biden administration. 25 As the Government Accountability Office explained, the official improper payment rate was artificially lowered due to "flexibilities granted to states during the COVID-19 public health emergency," which allowed states and CMS to use "relaxed requirements" to hide "payments that would have previously been determined to be improper."26 Even after the pandemic was over, the Biden administration continued to approve these flexibility waivers that artificially depressed improper payment rates.27
Furthermore, the managed care component of Medicaid improper payments is substantially understated. The federal audits capture whether or not states made correct capitation payments to managed care organizations, not whether those managed care organizations made appropriate payments to providers.28
As a result, the true extent of Medicaid improper payments is unknown. However, state and federal audits reveal widespread evidence of blatantly illegal instances of fraud as well as waste and abuse caused by bureaucrats' "legal" fraud-by-design schemes.
State and federal audits reveal countless examples of Medicaid fraud
State and federal audits confirm the magnitude of the Medicaid fraud crisis: Medicaid has enrolled dead people, prisoners, illegal aliens, criminals using stolen or fake identities, and millions of other ineligible individuals.29 Federal auditors found nearly 4.4 million ineligible and potentially ineligible enrollees on Medicaid in California alone.30 In Ohio, auditors determined that 62 percent of the state's expansion population was ineligible or potentially ineligible.31 New York experienced similar results, as auditors concluded that more than one million Medicaid enrollees were either ineligible or potentially ineligible.32 Audits performed in other states have flagged hundreds of thousands of ineligible and potentially ineligible enrollees.33 In a four-state review performed by the Office of the Inspector General, auditors estimated that roughly one-third of those states' combined 17.5 million Medicaid enrollees were ineligible or potentially ineligible.34
Audits have also identified tens of thousands of enrollees who were enrolled more than once in the same state--with some individuals having as many as seven open Medicaid cases at one time.35
Auditors also found hundreds of thousands of individuals who were enrolled in multiple states.36-37 A federal review of 47 states' Medicaid programs found every single reviewed state had enrollees who were also on other states' programs at the same time. 38 In some cases, individuals were
enrolled in as many as nine states' Medicaid programs at the same time.39 In 2025, CMS identified as many as 2.8 million individuals enrolled in two or more Medicaid managed care or ObamaCare exchange plans.40
In many cases, duplicate enrollment may result from identity fraud by illegal aliens or others.41 In Arkansas, more than 20,000 enrollees were reported to have "high-risk identities," including some with stolen or fraudulent Social Security numbers (SSNs). 42 Similarly, in New Jersey, auditors discovered more than 18,000 enrollees with fake or duplicative SSNs. 43 Making matters worse, auditors have uncovered hundreds of millions of dollars in Medicaid funding spent on deceased individuals, including individuals who had died as early as 1981.44-45 In some cases, audits identified millions of dollars spent on enrollees who had moved out of state, or never lived in the state at all.46 Fortunately, OBBB begins to crack down on some of this fraud by requiring states to share data with CMS to prevent duplicate enrollment, checking enrollees against death records, and instituting real penalties for eligibility errors above a certain threshold.47-50
Bureaucrats' fraud-by-design schemes are driving ineligible enrollment
Much of the Medicaid fraud crisis was caused by fraud-by-design schemes: policies intentionally designed by state and federal bureaucrats to maximize enrollment at all costs.
These policies have "legalized" fraud by dismantling eligibility verification infrastructure, reducing eligibility review frequency, adopting "passive" redetermination processes, and adopting self-attestation as the default eligibility standard. 51 - 52 Many states currently accept applicants' self-attestation for a variety of information, including income, household size, household composition, residency, and more.53 Nearly all states accept self-attestation for household composition despite having access to tax return information and other relevant sources, more than 40 states accept self-attestation of residency, and more than a dozen states accept self-attestation of income to some degree.54
Once accepting this information, states may not verify it until months later and sometimes not at all. A Louisiana audit, for example, found tens of thousands of ineligible individuals were allowed to enroll in the program because the state did not verify self-attested information on household size, composition, or certain types of income.55 Similarly, New Jersey auditors identified thousands of enrollees with unreported six-figure incomes, including some earning as much as $4.2 million per year.56
Although individuals are legally required to report changes in their circumstances that may affect eligibility, few do. An Illinois audit of the state's passive redetermination processes discovered that more than 93 percent of all eligibility errors resulted from enrollees reporting incorrect information or failing to report changes in their income, household composition, and more.57 New Jersey auditors identified a number of cases where individuals did not report changes as legally required, including individuals with wages nearly 15 times the eligibility threshold.58
This is particularly worrisome, given that 69 percent of Medicaid cases recently renewed were done through this passive or "ex parte" basis, and federal regulations require states to redetermine eligibility through this process first.59-60 In some states, virtually all recent renewals were conducted through this passive process. In North Carolina, for example, more than 99.5 percent of the state's 2.2 million recent renewals were conducted completely passively.61
State bureaucrats are already attempting to undermine the new work requirements adopted in OBBB through this same fraud-by-design scheme.62 Left-wing advocacy groups are preparing states to create new loopholes and gimmicks to exempt as many able-bodied adults from Medicaid work requirements as possible, primarily through eliminating verification through self-attestation. 63 Officials from at least 30 states recently announced that they would accept enrollees' self-attestation of medically frail status for exemption purposes if allowed by CMS.64 Several states also initiated litigation against CMS for an interim final rule that would somewhat limit their ability to use self-attestation for work requirement exemptions or compliance.65 Bureaucrats have also designed welfare expansions through "presumptive" eligibility determinations--a process whereby Medicaid allows hospitals to make temporary eligibility determinations before eligibility is verified by state agencies. 66 - 67 In a 2019 audit, the U.S. Department of Health and Human Services estimated that roughly 43 percent of sampled spending on presumptively eligible enrollees was improper.68 Data from state Medicaid agencies reveals that such improper payments could be even higher, with just 30 percent of individuals that hospitals determine "presumptively eligible" ultimately determined eligible for Medicaid by the state.69 This legalized fraudulent spending is never recouped.70
