Insurance & Commerce - Senate and House
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- October 2, 2026
Speaker 2
2:43
find your find your seats we can get started Meeting jointly insurance and
Speaker 24
3:05
commerce House and Senate today committee is examining growing threat to financial fraud in Arkansas raud is evolved into organized technologydrin schemes that target seniors small business and working families across our state our responsibility is clear to protect our Kansans strength and coordination between financial institutions and law enforcement and ensure our laws keep pace with the emerging threats as many members know we
passed a slate of of laws to address that in 25 and we need to keep pace and advance those laws as the threats change we appreciate the witnesses joining us today and look forward to a productive discussion uhpresentative maddox you got anything thank you Mr Chair. good morning.
Representative John Maddox
Unverified
3:56
just want to say that this is something that's very important to me in my other life I serve as an attorney for a medium sized bank and we see
fraud and scams they proliferating all the time so I look forward to maybe some solutions and some steps we can take to further and
Speaker 24
4:19
assist our state so thank you. thank you we're gonna begin with consideration to approve the minutes from the November3,2025 minutes has everyone had a chance to to review those. I'll I'll entertain a motion motion by senator Boyd second by
Senator Johnson, all in favor sayy aye all opposed like sign thank you members we're gonna get into our our financial fraud discussion uhloriri Trogden with the chief executive officer with Arkansas Bankers association come forward just introduce yourself and you're recognized just don't take too long
Speaker 31
5:06
have things to do understood well
thank you for allowing me to be here and talk about fraud and it's good to see all of you again it feels like it's been a while so great to be with you guys again but as Blake and I'm sorry as Senator Johnson andpresentative maddox said this is an epidemic across our country. I am going to leave specific examples you have the experts that work in the industry every day here that will be testifying. I'll just give you some numbers about our growing threatat landscape.73% of US adults have experienced some
type of online scan or cyberattack. FBI does a report every year the 2024 report because 2025 isn't out yet but it estimates $16 billion in total fraud losses nationwide we know that that number is underreported because many people are too embarrassed to report that they've been defrauded or scammed and so it's actually much higher than that it it remains significantly unreported. arkansas, let's talk about Arkansas from the FBI
report4,238 fraud incidents were reported in 2024 and again that number is probably far underreported and that equated to51.8 million in reported losses40% of those payments so40% of the51.8 million we're facilitate we're facilitated through cryptocurrency which makes clawing that back much more difficult and then seniors60+ are the most target not to call anybody in here a senior if you're 60 plus but that is the definition for the
FBI report. they're the most targeted demographic 25% of those reported incidents were60pl and53% of that monetary loss,53% of the52 million were senior 60 plus so that's a large demographic there some of the costliest fraud categories in that report were investment fraud, business email compromise you've all gotten the the email from your boss that says I need you to buy gift cards immediately and send them
over the internet. romance scams catfishing, tech support scams and like I said we have bankers and others here today to share more about what they're experiencing but some of the most common tactics are spoofed bank telephone numbers. I'm sure we've all gotten a text message or a fake call there spoofsban email address is fake websites being promoted on social media lotteries tooo good to be true deals on you know Louis Vuitton bags for400 dollars trying to steal your
credit card, fake job postings on Linkedinn and other platforms that they impersonate wellnn companies that get you to apply for the job and then they send you all the information for the background check and that's where they get your social security number and other things so what can we do here in the state of Arkansas you know banks stay on that front line all the time they spend billions with the capital B billions in training their frontline their tellers, their their managers their their
branches on recognizing and trying to deter fraud whenever possible. they are constantly deploying new technology they spend a lot of that money in technology and educating customers is something that we try and do every single day no matter where we are no matter what we're doing we all try to touch on fraud when we're talking out in our communities what can you all do to help at the state level my colleague Mr. Bina will talk a little bit more about some specifics on this but you can all pass legislation which Senator Johnson referred to in
2027 to hold telemarketing companies and social media platforms accountable if they knowingly facilitate fraudulent calls, text or ads on their platforms all of you can also every day right now after you leave this meeting you can use your platforms to help educate constituents about how to avoid frauds and scams so everyone here today in this room that'll be testifying we all have materials for consumer tips to help educate them and you can utilize those on your
social media or you know you all speak a lot at community organizations and in your churches and things like that so those are something that you can share at I take every time I speak with a community organization no matter what I'm talking about I take a few minutes just to talk about here are the current scams if you get a text like this if you get an email like this here's what you should do so you all have you have the ears of your constituents so you have an excellent opportunity to educate them and then at the federal level we go to Washington a couple of times a year the bankers association
does and take all of our bankers with us and we've we've been advocating with our meetings with the White House for a cross agency comprehensive task forcece that is slow solely committed to fraud because we can't do it alone. it does take all of us and all the cross agencies
Speaker 33
10:09
to combat this every day that is all I have unless somebody has questions youriri so
Speaker 24
10:15
just out of due consideration whenever the bank this may be
for some of the later witnesses whenever this happens and they reimburse the the person who had been fraud you know the so does that come does that come out of the deposit of assets or the profit margin of the bank or does the FDIC care of the person who's been
Speaker 36
10:43
defrauded I'm going to let the bankers answer that specifically.
Speaker 31
10:53
specific things and I don't think any of it's due to fraud but I will, I
Speaker 24
10:58
will let the experts who are in the room talk about that right thank you we have we have
Senator Mark Johnson
Unverified
11:05
some questions senator Mark Johnson thank you Mr Chairman loriri thank you for coming in on this important issue I I looked on my phone and I I I delete these things usually but I hung on to this one I'm glad I did I want to read it to you it says parking citation final notice. Our records indicate
outstanding parking citation associated with your vehicle. failure to pay the balance by February6 may result in continued noncompliance and suspension of driving privileges for up to 30 days this is reporting your violation to the arizona motor Vecle Division. Well I haven't
driven or parked in Arizona in certainly5 years maybe ever and
so this has got to be what do I do with this? I mean I can delete it but is there someplace I can report things like
Representative Julie Mayberry
Unverified
12:06
this so they can be investigated you should definitely the the little thing underneath the text messages that's that say support scam you should definitely do that and if you're ever in doubt if that might be real, don't use the number that's on the text.
Speaker 52
12:17
look up the arizona department and called them directly off what you find but never respond to the number that's related to the text or email or click the link. I had my
Senator Mark Johnson
Unverified
12:29
debit card hacked I think it was in New I think it was in New Orleans and I I think I even know the I went to a jazz club I paid for drinks with my debit card and ever since then I still get I still get notices of ofubber that you know that and I've got it I mean the credit union this will sue Arkansasederal they took care of me lickety split the day I got back but I'm still getting every now and then I'll get a you know aubber
declined because they were using the old debit card number When I use my debit card or credit card is the tap function more secure than the the using the chip function I I try not to I try to use the tap when it's available but is there one method one over the other that you would when when you say we talked to
our constituents we can tell this we can share this information is there a a safer
Representative Julie Mayberry
Unverified
13:31
way to to use that card my understanding is that tap is always the preferred method my colleague Mr. Bina that is coming up next. He he is the
Speaker 52
13:39
expert on all things fraud and so can probably give you a little more detail or one of the
Representative Julie Mayberry
Unverified
13:44
bankers in the room can as well but my understanding always tap'll wait for
Senator Mark Johnson
Unverified
13:47
them then thank you very much thank you Mr Cha. thank you senator so there's
Joe Peratt
Unverified
13:50
a lot of people want to ask you questions they they miss you. If, if I miss you all too if they're really technical I'm
Speaker 31
14:02
probably not the person to ask just Fy since we have bankers
Representative Carol Dalby
Unverified
14:10
in the roompresentativealby Thank you Mr chair it's good to see youlourri mine is not a technical question mine is referring to your testimony of of potential legislation does your association or the national association have some model legislation that we need to begin looking at to see if that would help address this issue in Arkansas because obviously y'all
would be probably a little more prepared than if one of us just kind of tried to think of something on our own do you have something like that that
Speaker 64
14:41
at some point you can share with some of
Representative Carol Dalby
Unverified
14:44
us I do have it and I would be
Speaker 21
14:49
happy to share that. OK, well I'll be happy to visit with
Representative Jim Wooten
Unverified
14:54
you thank you Thank youpresentative uhpresentative Wwooten thank you Mr Chairloriri thank you for being here my question I had 21 of them s uhs representativedalby covered on
the legislative part and the other part of it is how many how many of the scams that you know of and you may not have this information but originated in Arkansas that we would have any control over at
Speaker 31
15:20
all the the only numbers I have are those I reported from the FBI which which we know are underreported but that was the4238 that were actually reported and then51.8 million was the reported loss the monetary loss on those that those were specific Arkansas
Representative Jim Wooten
Unverified
15:37
numbers that was justkansas4000 of them originate I'm talking about the person who was creating the scale
Speaker 31
15:44
oh that I I don't have the information on that that
Representative Jim Wooten
Unverified
15:48
was the people being defrauded yeah all
Speaker 73
15:52
right thank you thank you Mr Chairman. thank
Senator Stephanie Flowers
Unverified
15:56
youpresentative senator flowers thank you Mrir How does Arkansas compare with the numbers that FBI report
Speaker 52
16:09
offers for other states against other states that report does have those numbers and I can get you the full report I did not look up the states around us for comparison but I know it's just as bad if not worse in in all
Senator Stephanie Flowers
Unverified
16:22
the other states I I'd like to see a comparative of of states they have a
Speaker 38
16:27
they do have a breakdown state by state. I'll get
Senator Stephanie Flowers
Unverified
16:30
that to you senator. OK is there a link for this? Can can you provide that to staff and then Mr
chair staff can send it out to the members
will absolutely'd like to know so you
have no idea if Arkansas is in the middle of those numbers or at the bottom or at
the top apologies I I do not OK
well some banks are go across state lines so are these numbers that you got from FBI do they
comprise those if you want to call them sister banks or affiliate banks across state lines or how how is that working how how do you break it down just to Arkansas banks if they are banks that have offices and and banks in other states I know Simmons is got banks in other states so I'd like to know how how does it those numbers
work across the state lines with banks that have multiple locations and out of state those numbers aren't
Speaker 31
17:48
reported by a bank. they're just reported when you when you file a police report for being defrauded that it comes from that agency so those numbers are no matter if it was a bank if it was a credit union if it was you know whatever it was a crypto kiosk those those numbers come from the actual police reports that have been filed senator
Senator Stephanie Flowers
Unverified
18:17
about that all right. One other thing I heard you mention crypto can you elaborate
on that a little bit how how is that impacting this fraud I I I
Representative Julie Mayberry
Unverified
18:30
don't don't want to steal her thunder. I think the bank commissioner may be going to talk about that
Speaker 31
18:37
because they had some legislation in 2025 but it's it can be untraceable and so like these crypto kiosks that
are at gas stations and things like that when you feed your money in to get you you know your hard earned cash to get the crypto and once you give transfer whatever the mechanism is to the other person to the criminal you can't get it back there is no getting it back it's gone forever. and so it's a
Speaker 52
19:00
it's its own, you know, industry and way of paying that's separate from banks and so we we can't go back and track that but I think, I think the commissioner
Representative Julie Mayberry
Unverified
19:08
may have a little more on that. I don't want to speak on her behalf. look
Senator Stephanie Flowers
Unverified
19:11
forward to hearing from that commissioner thank you Mr Cha.
