Policy That Protects: Fighting Online Fraud and Scams Through Responsive Policymaking

Online fraud and scams continue to be major concerns for members of the American public. 

When New America Chicago launched its CivicSpace Financial Security Survey to learn about what issues of economic well-being mattered most to Chicagoland residents with low or moderate incomes, one of the most common answers was protection from online fraud. Many expressed anxieties around scammers accessing sensitive personal information and stealing their hard-earned money. These concerns become all the more pressing when considering the heightened challenges that those with limited economic resources face in recovering from a fraud encounter.

People living outside the Chicago area echo these sentiments. Surveys from AARP and Gallup report that U.S. adults, on average, experience high levels of worry about fraud and scams and are more concerned about fraud than most violent crimes. In fact, nearly three in four adults have experienced some type of online scam or fraud. Given that these issues are a top concern for the public and result in billions of dollars in losses each year, there is a need for new legislative efforts to better protect and empower everyday consumers. 

As part of our work responding to community members’ concerns, we reviewed the current anti-fraud policy landscape and insights from consumer protection experts in order to identify pathways to more effective fraud prevention and response policies. Our goal is to help further the national conversation about online fraud and scams, particularly in light of the current administration’s attacks on consumer protection infrastructure. We discuss legislative efforts to address fraud activity, barriers that hamper prevention efforts, and why it is important to use the voices of community members to inform the fight against fraud and scams.

To understand the need for more effective policy efforts to combat fraud and scams, it is important to first define the issue and clarify its magnitude and impacts. While exact definitions of the terms fraud and scam vary across sources, fraud broadly refers to a range of deceptive actions that are done to acquire assets such as money or sensitive personal information. Scams, on the other hand, are a kind of fraud that typically involves the use of dishonesty or social engineering to lead a person to voluntarily hand over their money or personal information. The two terms are often used interchangeably, and a variety of specific tactics fall under each umbrella category.

Online fraud and scams are widespread and substantially underreported problems in the United States. In 2024, roughly 2.6 million individual reports of fraud were filed with the Federal Trade Commission, one of the primary federal agencies tasked with enforcing consumer protection laws. Those who filed reports lost $12.8 billion to fraud, but after adjusting for the cases likely left unreported, the agency estimated that total losses were closer to $195.9 billion that year.

Research on online fraud and scams reveals that anyone—regardless of age, occupation, education, race, or gender—can experience these crimes. Older adults who report encountering scammers typically experience the largest losses, but adults under the age of 30 report losing money more often than any other age group. Many people who have been harmed by fraud also report experiencing multiple fraud encounters. Those whose money or information was stolen often feel shame, grief, anger, and frustration, feelings that are only amplified by the common but flawed notion that victims of scams are to blame for their losses.

While the existing research sheds light on the harmful impacts of fraud, several questions remain unanswered. It is important to uncover all the reasons why so many people feel especially vulnerable to fraud, as well as what specific kinds of resources can help people feel more protected in their daily lives. Equally important, how can policymakers and other stakeholders best protect the public from online fraud and scams?

A complex network of federal and state agencies¹ and laws make up the anti-fraud policy landscape, yet these agencies and laws often struggle to keep pace with the ever-changing state of fraud and scam activity.² Advocacy groups and elected officials from across the aisle have advanced a range of legislative proposals aimed at filling policy gaps and responding to newly emerging threats to consumers.

The federal agencies tasked with addressing online fraud and scams are empowered to do so by several federal statutes. Central among these is the Computer and Fraud Abuse Act, which describes the civil and criminal penalties for engaging in computer-based fraud, hacking, and other prohibited activities. This 1984 law is one of the primary statutes that law enforcement agencies use to prosecute online fraud and other cybercrimes.³ More recent laws have also created entities dedicated to combating scams and fraud. For example, the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act established the Consumer Financial Protection Bureau (CFPB), an independent federal agency tasked with implementing and enforcing consumer protection laws. However, the One Big Beautiful Bill of 2025 cut CFPB’s budget request cap by nearly half, and the Trump administration began significantly curtailing the agency’s enforcement activities. Other laws created entities that focus on studying and fighting against fraud targeting older adults, such as the cross-sector Scams Against Older Adults Advisory Group.