Bureaucrats have also created an on-ramp to federal welfare programs for illegal aliens, despite statutory restrictions.71 Under federal regulations, states must enroll individuals in Medicaid for a "reasonable opportunity period" of at least 90 days while it attempts to verify satisfactory immigration status.72 This has allowed illegal aliens to enroll in the program, despite clear federal prohibitions, and remain on the program for months or even years at a time while states ostensibly attempt to verify their status after enrollment.73-74 Roughly 70 percent of these "temporary" cases now extend beyond the 90-day federal standard.75 In some states, enrollees have remained in this "temporary" Medicaid coverage for as long as 16 years without ever having their citizenship or immigration status verified.76
This Medicaid on-ramp was supercharged under the Biden administration, with the number of illegal aliens enrolled in the program through this loophole skyrocketing by more than 400 percent--even before the Biden administration finalized new regulations to block states from limiting its use.77
Bureaucrats have also begun importing eligibility errors from other welfare programs into Medicaid.78 In 2013, for example, the Obama administration issued guidance encouraging states to bypass important eligibility verification steps by enrolling individuals into Medicaid based on their food stamp eligibility.79 CMS directed states to use this method to seek out and enroll ineligible individuals--all in the name of administrative efficiency.80-81 At the time, CMS was already aware that many of these individuals are "income-ineligible for Medicaid," yet guided states to "facilitate their renewal, without requiring them to complete a new application."82 Although this strategy was initially meant to be temporary due to massive enrollment surges associated with ObamaCare expansion, the Obama administration made it a permanent option for states in 2015./83-84
This guidance encouraged states to adopt integrated eligibility approaches that use a single point of entry for multiple welfare programs. Not only does this increase Medicaid enrollment, but it also increases the likelihood of errors: If a state makes an initial incorrect determination when enrolling an individual in food stamps, this mistake is imported directly into Medicaid automatically without independent verification.85-86 The more welfare programs that states integrate in this way, the higher the risk and cost of fraud.87
A network of advocacy organizations, funded in part by tens of millions of dollars in federal grants, has promoted these "One Door" integrated eligibility systems that consolidate enrollment across multiple welfare programs into a single process. 88 Eligibility errors in one program propagate automatically across all integrated programs, meaning a single act of fraud or misrepresentation cascades through Medicaid, food stamps, housing, and childcare subsidies simultaneously.89
The predictable result: millions of ineligible individuals on the program and billions in improper payments. Until policymakers limit the widespread use of self-attestation and other fraud by design schemes, this crisis will persist.
Bureaucrats' fraud-by-design schemes are driving provider fraud
Bureaucrats' fraud-by-design schemes have not only led to millions of ineligible enrollees on the Medicaid program, they have paved the way for rampant provider fraud through lax verification of providers and continuing to pay providers long after learning of credible allegations of fraud.
Federal law requires all participating Medicaid providers to undergo revalidation of their enrollment at regular intervals.90 States have frequently failed to comply with those requirements, conducting revalidation on extended timelines, performing pro forma reviews, or failing to remove providers who no longer meet enrollment standards.91-94 More than 14 percent of states' total fee-for-service Medicaid spending improperly flows to unenrolled providers, unlicensed providers, providers that have not been appropriately screened, and providers with missing information.95-98
Data from state Medicaid agencies further reveals how poorly states have followed these federal requirements. Illinois, for example, did not revalidate a single provider between March 2021 and February 2024.99 According to state officials, nearly 142,000 providers have not been revalidated within the last five years, with some providers having gone nearly a decade since their last revalidation.100 In some states, providers have gone as long as 17 years without revalidation.101 CMS recently forced Minnesota to revalidate nearly 6,000 providers in 13 high-risk service categories.102 The results are astounding: more than 62 percent of those providers were disenrolled after failing background checks, site visits, or refusing to provide accurate and complete information.103
Even when they receive credible allegations of fraud, states often forgo enforcement. Under federal law, state Medicaid agencies must suspend all payments to a provider upon determining there is a credible allegation of fraud with a pending investigation.104
Allegations are considered "credible" long before proven beyond a reasonable doubt; states must treat allegations as credible if they "have indicia of reliability," meaning that there are "signs, indications or circumstances that seem to point to the existence of fraud."105-106
This is one of the most powerful program integrity tools available and one of the most underused.
Federal audits have uncovered that states routinely fail to suspend payments even when clear fraud indicators are present.107 New York, for example, issued "good cause" waivers to allow nearly 96 percent of providers with credible allegations of fraud to continue receiving Medicaid payments.108 Likewise, Massachusetts suspended payments for fewer than 10 percent of providers with credible allegations of fraud levied against them.109
With little enforcement by the states, it is no surprise that provider fraud has skyrocketed in recent years.
Medicaid money laundering has become widespread
If bureaucrats' fraud-by-design schemes were not bad enough, states have engaged in other types of "legal" fraud, primarily through Medicaid money laundering--the deliberate use of financing gimmicks to shift state costs on to federal taxpayers.110
Provider taxes are one of the most well-known examples of Medicaid money laundering, with nearly every state taking advantage of this gimmick.111 Under provider tax arrangements, hospitals and other providers are charged a tax or fee by the state, which is used to fund the "state share" of Medicaid spending to those same providers.112
Over the years, states have used provider taxes to boost their effective federal matching rate by an average of 5.4 points--and by as much as 12 points in some states--beyond what they are legally entitled to.113 For some supplemental payment programs within Medicaid, the provider tax scheme lets states raise their effective matching rate by a whopping 32 percentage points.114 To put this in perspective, a 5.4 point increase in the federal matching rate equates to roughly $50 billion in state costs shifted onto federal taxpayers every year.115 This explosion in money laundering is readily apparent in the share of non-general fund state spending on Medicaid, which has increased by an astonishing 70 percent since 2018 alone.116
In recent years, states have gotten even more creative with their money laundering schemes.