Speaker 24
19:15
thank you senator does anybody know or used one of those cryptorek kiosk I hadn never even seen one of those have you? don't use it I don't even trust that you shouldn't Well I mean we did it's not it's not US currency that's what
Representative Mark Perry
Unverified
19:47
we passed on that but uhpresentative Perry thank you Mr Chairman. thanks for being hereloriri. you know I do a lot of work in the senior market and it's it's once a week when I get a client or someone that has done this actually had a family member that was scammed out of it close to50,000 dollars and turned it over to the FBI and never heard anything. which kind of disturbing
maybe I had the wrong email or communication but when you try to reach out to him but it's you mentioned the consumer information that we could share with people. I would love if the the group could put those together and share with the staff and and distribute great thank you think it was an ass to share to
Speaker 52
20:49
all of us to put our information into one packet that can be shared with consumers and and get it
Representative Dwight Tosh
Unverified
21:00
to the committee which we're happy to do Representative Tosh thank you Mr Chairloura good to see you again thank you for being here just kind of walk us through or I guess make sure we all understand I know if an individual is victimized that the first contact or their their original initial contact is going to be with the local jurisdiction or the law enforcement have authority over
that jurisdiction. So, and you know some of those jurisdictions to be able to investigate these type of frauds their resources obviously are limited and we understand that so I guess what I'm trying to make sure that as a committee we understand is where does it go from there if local jurisdictions that have authority over the crime that has been committed if they want to seek assistance are there other agencies that can they can reach out to that would assist them because some of
these are gonna be crimes that's gonna require a lot of investigative work and a lot of resources made available to them to be able to to bring these individuals to justice so I'm just trying to make sure what is the protocol on that or do you know are they reaching out to other agencies or is there an investigative unit here in the state to assist those local jurisdictions with these type of fraud crimes the attorney general's office is
Speaker 109
22:18
here and I think they would probably be better suited to answer that question
Joe Peratt
Unverified
22:25
all right thank youlori. we'll go on to our next, uh. Thank
Speaker 24
22:33
you. it's Paul Bina executive vice president of Risk fraud and cybersecurity of American Bakers association ok he's apparently online I am online sir and I
Speaker 114
22:46
appreciate the opportunity being flexible allowing me to participate just to introduce yourself and
Speaker 116
22:55
who you're with and you're recognized. Erial I think I've been unmuted can you hear
Speaker 114
23:05
me now? yes we can hear you thank you sir. I appreciate
Speaker 117
23:08
the opportunity to be here and and your flexibility and allowing me to participate online. my name is Paul Bendy. I'm the executive vice president for risks fraud and cybersecurity at the American Bankers association. I alsoir Paul,
Joe Peratt
Unverified
23:21
you muted yourself or some kind of technological mes
anybody know what's going on staff right we're
Speaker 101
23:45
gonna go on to our next one we'll go back around her colleagues are
Speaker 24
23:52
right all right we was afraid you get hacked Paul oh am I back you're you're back hey there he is we give him seeing that we can see you now so we go with gas
Speaker 123
24:03
just go ahead all right perfect. So I assume
you didn't hear anything else that I had said earlier.
Speaker 24
24:10
just to just the first little little piece there and and but you're you're welcome to start over. thank you sir. so my
Speaker 117
24:18
name is Paul Benne executive vice president for Risk fraud and cyber at the American Bankers association. I serve as the chair of the International Banking federation scam and raud Worroup but I also sit on the global advisory boardard for the global anti-scam alliance. so I deal with scams a lot and I really wanted to focus a little bit on where these scams and frauds are coming from and maybe some things that we can do
with them you know people people wonder how do people fall for these scams and these frauds when people call them up and and what they forget is during the pandemic we had a massive rash of unemployment insurance fraud. many of you might experience this or heard colleagues experience this they're created a massive drive for personal information, work histories, things like that you know the department of laborbor estimated over300 billion in fraudulent claims were filed300 billion so think about that how many people filed these claims to get this this data
will your name and your address and your social security number and your date of birth don't really change that often, right? So so what happens? Someone calls you up on the phone. my dad's 87. if his if his phone rang and his caller Id said is it it was his bank but that bank's phone number and they call up and say Mr Bend is that you? Do you live at this address? This is the last four of your socialcial security number? Can I talk to you about a potentially fraudulent charge. I guarantee you that he would not have any clue that someone could spoof that number could have all his personal information
and engage him on it. and these are professional scammers. These are people that do this hundreds of times a day. They are very slick they're very convincing they know exactly the right things to say. If you did something 100 times a day you probably get pretty good at it. and what they re what we don't recognize is these are transnational criminal organizations. The State Department estimates there could be as many as400,000 people operating in scam centers around the world that are targeting not just the US but consumers all around the world and so what this has led to is a massive increase in scam losses not just
for the US but for the world. so the FBI estimates losses increased from 23 to24 by33%. The FTC estimates it went up by 25%. you know the FBIlo says 16.6 billion. FTC says 12.5 billion but the FTC also estimates losses could be as high as 196 billion. so let's take that middle ground.90 billion dollars potentially lost by Americans a lot of that going overseas a lot of that going to criminals here based in the US but just a massive increase in what we're seeing going forward. So banks invest billions of dollars to try and protect
Americans from scams and fraud. You know who here hasn't gotten a fraud alert from their bank. we're now seeing check fraud on a rise that's that's leveled off it's still a historically high level. Banks have taken a calling customers when they get a check in that's an out of normal amount for them. So we proactively lean into it but what we've recognized especially on the scam side of thing is that by the time a customer is willing to make a payment by the time they're willing to withdraw funds to put on a crypto ATm or whether they're willing to send money
somewhere, they believe they know and trust who they're sending that money to because they've been validated on the text message that looks exactly like it came from their bank followed up with a a spoof caller ID phone call or the social media site is pretending to be their bank and has convinced them that they're talking to someone who they believe is trustworthy. so we have our banks and our asset campaign that's out there you can go to banksNarass that.com. we've got some funny videos to try and educate consumers on what your bank will and won't ask such as you know we'll never ask you for that one time security code. we
have our practice safe checks campaign that's out there trying to help people figure out how to avoid the check fraud pieces but really where do we go to stop these scams and fraud and and you know it's the old adage an ounce of prevention's worth a pound to cure. We really need you know I'm a formal department of defense employee former Air Force veteran. we gotta move left to boom. We have to we have to stop these scammers from building this trust from consumers in the first place. there's only so much a bank can do when someone comes in front of them even if we know it's a scam we can do our best to try and stop them. We
could close their account as kind of the nuclear option but in the end it's a it's their money they get to decide Americans get to decide what they do with their money and so how do we stop them from engaging? Well one we have to stop the telecoms from allowing these spoofed calleridds there's no reason that a that a telecom should be enabling a criminal to present a bank's 1800 number. We've seen this used in multiple accounts where they'll be on the phone with the consumer and they'll say oh look on the back of your card. oh look up the number for that chase branch that's down the street. See the number we're
calling from matches that. Social media shouldn't be allowed to put impersonation accounts out there. Many of you probably use Googlehotos or Applehotos. I can put a picture of my daughter into Google Photos and will show me all the other pictures. Yet somehow Meta can't figure out how to pull down pictures of Brad Pitt or warren Buffett or others selling these fake cryp to investment schemes you're telling me you know a multi $100 billion technology company can't figure out how to stop these things. of course they can't. they choose not to. They make $160 billion on advertisements at least that was reported last
year. if you look at some of the news reports from Reuters or Wall Street Journal or others they asked me 10% of that revenue,16 billion dollars goes to scams and fraud. You know how hard it is to take on a scam ad by meta. it takes up to 8 to32 strikes so you can have an ad up there been reported 25 times and mett is like yeah you know we're not quite sure that's a scam ad so we're gonna leave it up just a little bit longer so they need to be taken more proactive action and and their own internal documents say meta is not going to act unless regulators or others
force them to act. so what we would ask you to do is look at ways and we do have some some legislation you can look at that can stop these telecoms from hosting these spoof caller IDs can stop these social media sites from putting an impersonation accounts out there. I do applaud this legislature for your passage on regulation on crypto ATMs if you want to invest in crypto we fully support your right to do that. Go to coinba or some other exchange these crypto ATMs will charge you a 20 to30% fee and when they've been looked at and
been sued by stateags 80 to95% of the transactions that go through there go to criminal elements. They are not legitimate businesses so I applaud you for taking that action and love to see you guys lead the way and trying to hold these telecoms and social media
Speaker 24
30:33
accountable. happy to answer any questions thank you Paul. is there any questions Senator
Senator Stephanie Flowers
Unverified
30:38
Flowers? thank you Mrir. Thank you Mr
Binham your name is Binda ma'am has your organization been before Congress?
