Ranking Members Waxman and DeGette Call for Hearing on Telephone Scams

WASHINGTON, DC— Today Energy and Commerce Committee Ranking Member Henry A. Waxman and Oversight and Investigations Subcommittee Ranking Member Diana DeGette sent a letter to Chairmen Fred Upton and Tim Murphy to request a hearing on recent reports of an onslaught of telephone scams, particularly targeting employees at work and older Americans. As fraudulent telephone schemes are on the rise, the members seek to explore their impact on delivery of public services and to better understand how consumers can protect themselves.

The full text of the letter is available below and online here.

January 28, 2014

The Honorable Fred Upton

Chairman

Committee on Energy and Commerce

2125 Rayburn House Office Building

Washington, DC 20515

The Honorable Tim Murphy

Chairman

Subcommittee on Oversight and Investigations

Committee on Energy and Commerce

2125 Rayburn House Office Building

Washington, DC 20515

Dear Chairman Upton and Chairman Murphy:

Last week, the New York Times reported that "new technology has led to an onslaught of Internet-inspired fraud tactics that try to use telephone calls to dupe millions of people or to overwhelm switchboards for essential public services." We are writing to request that the Committee hold a hearing on these and other telephone scams, their impact on the delivery of essential public services, and how consumers can protect themselves.

Fraudulent telephone schemes have increased in recent years, as technology has enabled swindlers to initiate millions of phone calls at once, often tricking people into turning over sensitive information or shutting down important phone systems. These schemes are widespread because they are lucrative, easy to initiate, and inexpensive to carry out. In addition to targeting older Americans, these new threats are targeting employees at work who may pay up "out of uncertainty about whether they owe…money or to avoid embarrassment at their workplaces." Due to the anonymous nature of the internet, it is difficult to track down and investigate the perpetrators.

The Department of Homeland Security has warned federal agencies and local governments of attacks that flood phone systems, "making them unusable by legitimate callers." Over the past two years in Texas, "the phone lines of several emergency dispatch centers were disabled…because of a surge of automated calls" and "an intensive care unit's phone lines were disabled for six hours." According to the New York Times, in both cases employees at the facilities were then contacted by callers posing as debt collectors seeking repayment of supposed loans. The callers threatened the employees, telling them that if they didn't pay, "the lines at the employees' workplaces would be brought down." There have been "over 200 such attacks" waged against public sector groups providing vital information and services.

While the public has been trained to be skeptical of fraudulent email requests where the perpetrator poses as a trustworthy entity, or "phishing," there is less awareness about the danger of the telephone version of phishing, known as "vishing" (a combination of voice and phishing). Some of the telephone schemes target public service phone systems through automated dialing software, but others target unsuspecting individuals, posing as financial institutions and asking for credit card numbers and pin numbers. According to the Federal Trade Commission, in 2012 telephone calls accounted for 34% of fraud complaints, up from 20% in 2010.

Because of the evidence that these new fraudulent telephone schemes are on the rise and their targeting of essential public services, the Committee should hold a hearing to fully explore these issues.

The hearing should examine:

1. The prevalence and impact of these telephone schemes and their implications for consumer privacy and protection.

2. The impact of fraudulent telephone schemes on the delivery of essential public services.

3. The targeting of older Americans and other vulnerable populations.

4. Statutory changes, best practices, or educational campaigns, if any, needed to help federal agencies, other public sector groups, and individuals protect themselves against these schemes.

We urge you to hold this hearing as soon as possible.

Sincerely,