Multiple congressional representatives have proposed legislation that directs resources toward studying online fraud and scams, strengthening protections against these crimes, and creating more opportunities for victims to receive relief. During the current 119th Congress, lawmakers have introduced at least three different bills that would establish task forces to develop recommendations for addressing various kinds of scam activity.⁴ Likewise, members of both chambers have recently filed proposals that are meant to address fraudulent online advertising and allow some individuals who have lost money to scams to claim a tax deduction. Growing concerns around bad actors using artificial intelligence (AI) tools to commit fraud have also pushed lawmakers to propose legislation that would, among other things, increase penalties for AI-enabled scam activities and update existing anti-fraud laws to reflect recent advances in technology. 

Nonprofit organizations working to protect consumers have urged the federal government to consider additional measures, such as creating a National Anti-Scam Center or establishing congressional commissions to review regulatory authorities relating to cyber-facilitated fraud and scams. Taken together, these proposals indicate that online fraud is an issue area ripe for innovative policies that empower those harmed by fraud and stop scammers before they reach consumers.

Although most anti-fraud laws are enshrined at the federal level, multiple states have passed laws to assist states’ attorneys general and relevant agencies in responding to and protecting against fraud.⁵ States have unique insights into the needs of their residents and, given reductions in federal protection efforts under the Trump administration, will need to play an increasing role in protecting people from online scams.

Policymakers across the country have proposed and implemented laws responding to the use of various payment mediums and emerging technologies for fraudulent purposes. At least 12 states in the last five years have enacted laws to combat gift card scams and fraud, such as by creating new criminal penalties for fraud activities or requiring gift card merchants to warn consumers about possible scams. Many others have established new licensing requirements for digital asset kiosks or invoked measures to prevent scammers from stealing consumers’ money held in cryptocurrencies like Bitcoin or Ether. As a part of widespread efforts to regulate the use and development of AI technologies, state policymakers have also introduced numerous measures to combat AI-enabled impersonation scams and other kinds of fraud that rely on these rapidly changing technologies.

Along with passing laws that target specific types of fraud activity, several states have enacted policies designed to protect vulnerable populations and create opportunities for fraud victims to recover lost funds. For example, 43 states and Puerto Rico have passed laws that require qualified financial services professionals to report if they suspect that an older adult has experienced or may experience financial exploitation.⁶ At least two states have also created new funds to compensate fraud victims in certain circumstances, such as when affected individuals are unable to receive restitution directly from prosecuted scammers. 

Presently enacted state and federal consumer protection laws offer tools that help government entities respond to online fraud and scams. Yet, as evidenced by increasing rates of fraud activity, these tools currently provide insufficient protection for consumers who navigate virtual and marketplace environments each day.

In order for lawmakers to better shield people from online fraud and scams, they must address several important facets of the issue and overcome barriers that currently limit what policy actions are possible. Only by addressing these challenges can they effectively respond to the public’s mounting concerns.

Advancements in AI and other new technologies have provided scammers with new tools to target people. These recent developments require policymakers, consumer advocates, private businesses, law enforcement, and everyday consumers to stay up to date on current scammer tactics to prevent and avoid them. Preventative anti-fraud policies are most effective when tailored to the evolving reality of tech-enabled fraud.

Self-reported fraud and scam data suffers from underreporting issues that decrease the quality of such data. Aggregated reports also obscure individual stories of loss that illustrate the significant material and psychological impacts that fraud and scams may have on those who have been harmed. Lacking reliable, consistent, and varied measures of fraud and scam activity can stand in the way of developing more effective, data-driven prevention resources and policies. 