Speaker 117
30:51
yes ma'am. I have personally testified in front
Senator Stephanie Flowers
Unverified
30:55
of Congress multiple times. long ago has your last presentation been? I would
Speaker 131
31:00
say it was about4 months ago, maybe5 months ago. I'd have to look it up. it was
Senator Stephanie Flowers
Unverified
31:07
last year do you have any indication that Congress is willing to act on a national level to curtail what is happening with financial fraud do ma'am we
Speaker 131
31:17
work closely with Senator Gallego and Senator
Speaker 117
31:22
Moreno in the drafting of the scam Act that was introduced and just had a house companion bill drop. this bill requires social media companies to develop a mitigation program for impersonation or deceptive ads requires FTC to approve those problems clarifies that those ads are not covered under section 230 which provided them immunity and then requires the ability to hold those social media companies liable by state AGs or private right of action so we're very supportive of that legislation and hopeful that we'll continue to gain sponsors and it'll move
Senator Stephanie Flowers
Unverified
31:52
forward in the legislative process. thank you for that the other question I have is your take on artificial
intelligence how is that going to play into this financial frauds scam sounds like it's gonna explode but like your opinion yes ma'am that that's a that's a great
Speaker 117
32:14
question. we're already seeing the impact on that you know,5 years ago you might have said oh look for those those
errors in the email look for the misspellings look for you know not wordage that seems different. Well you know anyone go on chat GBT and and put in and get a perfectly tailored email that looks exactly right. artificial intelligence is allowing these these these criminal elements to operate at scale where they can quickly reproduce websites look exactly like your bank website or you know the the gentleman had talked about the scam text that he received telling him to go to Arizona. Well they can recreate a website that looks exactly like the department of Arizona and they're trying to get your
debit card information for you to enter that into that so they can actually load that into a mobile phone and they can actually use this ghost tap software where they can then show that put that debit card in a wallet and put it on a mobile phone that's around the country and then they can go and make massive amounts of purchases almost instantaneously so this artificial intelligence is going to be a big driver for the volume of ads and so they you know they put 1000 hooks into the ocean and all they need is one successful this is going to allow them to increase that by a factor of 10 or 100 and I did want to you know you'd ask
questions where does Arkansas stand? they looked at the FBI's IC3 report Arkansas by losses is ranked 1 by the FBI and by the number of complaints at irtyfifth. the
Speaker 117
33:39
last one was the number of complaints filed by Arkansas residents you ranked thirtyfith in the number of complaints filed you ranked41st by the
Senator Stephanie Flowers
Unverified
33:48
number of losses the question is has
the association consulted or advised or expressed concern of this problem with Congressre and the administration concerning AI since they want to nationalize regulation and
rules for AI? so we have provided feedback to the administration that we would love
Speaker 117
34:14
to see a White House office of raud and scam prevention we think it's a necessary step to have a coordinated approach that would
help us look at how AI could be regulated to help stop scams and frauds how telecoms and social media companies their responsibilities along with what financial institutions do better so we think it's a whole of ecosystem approach and AI is certainly part
Senator Stephanie Flowers
Unverified
34:40
of that conversation and I suppose you've gotten some feedback from the administration or the congress
people that you've talked to so they're
Speaker 117
34:49
generally supportive of a national strategy we've not been successful in getting an office of scam and fraud prevention built the department
of justice did launch a national scam centerstrikeforce so we've been appreciative of that but we still think a national strategy is essential and have not yet been able to make
Senator Stephanie Flowers
Unverified
35:08
that happen yet. have one last question but if you need
Joe Peratt
Unverified
35:12
to go to someone else senator we got a you know pretty
Senator Stephanie Flowers
Unverified
35:16
extensive well I just it's a short question I think it one final question thank you OK you know when President
Obama was in office there was a
consumer protection agency set up I don't know if it's still in place or not to try to curb fraud and and bad business invoked on consumers is that still relevant and does that help in any way this situation that is
presented to us today with financial fraud all I can say is we tried to partner
Speaker 114
35:54
in the past with the CFPB in the last administration to help with education programs
Speaker 117
36:00
and they they neglected to partner with us so when it comes to the scam side of thing focused on the things
Speaker 115
36:08
on the bad actors we see from overseas and other pieces they weren't really
Speaker 24
36:15
helpful at least to us in trying to combat that thank you uhpresentative Wooten. I wanna, I wanna we're gonna have one question per person we have an extensive list please please get whatever you need into that one question thank you
Representative Jim Wooten
Unverified
36:31
thank you Mr Chairman. Mr. Bendner, thank you for being here and taking time out of your busy schedule. my my question is if I understand what you're saying and the way I understand the problem is the fact that social media which would really involve the national movement relatively to your membership have y'all have y'all explored the possibility of of executive order from the current president
Speaker 131
37:02
run to the fraud division that you're talking about we we have not I will say that we do have other states. I was actually just in Nebraska testifying on a
Speaker 117
37:14
bill to hold social media companies liable so other states are looking at options that they can they can execute on this you know an executive order is obviously much faster and much quicker but doesn't necessarily hold the force of law. it really becomes their the challenge we've got is some of the case law around this isn't where we need it to be so I referenced section 230. that's a specific part of the
law that shieldset companies from liability for user posted content. it's important because it's it provides first amendment protections we don't believe that ads that you take money for are part are the same thing as user posted content and that's why that scammack is really important so the executive orders can be really valuable
Speaker 115
37:51
in certain respects in other respects when case law is less clear that they they can
Representative Jim Wooten
Unverified
37:56
have less of an impact appreciate your response to that but the problem ispresentative wooten yes sir
Speaker 44
38:06
all right ripresentative Warden Thank you
Representative Les Warren
Unverified
38:16
Mr Benda for visiting with us. I run a title company and deal with a lot of wire fraud with our banks that we deal with I'd love to see us do something here in Arkansas as connected as you are do you have any states that have either
enacted legislation that you like or do you know of states that are coming up with some legislation that you'd like we'd love to I mean if they're already doing something we'd love to connect with them Reper warren thank you so much
Speaker 114
38:54
for that question I would say great minds think alike so we've
Speaker 117
38:57
just started an effort underway to try and track each of the fraud initiatives that have gone fraud legislative initiatives that each of the states have
implemented. I actually just talked with my team on this last week for example, Texas had some great initiatives came out of their state legislature last year federalizing the crime of stealing those arrow keys that open mailboxes giving venue to their state's law enforcement to go after cryptocurrencies. We are gathering those things exactly like you said and trying to find out what has worked what hasn't we would put the Arkansas legislation you passed last year on crypto ATMs in that bucket and trying to ident ify what has worked really well in each of those states where would you prioritize them so we
can make other states aware of it as we build that list we'll happily share that withloriri who can get them to you so that you can look at there might be potential
Speaker 24
39:52
things that you'd be interested in exploring that would be great thank you very much thank you Paul if there's no other questions we're gonna go on to the next presenter which is Brandon or Brendon Moss with persecurity Ba.
Brandon just introduce yourself and all your title and who you're with and you're recognized
Brandon Moss
Unverified
40:18
OK thank you for allowing me to be here today my name is Brandon Moss and I am the senior vice president of fraud and BSA for First Security Bank so we work directly with our customers in trying to not only prevent but also helping them recover funds from fraudulent activity and then reporting that to the federal government.
I did want to before I start introducing you to some of my customers that we've dealt with and kind of what their their scams that they've dealt with are did want to also thank the legislature for the amendments last year related to cryptocurrency ATMs through that effort we have been able to recover close to $250,000 for our customers from those kiosks that they deposited fraudulently.
the first customer that I would introduce you to is Ari she's 81 she was the victim of a Facebook scam she got a message through Facebook congratulating her for winning a house a car, and some money through a sweepstakes with that she was able or was required to pay taxes in advance of receiving her winnings the we were able to stop part of
that through the the foresight of the person that was working at the UPS store that she went to she was instructed to tape5,000 dollars in cash in the pages of a magazine and ship that overnight to Florida unfortunately she was the victim of several other scams that we discovered with a total loss to her44,000 dollars. the next scam
our customer John is75. he's also retired. he was befriended on Facebook by somebody that claimed that they were going to provide him with funds directly to his account. He provided them his personal information. thankfully he at that time realized it was a scam and did not complete that request but then in December of last year he was contracted again by someone claiming to be
a friend of his telling him about a grant called the Susan Smithgrant for30,000 dollars. He was the designated recipient of that and was told that all he needed to do was send $170 in Apple gift cards which he did go to his local dollarree and purchase Then in January he was communicating with someone he believed to be Jennifer Aniston via Facebook who needed
financial assistance until she could complete the sale of a property he was again willing to help with that and went back to his local dollarree and purchased $13,000 over the course of two months in Apple gift cards and forwarded those since that time last month, he has sent another $11,000 in gift cards that he purchased again at his local dollarree.
this time he is assisting Miranda Lambert with managing her finances and when she needs additional funds she will text him and he forwards that to her attorney because he was not comfortable sending money directly to her but again those are all coming through gift cards that he purchased at a local merchant. the most recent and a little bit
more concerning scam we have Thomas who's 89. he's been in his local branch, multiple times requesting withdrawals the last time he withdrew $23,000 in cash which he told us at the bank after multiple questions that it was for home renovations after being pressed he eventually confessed that he thought that he was speaking to an Apple employee who was
working with the federal government to prevent a charge against him he was instructed to take the $23,000 home from the bank put it in a shoebox or other container tape it closed and leave it on his front porch and someone will be by to pick it up. we have learned since then that that was going to be a ride sharing service that was going to come by his house that had been hired by the scammer so
it's not just cryptocurrency kiosks anymore they're finding other ways to retrieve those funds from our customers. the last one is extremely personal to me because I do know this individual and have known her my entire life. she's retired educator and she's 85 years old She received a pop up on her iPad one day when she was using it
this was actually back in March of 23, through the conversation with that pop up she was told that her Apple account had been compromised and she needed to take $19,000 from her account at the bank and wire those funds to a secure wallet at a crypto exchange she was instructed not to disclose the reason for the withdrawal or the wire to the bank
and when we asked questions she was instructed to inform the bank that this was for the purchase of a vehicle. then again in January of this year she came back so she is the the victim of multiple scams and requested to withdraw30,000 dollars she was instructed to go to a different branch than her normal branch where somebody might not be as familiar with her her activity and again to take that money
home and leave it on her front doorstep was again told not to disclose any information to the bank. and if we ask questions to tell us that that was for a home renovation it went a step further with this one and she was instructed to leave the coer on the phone the entire time that she was in the bank in an attempt to learn what questions we were asking so that they could be more prepared for the next victim.
