Today, the House Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions, led by Chairman Blaine Luetkemeyer (MO-03), is holding a hearing entitled “Protecting Americans' Savings: Examining the Economics of the Multi-Billion Dollar Romance Confidence Scam Industry.”
Chairman Luetkemeyer’s opening remarks focused on analyzing a pervasive threat to everyday Americans—Confidence Scams.
“I want to welcome our witnesses to our hearing today, which is devoted to analyzing a pervasive threat to everyday Americans—Confidence Scams," Luetkemeyer stated. He emphasized that the term 'Pig Butchering' would not be used during the hearing due to its derogatory connotations.
“These scams rely on trust. Trust that is built over weeks or months, but trust and confidence are paramount for this scam to be successful,” he explained.
Luetkemeyer noted an increase in scam-related texts since the COVID-19 pandemic. "They can feel random and are quickly deleted but can be as innocent as ‘Peter, how have you been’ or ‘Hey John, are you still interested in grabbing a coffee?’ Many would delete the message right away, but some reply correcting the individual and a conversation begins."
He described how scammers build trust over time before introducing discussions about cryptocurrency investments. “Once confidence is built and the victim is lulled into a false sense of security, the scammer will discuss how well their cryptocurrency investment portfolio is performing,” he said.
The scammers never directly ask for money but guide victims through setting up crypto accounts or wiring money to bank accounts in Southeast Asia. “Scammers have become incredibly adept with U.S. banking regulations and will prep their victim with ways to avoid suspicion,” Luetkemeyer added.
He cited an example where one victim was instructed to tell bank staff that money being wired was for purchasing goods from a Chinese supplier in Hong Kong. Victims may initially send small amounts to establish fictitious trading accounts while scammers present false account information showing growing investments.
“Scammers may even allow victims to cash out a portion of their initial investment to maintain a semblance of authenticity,” he said. The goal is to pressure victims into pulling from their savings and liquidating retirement funds until nothing remains.
According to John Griffin, an economics professor from the University of Texas at Austin, these scams resulted in $75 billion for Chinese criminal organizations from January 2020 to February 2024. The FBI's 2023 Cryptocurrency Fraud Report estimated $5.6 billion in losses for 2023 due to investment fraud—a 45% increase from the previous year.
“Confidence scams are a pervasive issue that affects red districts and blue districts," Luetkemeyer concluded. "It is abundantly clear that more education is needed... It is incumbent upon Congress to sound the alarm and warn our constituents.”
Testifying before the subcommittee was a diverse panel representing state, local, and federal responses to Confidence Scams. “It is obvious that more can be done to confront this problem,” Luetkemeyer asserted.
###