Due in part to the limitations they face in observing fraud and scam activity, lawmakers are unable to successfully prevent this activity by themselves. Indeed, multiple government agencies take in, investigate, and share fraud reports with one another but cannot fully address the evolving suite of scam tactics that fraud actors deploy. At the same time, these agencies still retain special authorities and institutional resources to go after those committing fraud inside the United States and from abroad.

Private sector entities—banks, social media sites, job recruitment portals, online marketplaces, etc.—are also ill-equipped to unilaterally eliminate all the fraud and scams that take place on their platforms and among their clients. However, given that the majority of adults who experience fraud report fraud activity to their financial institution or the company involved, these companies can offer unique insights into fraud and scam activity that is not directly reported to government agencies. 

Effective prevention efforts require collaboration between the public and private sectors in order to combat fraud on all fronts. Considering their respective advantages, there is room for greater coordination and information sharing across entities in order to advance proactive approaches to reducing fraud activity.

It is often difficult for people who have experienced a scam to get back the money they lost. While some supportive services exist to help victims manage the material and emotional consequences of scam encounters, the increasing prevalence of fraud and scam activity means that more resources are needed to help support those who have suffered losses. Consistent reports from fraud and scam victims about the shame and embarrassment they feel also demonstrate the need to combat victim-blaming narratives and shift the national conversation around these crimes. 

Because older adults experience the highest median losses from fraud and scams, several education campaigns and policy advisory groups have emerged to serve this population. However, data on scam encounters shows that anyone can get scammed, and that young adults report losing money to fraud more often than older adults. These data suggest that there is a need for more dedicated resources and efforts to provide accessible anti-fraud information to a wider audience and develop policies to protect all vulnerable populations, regardless of age.

As other organizations working to protect consumers have noted, lawmakers need to commit more legislative time and resources to combating fraud and scams. A growing number of elected officials have introduced bills meant to respond to the public’s concerns, yet few have been enshrined in law. The Trump administration has also signaled its interest in making online fraud and scams a national priority—a notable contrast to its ongoing attempts to halt or dismantle the government agencies responsible for protecting consumers. Several tech companies and other private entities have likewise committed to combating online fraud occurring on their platforms. 

Harnessing this momentum requires developing the political will to improve fraud prevention efforts that protect consumers while respecting individual privacy and civil liberties. Unless scam prevention efforts take place concurrently at the federal and state level, the American public will continue to be vulnerable to online fraud and scams.

As the number of scam and fraud reports rises each year and new threats continue to emerge, policymakers across the country must create more effective policies to shield consumers from loss. 

The public’s concerns about online fraud and scams are echoed across recent opinion polls, including our own CivicSpace survey. These worries are intertwined with other concerns around making ends meet and weathering economic hardships. Scammers take advantage of these concerns, as well as people’s emotions and personal circumstances. Indeed, research on fraud activity shows that people who have recently experienced stressful life events and those without strong support networks are more likely to experience scams. Those who are actively seeking work may also be particularly vulnerable to the growing number of job opportunity scams. The public’s anxieties about fraud and scams are inseparable from its concerns about achieving and maintaining economic security.

Beyond improving awareness and engaging in multi-sector, collaborative policymaking, it is essential that any efforts to strengthen protections against fraud center the voices and experiences of directly impacted consumers. Elevating the voices of those who have suffered losses from fraud or scams not only humanizes the aggregate data on the issue but also helps generate knowledge about how individuals experience these crimes. These efforts build trust in government, prompt civic engagement, and help push back against narratives of blame and shame that stigmatize victims. Uniting the valuable insights of people who have experienced fraud with the expertise of those who conduct anti-fraud research and political advocacy will help generate innovative strategies to better protect everyday consumers.

We want to express our gratitude to the members of the public who shared their experiences of online fraud and scams with us. We thank you for your candor, trust, and support in working to combat this pervasive issue.