we have also along with several other banks in Arkansas have been the victim of spoofed telephone numbers most recently our customer support number incersei was spoofed. that's a statewide number that we use for all of our customers to be able to call for support when customers are receiving those calls they're being asked either for their debit card information or their online banking credentials both of which can be used to transfer funds. and
then we've also seen several business email compromises over the last year with the biggest being a wire for $1.1 million that we fortunately were able to recover for our customer working with the receiving bank but that's most often not the case. different things that that we have found that would be helpful to communicate to the public specifically with social media
we need to be leery of odd friend requests, requests from people you don't know or not familiar with we don't want to accept requests from individuals posing as someone that you already know that you are already friends with we need to use extreme caution when talking to those individuals online I would honestly encourage people not to
talk to individuals especially those that they don't know or not familiar with through social media. don't click on links, emails or text messages that you're not expecting don't ever share any personal information, including your account information debit card information or online banking credentials and we would also encourage you not to use your email address or the password that you
use for any other account for any of your financial accounts we've seen last month there was a breach at gmail which exposed email addresses and passwords and we have seen many customers be victimized by using the first string of characters in their email address as their username and the same password so we have seen some credential hacking with that
and then contact the bank directly anytime you have a question, don't use a phone number in an email or a link lastly to echo on the previous witness we do continue to see check fraud. it is a growing trend. and not to demonize the postal service because they do provide a unnecessary function but I would encourage individuals to discontinue mailing checks and
def find alternative sources of payments for anyone that
Speaker 24
50:44
you need to pay. thank you Brandon appreciate those examples you're dismissed and we're going to the next presenter Shamika Johnson with the attorney general's office
Speaker 36
51:13
your your you know go ahead and introduce yourself and who
Shamika Johnson
Unverified
51:21
you're with and you're recognized I'm sorry my name is Shamika Johnson and I am an
Speaker 154
51:26
investigator at the attorney general's office and the consumer protection division and I handle mostly scams
Speaker 156
51:32
and fraud in our division my name's Justin Brash. I'm
Speaker 154
51:36
a senior assistant attorney general with our office. and the consumer protection division we protect the legitimate business community from deceptive business
practices and we also mediate disputes between consumers and businesses and then we also educate the consumers as far as going out and doing speaking engagements or working with other agencies to educate our consumers about the latest scams that we see. in the consumer protection vision we handle anything with consumer transactions if there's if there's a dispute and also if they're violating any of the AdTPpa which is the Arkansas
deceptive Trade Practices Act we we can investigate with with the under the Arkansas deceptive tradederactices Act and with that with scams and fraud in our division normally with the mediation the consumer will file a complaint with our office if they have been a victim of a scam or a fraud and they and we will investigate that to try to resolve the complaint by seeing if we can
recoup any money for the consumers so normally what we do is consumers submits a complaint and we contact the method of payment that they used in the sccam so what we have been seeing is a lot of consumers have been being affected by the government imposters scams where the scammers create in the sense of urgency and it's it has to be done immediately so that's what we're seeing as far as scams
with the government impostor and then also we are seeing scams with social media social media is that they're there's a ad maybe on Facebook saying saying that they can cre that you can purchase something or they are meeting someone on Facebook and they're creating a relationship with them so that's what we're seeing as far as social media and what we can do in that regards we can report those ads
to social media for them to take down we have a consumer policy channel that we use with meta that's that has Facebook and instagram so if we see any ads or anything like that we are able to contact them to see if they will take that information down and then also we have professional services scammers and these scammers are proposing as legitimate businesses so they may be may be proposes proposing is Microsoft
or any other legitimate business and then they are taking these consumer' monies pretending to be these businesses and we have seen an increase in those comp in in those types of complaints and in last year in 23 april pril twentypril23 of 2025 the attorney general established a financial fraud task forcece and the financial
fraud task force is made up of bankers and other stakeholders and we get together and meet quarterly to discuss the consumer protection issues that we are seeing as far as scams and frauds we share information and we try to collaborate to see what we can send out to consumers to educate them as far as what are the latest scams that we're seeing and the attorney general's belis believes that we are more
effective together so that's why he created that task force and also in our division we also do elder exploitation and that's the improper or illegal use of individual funds or property and that is done without the person's consent and normally we will get those complaints we will review those and also we will
if there is any elder financial exploitation that is geared towards any type of medicaid fraud we do have a unit that handles that as well if it's a medicaid recipient so the so we work we have other divisions in our office that also handles the elder exploitation and also in the last year at our office the consumers have reported to our office $1.6 million in
losses in scams over the last year and with the $1.6 million normally that is what consumers are reporting so they're they might have they might have been scammed out of maybe500 dollars and then they it may have been some type of investment scam so they may have said well the person said well you'll earn this much money so you might earn another500 dollars so that
might be 1000 so they might be counting their profits as losses so that number may seem high because of that and normally the constituents that we see that are being scammed they're around58 years old. and also these losses are huge now because of pig butchering and pig the pig butchering scam could start with any type of scam. Normally it starts with social media and it gains the trust is built
and they normally are using cryptocurrency and pig butchering scams so normally what the consumer will do they will create they have this they're talking to this person maybe on social media then they'll ask them to withdraw money from their bank then they will ask them to deposit the money into a legitimate cryptocurrency cryptocurrency company and then they would have them to download an app that is created by them
to deposit to transfer that crypto in so the crypto is getting transferred for a second time and when it gets transferred for a second time normally that's not a legitimate platform and they will in this app they have they have created they will make it seem like their money is gaining is gaining investments and it's really not and then by the time all the money they have spent all their money into this crypto currency app then
their money is gone and the scammer disappears and normally when they try to get the money back they will the scammer then will request more money just to take their try to get their money out so that's what we're seeing as far as ig butchering and I always advocate for consumers to file complaints with our office if they have been scammed. We were with the financial fraud task forcece the attorney general
Griffin established we were have been able to recover funds along with the help of our financial fraud task force on January6th we were we were we were contacted by one of our bankers on the task forcece elderly victim fell fell to a jury duty scam and withdrew $16,000. and deposited the funds into a bitcoin kiosk The bank assisted the consumer into filing the complaint and we
pulled the complaint in 24 hours we were able to send the complaint over to the kiosk company and by January14th the kiosk company responded back to our office and that consumer was able to receive $16,000 back. The next one was a title company the consumer received an email from the title company. the title company the consumer had talked to this title company
by phone only and then they received this email but it had all the information that they had spoke with the title company about over the phone the consumer based on the email initiated the wire for $25,000. and he he called his closing agent to verify verify the funds and that's when he found out it was a scam. what he did was he didn't call his bank he called the receiving bank and when he called the receiving
bank of the wire they did not they would not recall the wire because he authorized it the consumer then went ahead and contacted our office and we sent the complaint over to the receiving bank and his bank as well did a recall and after about 13 days he was able to get his money back for $25,000. and then another complaint
Speaker 24
1:01:21
thatmi we got we got a long list there's
Joe Peratt
Unverified
1:01:24
two other examples on on Cfo members if you would please close so members can ask questions
Speaker 162
1:01:33
thank you for putting this together thank uhloririroghan for organizing this as well thank you for all this and we continue to if you have constituents people who
Speaker 156
1:01:42
have this kind of stuff happen to them we're more than happy to to provide more examples like this and see if we can create the
next example of getting funds back at the agG's
Speaker 24
1:01:54
office so thank you thank you very much all all that presentation is on in C4 members just a reminder it'd
Joe Peratt
Unverified
1:02:00
be one question per member and you can get back in the queue if you need to. Senator flowers
Senator Stephanie Flowers
Unverified
1:02:11
thank you I'm curious about the online governmental
databases such as I don't know if you're familiar with www.atattascout where you have legal descriptions individuals names parcel number pretty much a lot of things do you see that as being a source of information for those persons that victimized these consumers
Speaker 166
1:02:53
thank you for that question senator do
Speaker 154
1:02:57
you is that is that something that we're seeing are you seeing based on
Senator Stephanie Flowers
Unverified
1:03:02
that website is that what the scammers are using yes you mentioned that a title company the situation with the title company and the consumer and it seemed as though it was suggested that they had
Speaker 154
1:03:15
some information beforehand I think it was more of a business email compromise. from the title company maybe some may someone compromised the
Senator Stephanie Flowers
Unverified
1:03:23
title company's email so I'm concerned about the what's online now in terms of what governmental agencies are able to report and you can see it online you can see in divorce cases all your court cases are only outlined now you see names of individuals involved
it it just seems like this digitization has brought us to a point where it's inexplicable how people's information is out there and being used for some illegal purpose yes senator and and that very well could be something that's
Speaker 162
1:04:12
being done we haven't seen any specific situations where that has been where people's
Speaker 156
1:04:18
data has then been used. We haven't seen any specific instances of that doesn't mean
Speaker 24
1:04:24
that it's not happening though. so thank
Representative Kenneth B. Ferguson
Unverified
1:04:32
you thank you senator uhpresentative Ferguson thank you Mrir. A quick question but want to say that your consumer protection divisions has done a great job. I've had at least3 or4 constituents that you guys have helped retrieve money for and kept them from being scammed. but my question is
regarding gift cards I had a individual who bought a car and they were asked to pay for their car with gift cards and I don't think you guys were able to help them I don't know whether y'all couldn't trace the IP address of the online cause I think they did it through Facebook Marketplace but have you been seeing that kind of scams using gift cards and I think these were Amazon gift cards and they did $1500 worth of amazon gift cards and then they wanted500 more for
transportation. at that time I got a phone call and I told them to reach out to you guys but I told them that isn't how I believe that people would do business in terms of buying a car but could you address that in terms of the gift card thing if you guys are able to help trace back to the IP address that sometimes some scammers will use it thank you Representative
Speaker 162
1:05:47
and I don't know that we can speak to that one specific situation but in general is that something that we've seen Normally what we
Speaker 154
1:05:57
do scammers have been asking for methods of payments in different ways and gift cards is one way that the scammers do ask for for payment and normally what has been done is that how we do it is that we contact the gift card company so it since if it was amazon if it was Apple any gift card company we will reach out to the gift card company to see if they are willing to offer the consumer a refund and that's how
it normally how it works because normally some gift card companies do not offer refunds unfortunately right thank
Representative Fred Allen
Unverified
1:06:39
you thank you Mr Chairman. thank you all for being here today you mentioned the financial fraud task force. he said it was made up of bankers. Are there any consumers on that task force or it just made up of exclusive bankers and business people. that's the only there are no
Speaker 162
1:06:58
consumers on the task force. The the intent behind the creations thattask force and thank you for that questionpresentative
Speaker 156
1:07:04
that particular task force was to get the different people the the different scams that are being seen on the banking and because these things are typically they're reported to or seen by banks and get everyone who's seen that in the same room so we can compare notes on it that's the idea behind the task force and so that's why those people weren included OK well