California and New York, for example, pioneered massive new "taxes" on Medicaid managed care plans. 117 Despite a federal requirement that such taxes be uniform, California structured its managed care tax to collect roughly $12.7 billion per year from Medicaid plans, compared to just $27 million from commercial plans.118 New York's managed care tax followed a similar pattern: $2.7 billion per year collected from Medicaid plans, compared to just $76 million per year from commercial plans.119 Because the entire cost of these taxes are built into the capitated rates paid to Medicaid managed care companies, this effectively serves as a direct tax on the federal government.120
States then use this "state share" to draw down even more federal funding from the Medicaid program. As a result, the taxed providers and plans receive back what they paid in taxes, while state policymakers generate a nearly endless stream of revenue from federal taxpayers.121 State officials have readily admitted that these provider tax schemes are used to increase Medicaid spending "without risk of the state needing to contribute" and "solely to offset General Fund spending" on Medicaid.122
These schemes are most glaring for ObamaCare expansion enrollees, where states often use the from money laundering to shift the entire cost of expansion onto federal taxpayers.123 States can also use the proceeds to fund special projects for which federal funding is specifically prohibited, such as coverage for illegal aliens.124
These money laundering schemes have been further augmented by other schemes, such as state-directed payments. These payment schemes, largely financed through provider tax money laundering schemes, enable states to direct managed care companies to pay politically connected providers excessively high supplemental payments. 125 But unlike other types of supplemental payments, state-directed payments were not subject to a cap at Medicare rates.126
Under President Biden, CMS finalized a rule authorizing states to use state-directed payments to increase provider rates to the average commercial rate--roughly 2.5 times higher than typical Medicare rates.127 It is no surprise that from 2020 to 2024, SDPs more than quadrupled.128
Encouragingly, OBBB implemented both limitations on provider taxes and state-directed payments.
OBBB closed the loophole that allowed states to tax Medicaid managed care plans at highly inflated rates to maximize revenue.129 OBBB also barred any new or increased provider taxes and phased down the "safe harbor" threshold for existing provider taxes from six percent of net patient revenue to 3.5 percent of net patient revenue in Medicaid expansion states.130 OBBB also capped new state-directed payments at Medicare rates in expansion states and 10 percent above Medicare rates in non-expansion states, while phasing down existing state-directed payments until reaching those new thresholds.131 CMS is now taking the initial regulatory steps to implement these policies.132-134 ObamaCare expansion's match rate encourages Medicaid fraud
ObamaCare's perverse funding formula encourages and enables fraud. For traditional Medicaid populations--like children, seniors, and individuals with disabilities--federal Medicaid matching funds are set based on states' per capita income, with rates currently ranging from 50 percent to 77 percent.135-136 Higher-income states receive a lower match rate, while lower-income states receive higher rates, though some jurisdictions like Washington, D.C. receive an artificially high rate set in statute.137-138
ObamaCare's Medicaid expansion, however, is fixed at 90 percent for this new class of able-bodied adults.139 This means that federal taxpayers provide $9 for every dollar states spend on able-bodied, childless adults, but on average provide only $1.39 for every dollar states spend on severely disabled individuals or frail low-income seniors.140
This creates a perverse incentive for states looking to constrain rapidly growing Medicaid costs. A state seeking $1 million in state-funded Medicaid savings would need to reduce total Medicaid costs by roughly $2.4 million if they targeted traditional enrollees like seniors or individuals with disabilities.141 But if policymakers sought to find the same state savings among able-bodied adults in the ObamaCare expansion, they would need to reduce total Medicaid costs by $10 million.142 The funding formula also creates no incentive for states to stop fraud committed by ObamaCare expansion enrollees or providers serving those enrollees. This is especially true in states that use provider taxes or other financing gimmicks to render the state match for expansion effectively zero.
States have treated ObamaCare expansion as an economic stimulus to draw down "free" federal dollars and shift existing costs onto federal taxpayers.143-146 Under this view, every dollar of fraud financed through ObamaCare expansion creates an economic "multiplier effect" that generates even more economic activity and state revenues. As such, many bureaucrats view investigating and stopping fraud in this eligibility category as budgetary malpractice. It should come as no surprise that Medicaid expansion spending is roughly 32 percent more likely to be improper than other types of Medicaid spending.147
If that were not bad enough, ObamaCare's perverse funding formula also encourages state officials to commit fraud themselves. State bureaucrats have defaulted to categorizing enrollees into ObamaCare expansion, even when they qualify under a different eligibility category, in order to claim ObamaCare's enhanced matching funds.148
Under federal law, ObamaCare's enhanced funding is only available to individuals who are not eligible under a different eligibility category. 149 But numerous states have improperly claimed "savings" by shifting existing enrollees into ObamaCare expansion.150-151 Some states even instruct those conducting eligibility determinations to evaluate eligibility under ObamaCare expansion before evaluating eligibility under other pathways, routing as many enrollees through the expansion as possible to maximize federal dollars.152
Policymakers can close loopholes to limit waste, fraud, and abuse--illegal or otherwise Medicaid waste, fraud, and abuse is omnipresent. With sky-high improper payment rates and frightening levels of fraud found in state-level audits, the Medicaid program has become a magnet for erroneous expenditures.
Unfortunately, far too much of this does not fall in the category of just bad-actor providers or foreign scam artists. In many cases, the responsibility lies squarely at the feet of bureaucrats creating and promoting a fraud-by-design framework. These bureaucrats have designed a system that not only permits fraud to run rampant, but rewards it. Whether intentional or not, these policy decisions have created the broken status quo today that has left the Medicaid program in shambles.
Thankfully, Congress has an opportunity to close the door to waste, fraud, and abuse by:
* Prohibiting self-attestation for key eligibility factors;
* Requiring identity verification and frequent post-enrollment cross-checks;
* Mandating more frequent eligibility reviews for all able-bodied adults;
* Implementing more frequent and more robust provider revalidation standards;
* Verifying immigration status prior to Medicaid enrollment;
* Expanding work requirements to all able-bodied adults without young children;
* Further limiting states' ability to use Medicaid money laundering schemes;
* Unwinding ObamaCare's perverse funding preference for able-bodied adults;
* Holding hospitals accountable for incorrect presumptive eligibility determinations;
* And much more.
Through these and other commonsense Medicaid reforms, policymakers can refocus Medicaid into a sustainable program that puts the truly needy first, rejects the fraud-by-design mantra, and holds bad actors accountable instead of letting them flourish with taxpayer dollars.
