US consumer groups press Congress to probe scams on tech platforms

A COALITION of advocacy groups urged key lawmakers on Wednesday (Sep 30) to hold technology companies accountable for alleged scams occurring on their platforms. 

Three dozen organisations, including the Consumer Federation of America and Color of Change, called for investigations into how tech companies’ business models may facilitate fraud as well as legislation that would curb scammers’ ability to reach users.

The groups pointed to Facebook owner Meta Platforms as an example of a company that has benefited financially by allegedly allowing fraudulent activity to proliferate.

“Families should not have to shoulder the burden on their own of combating a problem that is increasingly enabled by sophisticated technologies operated by trillion-dollar companies,” the groups wrote in a letter. 

Spokespersons for Meta didn’t immediately respond to a request for comment.

The CFA estimates that Americans lose US$148 billion per year to online scams, according to a July report, with more than half of the reported losses involving cryptocurrency.

Both the tech industry and the federal government have faced increasing scrutiny for what critics say are a lack of consumer safeguards.

US regulators have taken some steps to address the issues, such as the Federal Trade Commission recently weighing a rule that would push platforms and search engines to crack down on impersonation scams. But others worry a broader push for deregulation is interfering with efforts to curb nefarious activity. 

Last year, the Consumer Financial Protection Bureau dismissed a Biden-era lawsuit against Early Warning Services, the company that operates Zelle, and its major bank partners after the agency had alleged customers lost around US$870 million due to failures to protect them from scammers.

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In July, a New York judge said state Attorney General Letitia James could proceed with the state’s own US$1 billion lawsuit against the company. BLOOMBERG