Speaker 23
1:07:24
I applaud you all. thank you. Representative dalby
Representative Carol Dalby
Unverified
1:07:31
thank you Mr Chair. just really quick you said at the very first of your presentation giving a little background to the consumer division part of the attorney general's office are you working with other agencies within the state to get out the information that you exist like someone goes and renews their driver's license and we all have to show up to get our picture made is there something that you could maybe hand a a little card or something you know
a fraud regarding fraud are we working across state agencies to get the information out about your department is my
Speaker 154
1:08:10
question thank youpresentative. Do we have things like that yes we do we do work with other state agencies, we work with the Arkansas Securities department. we work with adult protective services we work with a lot of different agencies and we do have a particular card at our office in regards to fraud fraud and scams it tells where you can report fraud if you have been a victim of online fraud with the
FBI and then if you have any medicaid fraud it tells you where you can report it to postal service but we do work with different agencies
Joe Peratt
Unverified
1:08:44
thank you thank you for coming and being here. we'll go to our next you're dismissed thank you
Speaker 24
1:08:49
this is David Norris with the Arkansas Mortgage Bankers association David if you would introduce yourself and you're recognized Perfect thank you
David Norris
Unverified
1:09:00
Mr chairir my name is David Norris. I have the
distinguished pleasure to serve as the legislative chair for the Arkansas Mortgage Bankers Association. I want to be respectful of the committee's time so I'll be I'll be very brief very very brief. fraud is ever evolving and hard to detect especially when it comes to mortgage and real estate fraud which has really changed dramatically in recent years many of the scams that I'm going to talk about are briefly mentioned have already been mentioned by previous witnesses. it relies on
modern digital deception impersonation, and manufactured urgency these schemes often look very legitimate as we've already established. they look professional, familiar, making them very difficult to detect. and the really key component here is that these victims aren't necessarily careless and many of them are actively targeted. some common mortgage and real estate scams impacting Arkansas and Arkansans. we've already talked about it spoof phone
spoofing previous witnesses have have alluded to that an impersonation, fake social media accounts fake ads that we see on on Facebook and meta. one of the big things that we experience in the mortgage industry, fake loan payoffs and wire frauds where we have scammers that will hack into to title companypany lender databases and change wiring instructions and send those out to consumers and a lot of times those
those funds are not able to be recovered. a big thing that that we see targeting seniors is the reverse mortgage scams bad actors misrepresenting costs and terms pressuring seniors to act quickly and then stripping their home equity unnecessarily and then we have obviously the identitybased mortgage fraud where fraudsters scammers will actually assume the identity take out credit in other people's names using their socialcialcurity numbers and even their financial
information. those are some of the more common scams that we see on our side and then the the latter part of of my testimony really want to focus on what consumers, what ourkansans can really do to protect themselves. one of the big things is slowing down, taking your time, making sure that you understand and you know who you're talking to. so slowing down is a very very big thing. Vverify independently before sending money verify the the source where it's going or where it's
coming from you know, using a credible searches you know it it's a very very important to verify independently. Be skeptical of online offers you'd think that would go you know without without having to say but you know warning signs include guaranteed approvals, no documentation require ment s unverified government programs umir wire instructions verbally. I talked about that just a moment ago calling the title company, calling your title agent or even speaking with your realtor to collaborate with that settlement agency to
make sure that these wire instructions are legitimate. and then work with licensed professionals making sure that mortgage professionals are licensed like myself they're searchable through the nationwide multistate licensing system wed refer to that as the NML S consumers should be cautious of untraceable and online operators. So in summary why this matters mortgage and real estate fraud is a consumer protection issue that is
disproportionately impacting seniors first time home buyers and blue collar white collar working families, ation and awareness remain the most effective tools to reduce harm. I would be remiss if I didn't give the committee our appreciation at the Arkansas Mortgage Bankers association in your involvement with last year's passing of house bill 1184, the trigger lead Bill if you guys remember that we want to thank you for your help on that just a word of note
the national rigger lead bill goes into effect in March on March5th so we're excited about that and with some additional consumer protection for Arkansans thank you thank
Speaker 94
1:13:21
you David senator Mark Johnson thank you Mr Chairman Mr.
Senator Mark Johnson
Unverified
1:13:26
norris thank you for being here. I have not experienced
this I don't know anyone that has but when I see advertisements for companies that want to protect you from it it makes me realize
there's some real things going on and that's this situation where someone will pose as you and go get a mortgage on your house and you look up one day and you think your house is has been paid off for several years and suddenly they're coming after you to foreclose and that's scary and I mean and all this fraud is is scary and and concerning but the very idea that and obviously it's probably gonna be seniors because they spent30 years
paying that mortgage off. how prevalent of that how's that been in Arkansas and and and and to kind of give you the other half of the question before I turn off to stay under the chairman's rule one of the things that that I I worry about is someone sees oh that these guys are doing that well that's almost like a instruction booklet for another fraudster to try to to to go on that and to to to to follow up on Senator Flower's comment
earlier we have so much more transparency on what you owe, what your lawsuits have been. I mean you as you said you can go online and and look at what a lawsuit is and what all the parties are and who the mortgage holder is and that's you know if you had to go down to the courthouse in person and someone saw an employee saw you do it, you might be more hesitant to do it but now you can anonymously look a lot of this stuff up I'm I'm just wondering is there more we should do in Arkansas and what recommendations would you
David Norris
Unverified
1:15:13
have to to stop this kind of fraud yeah so two part question right? the first question I have not personally I've been in the mortgage business for 16 years I've not personally experienced the first part of your question the fraud that you outlined it I really the land title association, it would be a great representative of more of answering that first part of your question but it does exist I think that to
your point targeting seniors those are more prevalent in highly states like Florida that have a a larger senior population also higher property values than than what we have here in Arkansas. unfortunately I'm not able to answer your first question and and with any sort of factbased data but I'm sure that it that it that it is there we do have situations where you know the big thing that we see on the on the is the impersonating of a seller and trying to sell that property
for you know, reduced cost or whatever and a lot of times they only get a nonrefundable deposit ahead of time,10% and then they walk away and then nothing ever happens the the the real the seller or the buyer is out of that money so that's another one and then you know one of the things that Senator Flowers brought that up was the the abundance of information on the internet as it relates to property records, divorces,
bankruptcies, lawsuits etc etc. The I think that until something is done from a legislative standpoint as it relates to those are public records so until that changes then we're I think we're still going to have those you know those issues you know, I don't know of anybody that has used to senator flowers's question. I don't know of anybody that has fabricated a warranty deed or a quick claim
deed. I'm sure it's happened using the legal description I'll be honest though the legal descriptions that we use as mortgage bankers oftentimes are incorrect. they're they're wildly inaccurate due to the data entry and and truthfully misunderstanding how legal descriptions actually work. but I don't think you can just walk into the county clerk's office and file a warranty deed. um, and you might be able to but there there are some checks and balances there but I I I'm afraid I can't answer that question either. but the
prevalence for online data is certainly a concern and understandable but until until public record until real estate filings as an example are no longer public and accessible online the the fraud risk still remains Senator flowers
Senator Stephanie Flowers
Unverified
1:18:04
thank you Mr Chair. it's not the county clerk where you're gonna
find those de requisites circuit clerk you might find them in the county clerk under a probate matter or ard my apology senator no problem but
I'm interested in this reverse mortgage scam I remember when I was
in the house when it was passed I didn't vote for it we seem to be following Missouri law that had been enacted. I didn't think it was a good idea then and still don't but I'm curious to know do
you have any statistics data on how that's impacting ourkansans no ma'am I
David Norris
Unverified
1:18:47
don't. The the volume of reverse
mortgages in Arkansas is fairly low and I was actually speaking to one of my colleagues who is a mortgage loan originator here in central Arkansas. I think there were maybe, I think he said something to the tune of maybe 80 reverse mortgages last year so that's not very many. and then there are even fewer lenders that actually do them and most of them are online. you can't you can't walk into First Security Bank as an example if I've got colleagues from Firstcurity or our vest or your larger institutions in the
state they don't do reverse mortgages typically and so a lot of these are your online reverse mortgage lenders but again Arkansas simply doesn't have the volume that other states do for reverse mortgages you can't ask
Senator Stephanie Flowers
Unverified
1:19:39
another question so we're we're we got
Speaker 36
1:19:42
we're about halfway through here senator we'll we've got plenty of
Speaker 24
1:19:47
other presenters thank you David. we're gonna go on to Suzannah Marshall
Members this is this is on exhibit two if if you want to look try to keep keep this presentation as
Joe Peratt
Unverified
1:20:07
concise as you can because members have a copy of this thank you very much thank you Mr Chair. good
Speaker 197
1:20:12
morning good morning members of the committee. I had quite a few prepared remarks today but I'm gonna pause introduce yourselves both of you and
Speaker 36
1:20:19
you recognize Suzanna Marshall, commissioner of the Arkansas
Speaker 197
1:20:21
State Bank Department and state Securities department. Karen Tierney with Arkansas Securities' Department. I had quite a few comments to
make but many of them are already you've already heard statistics and information about the real and present threat and danger that fraud is impacting our state and our individuals and our consumers. so I won't spend much of my time on that except to reiterate what has been heard today and to think about how we can continue to come together to make change. When I talk to bankers across this state quite frankly across the region across the country fraud and cyber risks are two of the key impacts that are facing our financial institutions and that means
they're facing each one of us because we are the users of financial services from all types of banks and nonbanks. this volume of fraud that continues to increase and you've heard several several instances of different types of fraud expressed here today. those are the things we know there's so much of this that we don't know and we don't see money is private it's personal it impacts how we operate and live and so people are rightfully so very protective about when and how they discuss money and finances
when fraudsters attack our individual consumers and businesses in ourkansans and our friends and and colleagues there's it's done so with fear, threatat and quite frankly embarrassment as has been said earlier today and so shining a light on this topic helping our Arkansans figure out a way as leaders how we can help them perhaps combat this bothth at the state level and at the national level. I have a wonderful platform to visit with my federal regulatory colleagues
we're raising this question all the time we're highlighting it at the different levels in DC and when I visit our federal delegation as Miss Trogden said earlier we're constantly bringing this topic up with our federal members of Congress and our senators and so we're we're working toward finding ways to make sure that we utilize all known tools and future tools to help diminish this risk a couple of things I'd like to point out that we are doing and that we're seeing
success. one is about in 2021 if you'll remember Senator umarlton pardon mepresentative Carlton Wing led theAfe AR Act which gave banks an opportunity to help work with their customers on scams but gave some safe harbors and some protections that's been successful but the real win in the most recent past is your your your great work last session in our support of our securities bill that was to eliminate or pardon me not
eliminate but to put a framework around these bitcoin kiosks it's been mentioned several times here today but I want to personally thank you all as members of this committee for helping us advance that we're one of the first states in the country to have that legislation and it has paid off in huge dividends and Misstyranny can speak to specific numbers there may be some slides in your deck that can address that the other thing that we can each do individually is vigilance. We can talk to our friends, our neighbors, our colleagues and our family. be vigilant about your finances.