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References
1 Centers for Medicare and Medicaid Services, "2018 actuarial report on the financial outlook for Medicaid," U.S. Department of Health and Human Services (2018), https://www.cms.gov/files/document/2018-report.pdf.
2 Author's calculations based upon data provided by the U.S. Department of Health and Human Services on total Medicaid expenditures in fiscal year 2024. See, e.g., Centers for Medicare and Medicaid Services, "Financial management report for fiscal year 2024," U.S. Department of Health and Human Services (2025), https://www.medicaid.gov/medicaid/financial-management/downloads/financial-management-report-fy2024.zip.
3 Enrollment peaked at more than 100 million in fiscal year 2023. See, e.g., Centers for Medicare and Medicaid Services, "April - June 2023 Medicaid MBES enrollment," U.S. Department of Health and Human Services (2024), https://www.medicaid.gov/media/national-medicaid-chip-program-information/downloads/apr-jun-2023-medicaidmbes-enrollment.xlsx.
4 Enrollment remains nearly 83 million, even after unwinding from the continuous enrollment requirements put in place during the COVID-19 public health emergency. See, e.g., Centers for Medicare and Medicaid Services, "April - June 2025 Medicaid MBES enrollment," U.S. Department of Health and Human Services (2026), https://www.medicaid.gov/media/national-medicaid-chip-program-information/downloads/apr-jun-2025-medicaidmbes-enrollment.xlsx.
5 Jonathan Bain et al., "How federal lawmakers can combat waste, fraud, and abuse in Medicaid," Foundation for Government Accountability (2025), https://thefga.org/research/federal-lawmakers-can-combat-waste-fraud-and-abusein-medicaid.
6 Michael Greibrok and Jonathan Ingram, "Medicaid work requirements would help move millions of able-bodied adults from welfare to work," Foundation for Government Accountability (2025), https://thefga.org/research/medicaid-workrequirements-from-welfare-to-work.
7 Public Law 111-148 (2010), https://www.govinfo.gov/content/pkg/PLAW-111publ148/pdf/PLAW-111publ148.pdf.
8 Public Law 111-152 (2010), https://www.govinfo.gov/content/pkg/PLAW-111publ152/pdf/PLAW-111publ152.pdf.
9 Author's calculations based upon data provided by the U.S. Department of Health and Human Services on the number of non-disabled adults enrolled in Medicaid in fiscal year 2000 and the Congressional Budget Office on the number of non-disabled adults enrolled in fiscal year 2025.
10 There were 6.9 million able-bodied adults on Medicaid in fiscal year 2000. See, e.g., Centers for Medicare and Medicaid Services, "2018 actuarial report on the financial outlook for Medicaid," U.S. Department of Health and Human Services (2018), https://www.cms.gov/files/document/2018-report.pdf.
11 There were 34 million able-bodied adults on Medicaid in fiscal year 2025, including 17 million ObamaCare expansion enrollees and 17 million non-expansion adults. See, e.g., Congressional Budget Office, "February 2026 baseline projections: Medicaid," Congressional Budget Office (2026), https://www.cbo.gov/system/files/2026-02/51301-2026-02medicaid.pdf.
12 Author's calculations based upon data provided by the Congressional Budget Office on Medicaid expenditures in fiscal year 2025, disaggregated by eligibility category. See, e.g., Congressional Budget Office, "February 2026 baseline projections: Medicaid," Congressional Budget Office (2026), https://www.cbo.gov/system/files/2026-02/51301-2026-02medicaid.pdf.
13 Author's calculations based upon data provided by the Medicaid and CHIP Payment and Access Commission on the number of non-disabled adults enrolled in full-benefit Medicaid in fiscal year 2023, disaggregated by eligibility category. See, e.g., Medicaid and CHIP Payment and Access Commission, "MACStats: Medicaid full-year equivalent enrollment by state and eligibility group, fiscal year 2023," Medicaid and CHIP Payment and Access Commission (2026), https://www.macpac.gov/wp-content/uploads/2026/01/EXHIBIT-15.-Medicaid-Full-Year-Equivalent-Enrollment-by-Stateand-Eligibility-Group-FY-2023.pdf
14 Centers for Medicare and Medicaid Services, "Medicaid program: Community engagement requirement for certain individuals," U.S. Department of Health and Human Services (2026), https://www.govinfo.gov/content/pkg/FR-2026-0603/pdf/2026-11094.pdf.
15 Michael Greibrok and Jonathan Ingram, "Medicaid work requirements would help move millions of able-bodied adults from welfare to work," Foundation for Government Accountability (2025), https://thefga.org/research/medicaid-workrequirements-from-welfare-to-work.
16 Jonathan Bain et al., "How federal lawmakers can combat waste, fraud, and abuse in Medicaid," Foundation for Government Accountability (2025), https://thefga.org/research/federal-lawmakers-can-combat-waste-fraud-and-abusein-medicaid.
17 Ibid.
18 Ibid.
19 Ibid.
20 Brian Blase and Rachel Greszler, "Medicaid's true improper payments double those reported," Economic Policy Innovation Center and Paragon Health Institute (2025), https://epicforamerica.org/wpcontent/uploads/2025/02/Medicaids_True_Improper_Payments_FOR-RELEASE_V3.pdf.
21 Centers for Medicare and Medicaid Services, "2019 Medicaid and CHIP supplemental improper payment data," U.S. Department of Health and Human Services (2019), https://www.cms.gov/files/document/2019-medicaid-chipsupplemental-improper-payment-data.pdf-1.
22 Ibid.
23 In 2014, the Obama administration announced it was suspending the eligibility component of the payment error rate measurement, starting in fiscal year 2015. See, e.g., Centers for Medicare and Medicaid Services, "Payment error rate measurement (PERM): FY 2015 cycle kick-off," U.S. Department of Health and Human Services (2014), https://www.cms.gov/research-statistics-data-and-systems/monitoring-programs/Medicaid-and-chipcompliance/perm/downloads/fy2015permcyclekickoff.pdf.
24 Brian Blase and Rachel Greszler, "Medicaid's true improper payments double those reported," Economic Policy Innovation Center and Paragon Health Institute (2025), https://paragoninstitute.org/medicaid/medicaids-true-improperpayments-likely-double-those-reported-by-cms/?nab=0.