be cautious. I heard that word earlier today be cautious and also think about how we can work to assist our loved ones that may be vulnerable be engaged and and remain in discussion with them throughout the process to ensure that they aren't falling victim to a scam or a fraud. One other area I'd like to highlight before I let Miss Tyerney have any specific remarks on data is through the securities department we have an investor education arm we go out every week across the state to
schools and to senior citizens communities or other areas where a large groups of individuals may gather and we do invest we do education about potential fraud and other risk. one of the big highlights of and successes that we have is what's called fraud bingo. let me tell you how excited people get to participate in fraud bingo but they take something away, they learn something from it and again my message about spreading the word in education will be key for all of us coming together and I'm hopeful about
future legislative opportunities to combat this so M Tierney thank you
Speaker 198
1:24:47
and as the commissioner Marshall mentioned there is a slide in your deck about the bitcoins chaos scams that we've worked with we really appreciate the support of this legislation because it we're able to help consumers in real time as to make it from theagG's office mentioned that they're also doing and we have a handout a handout for you today earlier this week a police officer from theentnerton police department called me and he's like, I knew exactly who to call so we could help this consumer
get their money back and so and the the fraud had happened that day so they if we're just asking you to help get the word out about this you know give this flyer to the local police department, put it online we can get you a pdf to put it on your social media because as soon as we're able to get it we're able to get talk to those consumers and get that process started so they can get their money back immediately and it's through your support of having that legislation that we really appreciate that and one other thing I want to mention is that I've heard of a lot about gift card scams. one of the
parts of the legislation, that you guys passed in 2025 was education for authorized delegates and those are the people that are selling the gift cards. So anyone who is selling those gift cards is required to have education on elder abuse and financial fraud every year. So hopefully they can start seeing where there's a a potential victim that's buying these gift cards and help protect them in real time our team
Speaker 125
1:26:10
has also met with that flyer that you're talking about
Speaker 198
1:26:16
I don't see it in I have hard can out so I was gonna give to staff
Speaker 201
1:26:21
to hand out. I'm sorry our team has met with a
Speaker 197
1:26:24
law enforcement in northwest Arkansas and we continue to open the opportunity to meet with other members of law enforcement around the state to again spread the word and provide education. thank you guys uhpresentative beatty
Representative Howard M. Beaty, Jr.
Unverified
1:26:50
Try this again thank you Mr chairir. I I appreciate being recognized not a member of the committee but a topic that's important to me and having served in the industry for many years my my question is we've talked about a lot of the fraud that's been been detected and losses and how we recovered but do you have any statistics on the amount of fraud that's been prevented and what's been stopped and and and
just by best practices and training at our institutions iss is is there any information you can share
Speaker 197
1:27:27
with us on that Representative personally I do not we'll see if Miss Ttyranney has any but it's unfortunate that we probably don't I don't recall seeing that across the country because unfortunately they're probably too busy collecting the data events that are actually happening but it's a great point that that we are stopping a lot before it happens and we are able to claw back at times from folks that have
Speaker 210
1:27:47
been harmed but we're we're losing the game.
Representative Howard M. Beaty, Jr.
Unverified
1:27:52
Well I I just wanted to to highlight that point that that what we hear are the worst case scenarios and and you're right, Ba bankers should probably spent a lot of time filling out suspicious activity reports on on their efforts to prevent and stop crime but I just won't take a minute and give a shout out to the frontline employees of our Arkansas banks that stop a ton of this stuff before the consumer's harm they're doing a good job the banks are doing a great job of educating their staff and training and the amount of money and resources that are expended on bank
secrecy act training and they're they're doing a good job that's stopping a lot of these issues from ever going, you know, to impact the consumers so I I think we would all be impressed by just the amount of fraud that's stopped by our frontline employees in our financial institutions they're looking out for customers and with that I appreciate the discretion and being allowed to speak. thank you Mr. chairir. Was there
Speaker 101
1:28:47
a question in that representative beatty yeah
Representative Jim Wooten
Unverified
1:28:54
Representative wooten thank you commissioner and you too for being here my question would be very quick. Is there a place where bankers can look at what they're doing and maybe improve upon it do they do they analyze their outreach I know one bank when you call the bank they put
you on hold which is normal but then then they make a comment about fraud but it's just it's not specific is there a clearing house or do the bankers get together and talk about it from the standpoint of they need to message this versus what they're doing yes sir I would I
Speaker 196
1:29:47
would believe that through membership and such as the
Speaker 197
1:29:50
Arkansas Bankers association and the American Bankers association or
thendependentunity Bankers America that those are realli opportunities for them to exchange ideas, express concerns see you know communicate about trends and then learn from each other and so I know that that happens here in Arkansas because our bankers are very engaged with each other and to Representative beatty's point, very proactive in taking care of their customers and their citizens so the dialogue is real time and we we all are
Speaker 196
1:30:22
committed to highlighting and continuing that dialogue. sir you Mr Chairman
Senator Stephanie Flowers
Unverified
1:30:28
Senator flowers thank you Mr chair I wanted to
know about state agencies and whether you've seen any fraud perpetrated upon state agencies by not
necessarily consumers or beneficiaries. I'm not talking necessarily about Medicaid
but some of the say the Arkansas teacher retirement system I'm
always curious about you know we have consultants you have those people that handled the investments and all that kind of stuff but how safe is it and have there been any reports of issues with fraudulently taking the Arkansas
taxpayer or the beneficiaries of those particular entities that as well as since we're talking about banks and bank accounts is it safe really when we're dealing online with these banks can can your account be hacked online without any kind of
any kind of information given by the consumer you can tell I don't particularly care for all this digitization you know as a lawyer we even had to start paying for our filing fees with a credit card and you had to upload the information online to get your pleading file that
I I'm just not that well don't engage in the practice anymore and I think many lawyers my age have stopped because of all of this digitization we don't understand it and I personally don't think it's safe, but I'd like for your opinion on whether these accounts can be hacked without inputting information from a consumer yes ma'am well
Speaker 197
1:33:02
let me your first question about other state
agencies. I would think we would probably be best served to visit with maybe a legislative audit to do ensure if there was any stats or if its statistics on that certainly I'm not aware of anything and and very proud that I don't have any specific instances in my agencies to report of that but I will say to your question about the safety of online products and services and financial measures it is absolutely safe to do banking business online. we all of us have
tools at our disposal and certainly opportunities most banks offer some type of online account or mobile banking product and service in many many thousands of customers do so every day in a safe manner and that is tech one of the advances of technology and how it's helping serve and reach customers safer and easier banks invest thousands and thousands and probably millions of dollars on technology and cybersecurity protocols to ensure that their customers are safeguarded to the best of their ability can systems be hacked? yes ma'am
they can. and is there anything foolproof? No ma'am but but I know that they are committed to creating a structure and framework where their customers can utilize all their bank products and services in a safe and sound
Speaker 24
1:34:29
manner. Thank you guys. we're going to go on and you're dismissed Dan Riber with the state insurance department
Joe Peratt
Unverified
1:34:45
then if you would just introduce yourself
Dan Reber
Unverified
1:34:58
and you're recognized my first time here my name's Dan Reber I'm the director of the criminal investigation division of the Arkansas Department of Insurance we're a law enforcement agency strictly we we enforce the Arkansas we we enforced the Arkansas insurance raud Act in
the Arkansasriminal code. in 2016 the FBI estimated there was $80 billion in insurance fraud that was occurring throughout the United States in2025 that's gone up to uh300 billion dollars of insurance fraud nationwide. the impact of the consumer is estimated at40 excuse me to700 dollars and increased premium payments some experts expect that to top trillion dollars by 2035. that's nationwide the bulk
of that is medi medical fraud and the bulk of that is done by foreign actors or organized crime a lot of that is coming out of Asia out of theiddle East and out of central Europee our office is like I said structured as a law enforcement agency we have7 certified law we have spaces for seven certified law enforcement investigators to to special prosecutors and myself is also attorney who prosecute cases
we have authority to arrest we have authority to serve warrants we have authority to when appointed to prosecute as special deputy prosecutors in the districts where the prosecutors want us to step in and take over the case additionally we have subpoena authority last year but let me back up so in 2023 we had about 1100 referrals that were sent into our office for investigation that over the last 10 or fi5 years we've been running roughly
around 1000 so 1100 was a bit of a step up in 2024 that went to 1400 last year we topped out at 1,978 referrals so it's a 25% increase over the last year and referrals that we've received mostly from insurance companies but also from consumers law enforcement agencies and prosecutors who have asked us to step in and take over cases that were filed locally
Speaker 219
1:37:21
of the of the 1976 um567 were referred for investigation
Dan Reber
Unverified
1:37:25
to our investigators the reason that many of the that's about a third that's about30% that of the referrals that went on for investigation every referral is is has goes through a preliminary inquiry every single one is read and made a determination if there's enough pro excuse me reasonable suspicion to go forward for investigation and from investigation probable cause to go to an attorney to to later go on and file the different reasons why they don't
get investigated the statute of limitations is run we don't have jurisdiction it's multi jurisdictional therefore an FBI issue as as well as it's just not insurance fraud so trends so I I could talk about insurance fraud take up your whole day to do that but I know we have limited time so I'm just gonna hit the wave tops we tend to play wackck a mole at CId
there's a there's a scheme that that's in vogue it's it's happens all the time over a two year period we prosecuted hard come down on it hard and it kind of drifts away and then it comes back up three or four years later one of the the schemes were card cases this is where individuals would get on Facebook and say hey let me know if you need insurance for40 dollars I'll get you an insurance card. All I need is your VIn number and and your address and that sort of stuff and I'll meet you at the Kroger parking lot and I'll get you a USA cardgressive Geico