25 Ibid.
26 Orice Williams Brown, "Significant improvements are needed to address improper payments and fraud," Government Accountability Office (2024), https://www.gao.gov/assets/gao-24-107660.pdf.
27 Centers for Medicare and Medicaid Services, "COVID-19 PHE Unwinding Section 1902(e)(14)(A) Waiver Approvals," U.S. Department of Health and Human Services (2025), https://www.medicaid.gov/resources-for-states/coronavirus-disease2019-covid-19/unwinding-and-returning-regular-operations-after-covid-19/covid-19-phe-unwinding-section-1902e14awaiver-approvals.
28 Chris Medrano and Brian Blase, "Medicaid waste, fraud, and abuse: Why CMS's improper payment rate can't be trusted," Paragon Health Institute (2026), https://paragoninstitute.org/wpcontent/uploads/securepdfs/2026/04/Why_CMS_Improper_Payment_Rate_Cant_Be_Trusted_RELEASE_V2.pdf.
29 Jonathan Bain et al., "How federal lawmakers can combat waste, fraud, and abuse in Medicaid," Foundation for Government Accountability (2025), https://thefga.org/research/federal-lawmakers-can-combat-waste-fraud-and-abusein-medicaid.
30 Ibid.
31 Ibid.
32 Ibid.
33 Ibid.
34 Ibid.
35 Ibid.
36 Ibid.
37 Jonathan Bain, "Safeguarding the safety net: Solutions to Medicaid's program integrity crisis," Foundation for Government Accountability (2025), https://thefga.org/research/safeguarding-the-safety-net-solutions-to-medicaidintegrity-crisis.
38 Jonathan Bain et al., "How federal lawmakers can combat waste, fraud, and abuse in Medicaid," Foundation for Government Accountability (2025), https://thefga.org/research/federal-lawmakers-can-combat-waste-fraud-and-abusein-medicaid.
39 Keith Faber, "Ohio Department of Medicaid: The cost of concurrent enrollment," Ohio Auditor of State (2024), https://oig.hhs.gov/documents/audit/9960/A-09-23-02004.pdf.
40 Centers for Medicare and Medicaid Services, "CMS finds 2.8 million Americans potentially enrolled in two or more Medicaid/ACA exchange plans," U.S. Department of Health and Human Services (2025), https://www.cms.gov/newsroom/press-releases/cms-finds-2-8-million-americans-potentially-enrolled-two-or-moremedicaid-aca-exchange-plans.
41 Jonathan Ingram and Hayden Dublois, "The loopholes fueling illegal alien Medicaid and ObamaCare benefits," Foundation for Government Accountability (2025), https://thefga.org/research/loopholes-fueling-illegal-alien-medicaidobamacare-benefits.
42 Jonathan Bain et al., "How federal lawmakers can combat waste, fraud, and abuse in Medicaid," Foundation for Government Accountability (2025), https://thefga.org/research/federal-lawmakers-can-combat-waste-fraud-and-abusein-medicaid.
43 Ibid.
44 Ibid.
45 Jonathan Bain, "The welfare walking dead: How hundreds of millions in Medicaid payments were made on behalf of deceased enrollees," Foundation for Government Accountability (2025), https://thefga.org/research/the-welfare-walkingdead-medicaid-benefits-deceased-enrollees.
46 Jonathan Bain et al., "How federal lawmakers can combat waste, fraud, and abuse in Medicaid," Foundation for Government Accountability (2025), https://thefga.org/research/federal-lawmakers-can-combat-waste-fraud-and-abusein-medicaid.
47 Public Law 119-21 (2025), https://www.congress.gov/119/plaws/publ21/PLAW-119publ21.pdf.
48 Jonathan Bain, "The welfare walking dead: How hundreds of millions in Medicaid payments were made on behalf of deceased enrollees," Foundation for Government Accountability (2025), https://thefga.org/research/the-welfare-walkingdead-medicaid-benefits-deceased-enrollees.
49 Jonathan Bain, "Safeguarding the safety net: Solutions to Medicaid's program integrity crisis," Foundation for Government Accountability (2025), https://thefga.org/research/safeguarding-the-safety-net-solutions-to-medicaidintegrity-crisis.
50 Michael Greibrok, "States have the tools necessary to reduce their Medicaid improper payment rates and avoid increased costs," Foundation for Government Accountability (2025), https://thefga.org/research/stateshavetoolstoreducemedicaidimproperpaymentrates.
51 Victoria Eardley and Jonathan Ingram, "How the Trump administration can crack down on Medicaid fraud," Foundation for Government Accountability (2018), https://thefga.org/research/medicaid-fraud-reform-trump-administration.
52 Jonathan Bain and Sam Adolphsen, "Maximize enrollment, weaken program integrity: How the Biden administration's proposed Medicaid rule would decimate an already broken program," Foundation for Government Accountability (2022), https://thefga.org/research/maximize-enrollment-weaken-program-integrity.
53 Jonathan Ingram, "Manage effectively: Make Medicaid more accountable," Paragon Health Institute (2021), https://paragoninstitute.org/wp-content/uploads/2023/12/dont-wait-for-washington.pdf.
54 Ibid.
55 Medicaid Audit Unit, "Medicaid eligibility: Modified Adjusted Gross Income determination process," Louisiana Legislative Auditor (2018), https://www.lla.la.gov/PublicReports.nsf/0C8153D09184378186258361005A0F27/$FILE/summary0001B0AB.pdf.
56 Office of the State Auditor, "NJ FamilyCare eligibility determinations," New Jersey Office of Legislative Services (2018), https://pub.njleg.state.nj.us/publications/auditor/2018/544016.pdf.
57 Office of Inspector General, "FFY09 MEQC pilot project passive redeterminations," Illinois Department of Healthcare and Family Services (2010), https://hfs.illinois.gov/content/dam/soi/en/web/hfs/oig/documents/passiveanalysis092910.pdf.
58 Office of the State Auditor, "NJ FamilyCare eligibility determinations," New Jersey Office of Legislative Services (2018), https://pub.njleg.state.nj.us/publications/auditor/2018/544016.pdf.
59 Author's calculations based upon data provided by the U.S. Department of Health and Human Services on the share of individuals renewed between March 2023 and July 2024 on an ex parte basis as a share of total individuals renewed. See, e.g., Centers for Medicare and Medicaid Services, "Medicaid and CHIP national summary of renewal outcomes: July 2024 and national summary to date," U.S. Department of Health and Human Services (2024), https://www.medicaid.gov/resources-for-states/downloads/july-2024-national-summary-renewal-outcomes.pdf.
60 42 C.F.R. Sec. 435.916 (2025), https://www.govinfo.gov/content/pkg/CFR-2025-title42-vol4/pdf/CFR-2025-title42-vol4sec435-916.pdf.
61 Author's calculations based upon data provided by the U.S. Department of Health and Human Services on the share of individuals renewed between March 2023 and July 2024 on an ex parte basis as a share of total individuals renewed. See, e.g., Centers for Medicare and Medicaid Services, "National summary of outcomes of Medicaid and CHIP related renewals: March 2023 - July 2024," U.S. Department of Health and Human Services (2024), https://www.medicaid.gov/resources-for-states/downloads/july-2024-national-summary-renewal-outcomes.xlsx.
62 Jonathan Ingram et al., "Comment on CMS-2026-2047," FGA Action (2026), https://fgaaction.org/wpcontent/uploads/2026/06/Comment-on-CMS-2026-2047.pdf.
63 Ibid.
64 Ibid.
65 Massachusetts v. Oz, Motion for preliminary injunction, Case No. 26-12962 (D. Mass. 2026).
66 42 CFR Sec. 435.1110 (2025), https://www.govinfo.gov/content/pkg/CFR-2025-title42-vol4/pdf/CFR-2025-title42-vol4sec435-1110.pdf.
67 Sam Adolphsen and Jonathan Bain, "Eligible for welfare until proven otherwise: How hospital presumptive eligibility pours gasoline on the fire of Medicaid waste, fraud, and abuse," Foundation for Government Accountability (2020), https://thefga.org/research/hospital-presumptive-eligibility.
68 Centers for Medicare and Medicaid Services, "2019 Medicaid and CHIP supplemental improper payment data," U.S. Department of Health and Human Services (2019), https://www.cms.gov/files/document/2019-medicaid-chipsupplemental-improper-payment-data.pdf-1.
69 Sam Adolphsen and Jonathan Bain, "Eligible for welfare until proven otherwise: How hospital presumptive eligibility pours gasoline on the fire of Medicaid waste, fraud, and abuse," Foundation for Government Accountability (2020), https://thefga.org/research/hospital-presumptive-eligibility.
70 Centers for Medicare and Medicaid Services, "Medicaid and CHIP FAQs: Implementing hospital presumptive eligibility programs," U.S. Department of Health and Human Services (2014), https://www.medicaid.gov/state-resource-center/faqmedicaid-and-chip-affordable-care-act-implementation/downloads/faqs-by-topic-hospital-pe-01-23-14.pdf.
71 Jonathan Ingram and Hayden Dublois, "The loopholes fueling illegal alien Medicaid and ObamaCare benefits," Foundation for Government Accountability (2025), https://thefga.org/research/loopholes-fueling-illegal-alien-medicaidobamacare-benefits.
72 42 C.F.R. Sec. 435.956 (2025), https://www.govinfo.gov/content/pkg/CFR-2025-title42-vol4/pdf/CFR-2025-title42-vol4sec435-956.pdf.
73 Jonathan Ingram and Hayden Dublois, "The loopholes fueling illegal alien Medicaid and ObamaCare benefits," Foundation for Government Accountability (2025), https://thefga.org/research/loopholes-fueling-illegal-alien-medicaidobamacare-benefits.
74 Hayden Dublois and Addison Scherler, "How Congress can stop states from diverting Medicaid resources to illegal aliens," Foundation for Government Accountability (2025), https://thefga.org/research/stop-states-from-divertingmedicaid-resources-to-illegal-aliens.
75 Hayden Dublois and Addison Scherler, "How Congress can stop states from diverting Medicaid resources to illegal aliens," Foundation for Government Accountability (2025), https://thefga.org/research/stop-states-from-divertingmedicaid-resources-to-illegal-aliens.
76 Jonathan Ingram, "The Medi-Cal fraud loophole Gavin Newsom doesn't want you to know about," New York Post (2026), https://nypost.com/2026/05/02/opinion/the-medi-cal-fraud-loophole-gavin-newsom-doesnt-want-you-to-knowabout.
77 Hayden Dublois and Addison Scherler, "How Congress can stop states from diverting Medicaid resources to illegal aliens," Foundation for Government Accountability (2025), https://thefga.org/research/stop-states-from-divertingmedicaid-resources-to-illegal-aliens.
78 Jonathan Ingram and Hayden Dublois, "States should close the door on welfare fraud," Foundation for Government Accountability (2026), https://thefga.org/research/states-should-close-the-door-on-welfare-fraud.
79 Centers for Medicare and Medicaid Services, "Facilitating Medicaid and CHIP enrollment and renewal in 2014," U.S. Department of Health and Human Services (2013), https://www.medicaid.gov/federal-policyguidance/downloads/sho13-003.pdf.
80 Ibid.
81 Centers for Medicare and Medicaid Services, "Policy options for using SNAP to determine Medicaid eligibility and an update on targeted enrollment strategies," U.S. Department of Health and Human Services (2015), https://www.medicaid.gov/federal-policy-guidance/downloads/sho-15-001.pdf.
82 Ibid.
83 Centers for Medicare and Medicaid Services, "Facilitating Medicaid and CHIP enrollment and renewal in 2014," U.S. Department of Health and Human Services (2013), https://www.medicaid.gov/federal-policyguidance/downloads/sho13-003.pdf.
84 Centers for Medicare and Medicaid Services, "Policy options for using SNAP to determine Medicaid eligibility and an update on targeted enrollment strategies," U.S. Department of Health and Human Services (2015), https://www.medicaid.gov/federal-policy-guidance/downloads/sho-15-001.pdf.