whatever you need we can do that and when they get when they get caught down at the DMV we get notified we open a case file and we prosecuted those things hard we prosecuted 100% of those that came across our desk and we prosecuted them as felonies over a two year period we had61 convictions after that it started to tail off. we only had four in 2025 but now we have a meeting next Tuesday with the chief of police withdF andA because it's starting to ramp back up again and we're gonna
cro collaborate on best practices on how to how to combat this going forward. when I say we prosecuted this hard we had79 years of probation fines of33,000 dollars 215 hours of community service on those61 cases agent cases there's 9,195,000 nonresident agents in Arkansas there's 20,000 resident agents so that's a huge number over the last
five years we've had 208 referrals on agents those have those have been painstakingly reviewed and and the ones where we found probable cause we prosecuted to the fullest extent and got a a large amount of restitution most of them didn't go to prison because they were to to stay out of prison they had to make restitution to the victims of the of the money that they stole Best practices on on this when when I would tell consumers is
be cognizant of your coverage ir what your what the the covers that you actually have and ensure that the correspondence that you're receiving from the consumer coming to you the type the type of and I say that based on the type of fraud that is occurring by agents a lot of it's commission churning they they they they send in a forged policy to the insurance company they get a commission and
Speaker 219
1:40:54
then later on that that policy cancels for nonpaymentnough of
that happens and then they they send it to
Dan Reber
Unverified
1:41:01
us and we invest ig ate it and we prosecute it hard ford's policies where they've where they've they forged the the the name of the the potential insured send that in again that's for for turning commission canceled policies we see these a lot with with large policies like farm policies small business policies the the small business owner the farmer comes in and he pays full price before I worked at
the insurance department I didn't realize how large these policies were many of them are50,60 dollars 100, $1000 and they pay pay cash for them and they bind the coverage and they get an authentic binder from the agent the agent then contacts the insurance company and says hey that farmer wants to cancel that policy please send the refund to me and I'll I'll send it back to him well what ends up happening is he doesn't send it back and the farmer thinks that he has a a good policy and in fact he doesn't have a policy at all and typically they only get found
when they actually have a claim and when the claim comes in it comes to us and we prosecute it premium finance kind of a the same scheme in the different variants again the farmer or the small trucker or whoever takes out the policy and then the agent contacts and he pays for full price for the policy but then the agent contacts a premium finance company and gets the premium fin finance company to fund a policy that's already
been paid and he gives himself basically a short term loan and if he pays it back nobody's the wiser but if you can't what ends up happening is the premium finance company goes to the farmer and says you owe us money and he goes I didn't take one out how would I owe you money? and obviously that comes to us and we prosecute those then we come to basic consumer insurance fraud again I'm just hitting the wave tops there's there's hundreds of schemes but these are the these are the ones we see most prevalent we call
these bash and buys this is a nationwide problem this is where an individual has a policy policy they they they don't pay their premium their policy cancels they get in an accident and they get in accidents let's say they got in an accident today February 13th. well they don't they don't have a policy or they only have liability coverage what they'll do is they'll then contact their insurance agency or an insurance agency take
Speaker 223
1:43:24
out a policy with full coverage from that time after the
Speaker 224
1:43:28
accident has occurred when they weren't covered and then they'll wait a
Dan Reber
Unverified
1:43:33
week and they'll call on a claim hey I was just in an accident and these are called bashing buys and they're it's it's probably the number one scheme that is done throughout the nation what most most people don't realize if you file a claim within30 days of changing or establishing coverage the insurance company is going to put a microscope and a and a blazing light on your claim and assign it to an SIU a security investigation unit individual to investigate it and they come to us and again we prosecute every one of them
jump ins this is typically when people know each other somebody gets into an accident they hit another car and it's in their neighborhood and they're by them they're by themselves and two or three of their friends see them and they jump in the car and say hey I was in here too and they all filed claims they all they all go to the hospital they all get medical receipts and submit their claims and and get paid and and the money is the money they're getting paid is based on the medical bills and sometimes it's quite
substantial stage accidents car crash rings back in early 2u between 20,052,010 this was pretty prevalent we were getting two or three of these a year which is a lot and most of the time a car crash looks like a car crash looks like a car crash and it only shows up when you start to get into double digits we had one that there were48 crashes done by two individuals who had different schemes that they would do either they would purposely cause a car accident with a with an innocent third party or they
would have coconspirators and they would crash into each other and file claims and all the cars are full of people they all go to the hospital they get MRI's they getAT scans they get all kinds of stuff they never have health insurance and the insurance company sent or excuse me the hospital sends them a bill they sent the bill to the insurance company and the insurance company sent them the money and no money was ever forwarded to the hospital of the48 crashes that these two individuals were involved in the insurance companies paid out over $2 million in medical bills
in Baptist hospitalspital got0 dollars of that they were both prosecuted and both got 10 years in prison and they're still is a condition of their parole they're still having to pay the restitution which they'll have to pay for the probably the rest
Speaker 24
1:45:55
of their life U-aul cases we've we've hit the top of the waveann got you what is there any questions
Senator Stephanie Flowers
Unverified
1:46:02
on insurance fraud go ahead Stephhaie or soon flowers just one I
wanted to know about false advertising of insurance does
your office, your di vision deal with that we have we've actually had cases of
Dan Reber
Unverified
1:46:15
that we had one we went to trial on at the beginning of 2005 there were two individuals who pretended that they were progressive insurance agents had the t shirts or the collared shirts and everything and and showed up at a at a car dealership whose name I won't pass but they represented themselves to be progressive agents so if you have people who need insurance when you buy a car just send them over to our little table over here and we'll
sell them insurance they sold 232 fraudulent policies to people who that they were legitimate policies they went on progressive website they bound the coverage took cash, never forwarded the money and the policy ultimately canceled those two were in
Senator Stephanie Flowers
Unverified
1:46:57
those two individuals would your office do the follow up the prosecution do you send that out to the AG or the local prosecutor you all do it so you
Dan Reber
Unverified
1:47:11
have it so depending on the so the prosecutor prosecutor controls the courthouse he gets to decide who prosecutes in his district. Probly in 80% of the districts in in Arkansas we get appointed there's a few that handle that that they handle it through ple arraignment if it goes to trial they ask us to do it and there's a handful of prosecutors who say I'm the elected prosecutor in my district. I'll handle everything that comes in that comes across our desk our desks for instance Sebastian County and that's perfectly fine we are happy to help support them in their prosecution and they can handle it but most of them we get appointed and our
investigators do the investigation they we draft an affidavit for a warrant the warrant gets issued we send it to the local sheriff to try to serve it if they can't serve it they can't find it then we as certified law enforcement go out and find these individuals and arrest them and then if we get appointed we prosecuted all the way to sentencing after sentencing it becomes theagG's office for appeal appeal
Senator Stephanie Flowers
Unverified
1:48:09
and the the issue that it has to do with
seniors and defrauding seniors with this supplemental medicare yeah that's gonna
Dan Reber
Unverified
1:48:20
behs that's gonna be the department of healthalth and Human Services who deal with medicare. We have no
Senator Stephanie Flowers
Unverified
1:48:29
jurisdiction over that and think my question is probably would have been more appropriately answered by the attorney general's office about in terms of consumer protection because
I'm seeing the information being disseminated to seniors about their need for supplemental medicare policies and that's not often what they need don't I'm not even eligible for medicare yet and they're
Speaker 21
1:49:01
calling me three or four times a day right now I mean that's the I mean it's were you on the on the
Speaker 234
1:49:10
edge then you on the feel like I'm on the
Joe Peratt
Unverified
1:49:13
edge but I mean this is this is
Speaker 24
1:49:18
our initial, I mean this is the initial meeting on this I mean this we're we need to go further into this and have have more discussions and because it is about protecting seniors and and the affordability of these things because all this impacts insurance cost in the long run same way in banking but but we we we need to move on if if that's
Dan Reber
Unverified
1:49:41
all right with me so health insurance is from private health insurance is my department that that's that's
our science department medicaid is the ag's office and medicare is the department of the inspector general with DhHS on the
Speaker 24
1:49:57
federal level thank you Dan appreciate you coming today and your patiences chris McCoy with AAarP ri if you would introduce yourself and read
Joe Peratt
Unverified
1:50:13
about half of whatever you got on in front of
Speaker 236
1:50:21
you there. I'll do so thank you Mr Chair and members of the committee for having me today. my name isri McCoy. I'm associate state director of advocacy for AAarp Arkansas. keeping it very brief, very top line here you know we we discussed a lot of these numbers thrown out here I'll give you some of the Aarp numbers and then open up for questions for anybody in a recent survey from Aarp it shows that41% of adults across the country it's nearly nearly 110 million people have had money or sensitive information stolen through fraud
nearly 9 in 10 US adults now believe fraud can happen to anyone and that's the biggest worry that they have is that fraud actually happening to them Now from 2024 to2025 we discussed a little bit earlier with some of the other speakers that fraud is up about30% in the state of Arkansas specifically. year over year and there are some Aarp surveys that we put out into the field and I'll read you some
of those findings that we had from those surveys that through fraud has risen exponentially over the last five yearsc according to a recent report from the Federal Trade Commission we discussed earlier report losses surged at 12.5 billion which could be as high as almost 200 billion potentially. a 25% increase from the previous year. the drive was ris or the rise was driven by an increase in percentage of people reporting financial losses due to fraud which grew from 27%
in2003 to38% in2024. so from this fraud survey that we put into the field last year there's some of the findings that we we had of the adults that we surveyed59% worry about fraud. Their top concern obviously is becoming a victim those very concerned about fraud increased from uh30% to37% so it's actually growing up from that standpoint. their experiences with fraud and this is where I think we have
those discussions on a broader scale is 41 % have experienced fraud stolen money through deception or sensitive information obtained through fraudulent use. Most did not report the crime and that's kind of the the point to all of this we're getting to you know why are the numbers going up they're there are many reasons why but they're getting more comfortable starting to report these crimes so78% according to the FBI did not actually report fraud last year that happened to them
uhcor to the FTC that's an 86% didn't actually report. Additionally57% didn't decide to warnt
Speaker 238
1:53:05
anybody else that's enough percentages so
Joe Peratt
Unverified
1:53:08
if anybody has any questions so I mean you know there's a lot of
Speaker 24
1:53:13
AarP commercials and and what they what they give my they need to I mean my opinion need to help help in in their advertising of AAarp helped these seniors
recognize that whether it be one of these different bank frauds that's going on don't go by debit cards or whatever that's just a recommendation from me you know we can do stuff legislatively but you can also be educate educational to those seniors that we serve and I I think that would be be very helpful because I've had to give that advice out about the gift cards and and anything you got to pay
Joe Peratt
Unverified
1:53:54
for or it sounds better than you know if it's
it's just not you know not good but those educational purposes would be great through AARP in Arkansas and and around the nation is there any other questions seeing none thank
Speaker 24
1:54:14
you for comingris and we'll continue this conversation and it is largely impacting seniors I'm not quite there yet I'm in the five year time frame but I'm getting there
so we're gonna go on to Joe I'm gonna I'm gonna go with Pirette close enough yes yes
Speaker 55
1:54:44
I'm sure that Mr. McCoy might remind you to join AARP you need to be50 so you can certainly be involved in that
Joe Peratt
Unverified
1:54:58
thank you thank you Senator Johnson
Speaker 24
1:55:05
so Joe if you would clarify your last name for us and and you're
Joe Perettt
Unverified
1:55:11
recognized thank you Mr Chairman. my name is Joe Perettt
Speaker 241
1:55:15
I am the chief operations officer for Farmers Bank and Trust headquartered out of the beautiful city of magnolia. earlier hopefully you all got a couple of pages that just have some examples of of tech scams we average probably 2 to3 of
these a month with our bank in each instance probably impacts 10 to15 of our customers in one way or another so it's significant at the customer level I know there's nothing I can say here now that you hardy few who clearly had big breakfasts and and were able to avoid an early lunch havenn't heard but I would say that I would echo what Mr Moss said from First Security I'm I'm not a politician I'm not
a lobbyist I'm a banker and my folks deal with this stuff on the front line every day and we see it every day since we've been sitting here this morning I had a new example come in we I get a ticket every time that we have a fraud instance and I had one come in at 11:10 a.mustomer has released account and debit card information over a scam call. This is one of my tellers putting this in I have since turned the card off customers visiting a local branch as soon as possible to close account and open a new one
and get a new debit card. This impacts our customers your constituents every day. the cost to them may not always be direct. We were able to catch this but the cost of this customer is they've got to change their accounts so every direct deposit that they have set up every direct ACH payment that they have set up for their water bill, their gas bill, their electric bill, their insurance bill they've got to change it the account changed their debit card's getting changed. there's a cost to the bank, there's a cost to the customer
chairman Johnson you asked the question earlier who eats the cost the bank eats the majority of the cost. We affectionately refer to a federal reg called regy and that dictates how we handle fraud disputes over electronic funds transfers and reg E gives us specific guidelines on how we manage disputes and how we pay the bank the bank eats the cost
but the customer has the impact of the time and the inconvenience the cost to our bank just in 2025 for total fraud losses between500,000 dollars and a million dollars just for our small community bank in magnolia our our biggest issue or spoof calls and text we we get 100 hundreds you know we we get these everyday
senator Mark Johnson I'm gonna try to go back and capture some of the questions that may have not gotten answered if I may chairman you asked about tap A is much more secure than than EMV or swipeaa being that that when you tta that card without that direct touch it generates an algorithm it puts a one time code in there and it's much harder for for the fraudsters to actually capture the the guts of your card and duplicate that
p re s ent ative Tosh I think has since left but he asked a question about the investigative process beyond local what we have seen because of the the volume of fraudulent events that we encounter local police departments generally aren't interested in prosecuting anything that's that's under a significant amount so if it's a if it's just your general500 to1,000 dollars
local pd won't even touch it we we eat it and go on if it's significant enough then then we can get local PD involved and they will escalate to FBI or Arkansas Statelice. representative beatty asked the question and and he has since left but he asked the question how much fraud gets stopped we estimate that we stop5x what gets through.
Our tellers are trained our bankers are trained our contact center people are trained and when someone brings a check into us that has certain certain characteristics to it our folks ask questions some people don't like to be asked questions but if if you're if you come in and want a cashier's check for5,000 dollars and it's going to someone that that is not not local and and not a business
we train our tellers to try to question these people what's your relationship with with these folks are they did they do something for you that that you're giving them money did they did they sell something to you that you're giving them money you would not believe how many people fall for the scams of I'm gonna I'm gonna send you this4000 dollars check you you send me3000 back and keep 1000 and then by the time that check clears it's bad they've
lost their3 grand in the bank eats the rest so it's it's tough it's tough I
Speaker 242
2:00:58
don't really have anything else to cover but I'm
Joe Peratt
Unverified
2:01:01
happy to answer any questions. Thank you Joe. I thank you covered questions that wasn't even asked and I appreciate that because you were listening and questions and and you handled it handled it for before it was asked uhpresentative Wooten yes sir thank you
Representative Jim Wooten
Unverified
2:01:16
and I'll be very thank you for being here Mr arre
my question has to do with the bank department showed in their report that fraud is more prevalent among young people of reporting I'm assuming but when you get on the dollar amount this impacted in age from 2 up to 29 and then and then over 80 is even greater and and I know it's a problem
among older people but but do you
Joe Perettt
Unverified
2:01:56
find it's older or younger at your bank we we see both
Speaker 241
2:02:01
but Representativeooten what we see is the younger people are more prone to use the cash apps in the ennmo's and those people are much much less apprehensive about reporting fraud and what we've and and and they're generally smaller numbers you're they they may
they may lose $110 to a cash App scam they'll report it but it's not significant dollars where your elderly people what we see is they're more likely to fall for the higher dollar scams and what we also see is that they are much less likely to report because the embarrassment the elderly people they they don't want that stigma of I'm I'm slipping and I don't want somebody to think that that
I can't handle my own finances anymore so we have to be very careful and and we we watch our elderly customers as closely as we can we try to take care of them we we have a standard to meet with regard to elder abuse? and and we try to take care of them as much as possible but they are much less likely to report an issue we we quite often have to go and ask is this a check that that you wrote or did somebody write this on your behalf or was this payee
somebody that that is pressuring you to give them money or is this something that you're doing freely so we we have
Speaker 44
2:03:40
to ask our elderly customers questions quite often thank you thank you Representative
Senator Mark Johnson
Unverified
2:03:48
Chairman. Mr. Perettt, thank you for your information it's very helpful. you mentioned that who eats this the bank does is there any insurance that you can carry to cover that no sir even even like
Speaker 246
2:04:02
a umbrella where if it was really big you wouldn't go under no
Speaker 241
2:04:07
sir we we carries cyber insurance so if somebody were to were to actually hack into us and and cause us an issue we we have insurance against that but we can't carry insurance against fraud losses for customers we we can carry insurance against somebody physically destroying one of our ATms and taking the cash out of it but I can't carry insurance against you as one of my
Senator Mark Johnson
Unverified
2:04:32
customers getting defrauded well that that obviously and I know that there's no such thing
as doesn't nobodydy really pays because you've got you you pay interest on CDs and if you didn't have to pay for this fraud you might be able to pay a higher interest rate on those CDs so it's costing the consumer ultimately and if if you think about
Speaker 241
2:04:53
it we're we're a community bank but we do have shareholders we're not publicly traded but we do have shareholders and our share shareholders are people in the
community and those are the ones that ultimately pay the cost right
Joe Peratt
Unverified
2:05:11
thank you sir thank you Mr Chair. thank you Joe
Speaker 24
2:05:14
appreciate you very informative guys look at your sectiond we have a report from the department of humanman Services that's just there's no action needed to be taken on it but please bring bring this flyer with you about those virt virtual currency kiosks and
that way you can you can make copies of that give it to your constituents and tell them to use a bank not cur r ency appreciate everyone's time members thank you for sticking it out we need to continue this is is legislation is passed you know we we'll be in physical session this year but as legislation passed we need to circle back around at a later time and and and review some of
that new legislation and and new forms of fraud that come up between now and the time we go into general session thank youlourri thank you for putting a lot of these presenters together and thank you for your diligence members we are adjourned
Agenda
A. Call to Order
B. Consideration to Approve the November 3, 2025, Meeting Minutes [Exhibit B]
C. Discussion on Financial Fraud in Arkansas [Exhibits C1-C4]
D. Arkansas Department of Human Services, Quarterly Report Concerning Progress and Activities for a Psychiatric Collaborative Care Model, submitted pursuant to A.C.A. § 23-99-422 (f)(1) - (f)(2) (Act 615 of 2023) [Exhibit D]
E. Other Business
F. Adjournment
Documents
Speakers
Joe Peratt
Unverified
Speaker 2
Speaker 24
Representative John Maddox
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Speaker 16
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Senator Mark Johnson
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Representative Julie Mayberry
Unverified
Speaker 52
Representative Carol Dalby
Unverified
Speaker 64
Speaker 21
Representative Jim Wooten
Unverified
Speaker 73
Senator Stephanie Flowers
Unverified
Representative Mark Perry
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Representative Dwight Tosh
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Speaker 109
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Representative Les Warren
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Brandon Moss
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Shamika Johnson
Unverified
Speaker 154
Speaker 156
Speaker 161
Speaker 162
Speaker 166
Representative Kenneth B. Ferguson
Unverified
Representative Fred Allen
Unverified
Speaker 23
David Norris
Unverified
Speaker 94
Speaker 197
Speaker 198
Speaker 125
Speaker 201
Representative Howard M. Beaty, Jr.
Unverified
Speaker 210
Speaker 196
Dan Reber
Unverified
Speaker 219
Speaker 223
Speaker 224
Speaker 234
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Speaker 238
Speaker 55
Joe Perettt
Unverified
Speaker 241
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Speaker 246