85 Victoria Eardley and Jonathan Ingram, "The case for ending auto-enrollment in Medicaid," Foundation for Government Accountability (2019), https://thefga.org/research/ending-medicaid-auto-enrollment.
86 Jonathan Ingram and Hayden Dublois, "States should close the door on welfare fraud," Foundation for Government Accountability (2026), https://thefga.org/research/states-should-close-the-door-on-welfare-fraud.
87 Ibid.
88 Ibid.
89 Ibid.
90 42 C.F.R. Sec. 455.414 (2025), https://www.govinfo.gov/content/pkg/CFR-2025-title42-vol4/pdf/CFR-2025-title42-vol4sec455-414.pdf.
91 Office of Inspector General, "Medicaid enhanced provider enrollment screenings have not been fully implemented," U.S. Department of Health and Human Services (2016), https://oig.hhs.gov/documents/evaluation/2915/OEI-05-1300520-Complete%20Report.pdf.
92 Carolyn L. Yocom, "Medicaid providers: CMS oversight should ensure state implementation of screening and enrollment requirements," Government Accountability Office (2019), https://www.gao.gov/assets/gao-20-8.pdf.
93 Gene L. Dodaro, "Medicare and Medicaid: Additional actions needed to enhance program integrity and save billions," Government Accountability Office (2024), https://www.gao.gov/assets/gao-24-107487.pdf.
94 Michelle B. Rosenberg, "Medicaid program integrity: Opportunities exist for CMS to strengthen use of state auditor findings and collaboration," Government Accountability Office (2023), https://www.gao.gov/assets/gao-23-105881.pdf.
95 Author's calculations based upon data provided by the U.S. Department of Health and Human Services on the share of fee-for-service Medicaid spending in the payment error rate measurement reporting years 2019, 2020, and 2021 that were improper due to provider information or enrollment errors, coded as DP10 errors.
96 In reporting year 2019, DP10 errors totaled $24 billion out of $167 billion in total fee-for-service claims. See, e.g., Centers for Medicare and Medicaid Services, "2019 Medicaid and CHIP supplemental improper payment data," U.S. Department of Health and Human Services (2019), https://www.cms.gov/files/document/2019-medicaid-chipsupplemental-improper-payment-data.pdf-1.
97 In reporting year 2020, DP10 errors totaled $30 billion out of $181 billion in total fee-for-service claims. See, e.g., Centers for Medicare and Medicaid Services, "2020 Medicaid and CHIP supplemental improper payment data," U.S. Department of Health and Human Services (2020), https://www.cms.gov/files/document/2020-medicaid-chipsupplemental-improper-payment-data.pdf.
98 In reporting year 2021, DP10 errors totaled $24 billion out of $198 billion in total fee-for-service claims. See, e.g., Centers for Medicare and Medicaid Services, "2021 Medicaid and CHIP supplemental improper payment data," U.S. Department of Health and Human Services (2021), https://www.cms.gov/files/document/2021-medicaid-chipsupplemental-improper-payment-data.pdf-1.
99 Author's calculations based upon data provided by the Illinois Department of Healthcare and Family Services on the number of providers, disaggregated by revalidation date.
100 Ibid.
101 Author's calculations based upon data provided by state Medicaid agencies on the number of providers, disaggregated by revalidation date.
102 John M. Connolly, "Corrective action plan for program integrity update," Minnesota Department of Human Services (2026), https://mn.gov/dhs/assets/2026-01-30_cap-response_final_redacted_tcm1053-728931.pdf.
103 Health Care Administration, "Minnesota revalidate 2026 overview," Minnesota Department of Human Services (2026), https://mn.gov/dhs/assets/one-pager-mn-revalidate-2026_tcm1053-751966.pdf.
104 42 C.F.R. Sec. 455.23 (2025), https://www.govinfo.gov/content/pkg/CFR-2025-title42-vol4/pdf/CFR-2025-title42-vol4sec455-23.pdf.
105 42 C.F.R. Sec. 455.2 (2025), https://www.govinfo.gov/content/pkg/CFR-2025-title42-vol4/pdf/CFR-2025-title42-vol4sec455-2.pdf.
106 General of Medicaid Services, "What is a credible allegation of fraud?" Utah Office of Inspector General (2017), https://oig.utah.gov/2017/08/17/what-is-a-credible-allegation-of-fraud.
107 Office of Inspector General, "Challenges appear to limit states' use of Medicaid payment suspensions," U.S. Department of Health and Human Services (2017), https://oig.hhs.gov/documents/evaluation/3126/OEI-09-14-00020Complete%20Report.pdf.
108 Ibid.
109 Ibid.
110 Liesel Crocker, "How Congress Can Put a Stop to States' Provider Tax Schemes in Medicaid and Save Billions," Foundation for Government Accountability (2025), https://thefga.org/research/congress-can-put-stop-states-providertax-schemes-medicaid.
111 Ibid.
112 Ibid.
113 Ibid.
114 Ibid.
115 Author's calculations based upon data provided by the U.S. Department of Health and Human Services on total Medicaid expenditures in fiscal year 2024, disaggregated by source of funding. See, e.g., Centers for Medicare and Medicaid Services, "Financial management report for fiscal year 2024," U.S. Department of Health and Human Services (2025), https://www.medicaid.gov/medicaid/financial-management/downloads/financial-management-report-fy2024.zip.
116 Liesel Crocker, "How Congress Can Put a Stop to States' Provider Tax Schemes in Medicaid and Save Billions," Foundation for Government Accountability (2025), https://thefga.org/research/congress-can-put-stop-states-providertax-schemes-medicaid.
117 Ibid.
118 Ibid.
119 Ibid.
120 Ibid.
121 Ibid.
122 Ibid.
123 Ibid.
124 Ibid.
125 Paige Terryberry, "States must implement new limits on state-directed payment schemes," Foundation for Government Accountability (2025), https://thefga.org/research/state-directedpaymentschemes.
126 Ibid.
127 Ibid.
128 Ibid.
129 Public Law 119-21 (2025), https://www.congress.gov/119/plaws/publ21/PLAW-119publ21.pdf.
130 Ibid.
131 Ibid.
132 Centers for Medicare and Medicaid Services, "Medicaid Program; Preserving Medicaid Funding for Vulnerable Populations-Closing a Health Care-Related Tax Loophole," U.S. Department of Health and Human Services (2026), https://www.federalregister.gov/documents/2026/02/02/2026-02040/medicaid-program-preserving-medicaid-fundingfor-vulnerable-populations-closing-a-health.
133 Centers for Medicare and Medicaid Services, "Medicaid Program; Amending the Indirect Hold Harmless Threshold of Health Care-Related Taxes," U.S. Department of Health and Human Services (2026), https://www.federalregister.gov/documents/2026/07/23/2026-14897/medicaid-program-amending-the-indirect-holdharmless-threshold-of-health-care-related-taxes.
134 Centers for Medicare and Medicaid Services, "Medicaid Program; Medicaid Managed Care State Directed Payments and Medicaid Fee-for-Service Targeted Medicaid Practitioner Payments," U.S. Department of Health and Human Services (2026), https://www.federalregister.gov/documents/2026/05/22/2026-10292/medicaid-program-medicaid-managedcare-state-directed-payments-and-medicaid-fee-for-service-targeted.
135 Paige Terryberry, "How Congress Can Fix the Flawed Financing Structure for Medicaid Expansion and Reprioritize the Truly Needy," Foundation for Government Accountability (2025), https://thefga.org/research/congress-fix-flawedfinancing-structure-medicaid-expansion.
136 Centers for Medicare and Medicaid Services, "Federal financial participation in state assistance expenditures: Federal matching shares for Medicaid, the Children's Health Insurance Program, and aid to needy aged, blind, or disabled persons for October 1, 2025 through September 30, 2026," U.S. Department of Health and Human Services (2024), https://www.govinfo.gov/content/pkg/FR-2024-11-29/pdf/2024-27910.pdf.
137 Paige Terryberry, "How Congress can fix the flawed financing structure for Medicaid expansion and reprioritize the truly needy," Foundation for Government Accountability (2025), https://thefga.org/research/congress-fix-flawedfinancing-structure-medicaid-expansion.
138 Paige Terryberry, "Congress should end Washington, D.C.'s sweetheart Medicaid matching fund bonus," Foundation for Government Accountability (2025), https://thefga.org/research/congress-should-end-washington-dc-sweetheartmedicaid-matching-fund-bonus.
139 Paige Terryberry, "How Congress Can Fix the Flawed Financing Structure for Medicaid Expansion and Reprioritize the Truly Needy," Foundation for Government Accountability (2025), https://thefga.org/research/congress-fix-flawedfinancing-structure-medicaid-expansion.
140 Author's calculations based upon data provided by U.S. Department of Health and Human Services on total Medicaid expenditures in fiscal year 2024, disaggregated by funding source and Group VIII eligibility category. See, e.g., Centers for Medicare and Medicaid Services, "Financial management report for fiscal year 2024," U.S. Department of Health and Human Services (2025), https://www.medicaid.gov/medicaid/financial-management/downloads/financial-managementreport-fy2024.zip.
141 Ibid.
142 Ibid.
143 James A. Richardson et al., "Medicaid expansion and the Louisiana economy," Louisiana Department of Health (2018), https://gov.louisiana.gov/assets/MedicaidExpansion/MedicaidExpansionStudy.pdf.
144 Bryce Ward, "The impact of Medicaid expansion on states' budgets: Appendices A, B, and C," Commonwealth Fund (2020), https://www.commonwealthfund.org/sites/default/files/2020-05/Ward_impact_Medicaid_expansion_state_budgets_Appendices_A_B_C.pdf.
145 Kevin Koorstra, "Fiscal brief: Healthy Michigan Plan savings and cost estimates," Michigan House Fiscal Agency (2018), https://www.house.mi.gov/hfa/PDF/Alpha/Fiscal_Briefing_HMP_Savings_and_Cost_Estimates.pdf.
146 Deborah Bachrach and Heather Howard, "States expanding Medicaid see significant budget savings and revenue gains: A presentation to Grantmakers in Health," Robert Wood Johnson Foundation (2015), https://www.gih.org/files/Medicaid%20Expansion%20Economic%20Impact%20and%20Sustainability%20Presentation.pd f.
147 Author's calculations based upon data provided by the U.S. Department of Health and Human Services on eligibilityrelated improper payments in reporting year 2021, disaggregated by eligibility category. See, e.g., Centers for Medicare and Medicaid Services, "2021 Medicaid and CHIP supplemental improper payment data," U.S. Department of Health and Human Services (2021), https://www.cms.gov/files/document/2021-medicaid-chip-supplemental-improper-paymentdata.pdf-1.
148 Jonathan Bain, "Gaming the system: How states exploit ObamaCare expansion to maximize federal dollars," Foundation for Government Accountability (2026), https://thefga.org/research/gaming-the-system-how-states-exploitobamacare-expansion-to-maximize-federal-dollars.
149 42 U.S.C. Sec. 1396a(a)(10)(A)(i)(VIII) (2024), https://www.govinfo.gov/content/pkg/USCODE-2024-title42/pdf/USCODE2024-title42-chap7-subchapXIX-sec1396a.pdf.
150 Deborah Bachrach and Heather Howard, "States expanding Medicaid see significant budget savings and revenue gains: A presentation to Grantmakers in Health," Robert Wood Johnson Foundation (2015), https://www.gih.org/files/Medicaid%20Expansion%20Economic%20Impact%20and%20Sustainability%20Presentation.pdf.
151 Bryce Ward, "The impact of Medicaid expansion on states' budgets: Appendices A, B, and C," Commonwealth Fund (2020), https://www.commonwealthfund.org/sites/default/files/2020-05/Ward_impact_Medicaid_expansion_state_budgets_Appendices_A_B_C.pdf.
152 Jonathan Bain, "Gaming the system: How states exploit ObamaCare expansion to maximize federal dollars," Foundation for Government Accountability (2026), https://thefga.org/research/gaming-the-system-how-states-exploitobamacare-expansion-to-maximize-federal-dollars.
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Original text here: https://www.budget.senate.gov/imo/media/doc/mr_jonathan_ingram_-_testimony_-_senate_budget_committee_-_08042026.pdf