[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]


                   PROTECTING MILITARY SERVICEMEMBERS
                   AND VETERANS FROM FINANCIAL SCAMS
                               AND FRAUD

=======================================================================

                                HEARING

                               BEFORE THE

                   SUBCOMMITTEE ON NATIONAL SECURITY

                                 OF THE

                   COMMITTEE ON OVERSIGHT AND REFORM

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 13, 2022

                               __________

                           Serial No. 117-92

                               __________

      Printed for the use of the Committee on Oversight and Reform
      
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]      


                       Available on: govinfo.gov,
                         oversight.house.gov or
                             docs.house.gov
                             
                               __________

                   U.S. GOVERNMENT PUBLISHING OFFICE                    
48-121 PDF                  WASHINGTON : 2024                    
          
-----------------------------------------------------------------------------------                                 
                            
                   COMMITTEE ON OVERSIGHT AND REFORM

                CAROLYN B. MALONEY, New York, Chairwoman

Eleanor Holmes Norton, District of   James Comer, Kentucky, Ranking 
    Columbia                             Minority Member
Stephen F. Lynch, Massachusetts      Jim Jordan, Ohio
Jim Cooper, Tennessee                Virginia Foxx, North Carolina
Gerald E. Connolly, Virginia         Jody B. Hice, Georgia
Raja Krishnamoorthi, Illinois        Glenn Grothman, Wisconsin
Jamie Raskin, Maryland               Michael Cloud, Texas
Ro Khanna, California                Bob Gibbs, Ohio
Kweisi Mfume, Maryland               Clay Higgins, Louisiana
Alexandria Ocasio-Cortez, New York   Ralph Norman, South Carolina
Rashida Tlaib, Michigan              Pete Sessions, Texas
Katie Porter, California             Fred Keller, Pennsylvania
Cori Bush, Missouri                  Andy Biggs, Arizona
Shontel M. Brown, Ohio               Andrew Clyde, Georgia
Danny K. Davis, Illinois             Nancy Mace, South Carolina
Debbie Wasserman Schultz, Florida    Scott Franklin, Florida
Peter Welch, Vermont                 Jake LaTurner, Kansas
Henry C. ``Hank'' Johnson, Jr.,      Pat Fallon, Texas
    Georgia                          Yvette Herrell, New Mexico
John P. Sarbanes, Maryland           Byron Donalds, Florida
Jackie Speier, California            Mike Flood, Nebraska
Robin L. Kelly, Illinois
Brenda L. Lawrence, Michigan
Mark DeSaulnier, California
Jimmy Gomez, California
Ayanna Pressley, Massachusetts

                      Russ Anello, Staff Director
              Daniel Rebnord, Subcommittee Staff Director
                    Amy Stratton, Deputy Chief Clerk

                      Contact Number: 202-225-5051

                  Mark Marin, Minority Staff Director
                                 ------                                

                   Subcommittee on National Security

               Stephen F. Lynch, Massachusetts, Chairman
Peter Welch, Vermont                 Glenn Grothman, Wisconsin, Ranking 
Henry C. ``Hank'' Johnson, Jr.,          Minority Member
    Georgia                          Virginia Foxx, North Carolina
Mark DeSaulnier, California          Bob Gibbs, Ohio
Kweisi Mfume, Maryland               Clay Higgins, Louisiana
Debbie Wasserman Schultz, Florida    Mike Flood, Nebraska
Jackie Speier, California
                        
                        
                        C  O  N  T  E  N  T  S

                              ----------                              
                                                                   Page
Hearing held on July 13, 2022....................................     1

                               Witnesses

Malini Mithal, Associate Director, Division of Financial 
  Practices, Bureau of Consumer Protection, Federal Trade 
  Commission
Oral Statement...................................................     5

Jim Rice, Assistant Director, Office of Servicemember Affairs, 
  Consumer
  Financial Protection Bureau
Oral Statement...................................................     6

Brendan Carr, Commissioner, Federal Communications Commission
Oral Statement...................................................     8

Troy Broussard, Senior Advisor, Veterans and Military Families 
  Initiative, AARP
Oral Statement...................................................    10

Robert Burda, Interim Chief Executive Officer and Chief Strategy 
  Officer, Cybercrime Support Network
Oral Statement...................................................    11

Written opening statements and statements for the witnesses are 
  available on the U.S. House of Representatives Document 
  Repository at: docs.house.gov.

                           Index of Documents

                              ----------                              

No additional documents were submitted for this hearing.


 
                   PROTECTING MILITARY SERVICEMEMBERS
                   AND VETERANS FROM FINANCIAL SCAMS
                               AND FRAUD

                              ----------                              


                        Wednesday, July 13, 2022

                   House of Representatives
          Subcommittee on National Security
                          Committee on Oversight and Reform
                                                   Washington, D.C.

    The subcommittee met, pursuant to notice, at 3:43 p.m., in 
room 2154, Rayburn House Office Building, and via Zoom; Hon. 
Stephen F. Lynch (chairman of the subcommittee) presiding.
    Present: Representatives Lynch, Johnson, DeSaulnier, 
Grothman, and Gibbs.
    Mr. Lynch. The subcommittee will now come to order.
    Without objection, the chair is authorized to declare a 
recess of the subcommittee at any time.
    I'll now recognize myself for a brief opening statement.
    Good afternoon, everyone. In recognition of Military 
Consumer Month, today the Subcommittee on National Security 
will examine the pernicious and growing threat of financial 
scams and fraud targeting America's servicemembers, veterans, 
and their families.
    According to a recent AARP survey, servicemembers and 
veterans are 40 percent more likely to be exploited by 
financial fraud--including robocalls, suspicious texts, and 
scam offers--than their civilian counterparts.
    Even more disturbing, four out of every five servicemembers 
and veterans surveyed in 2021 reported that they were targeted 
by scams directly related to their military service or 
benefits--with one in three reporting that they lost money as a 
result.
    Federal Trade Commission data further reveals that 
financial scams targeting servicemembers, veterans, and 
military families have increased dramatically--by 69 percent--
from 2020 to 2021.
    Last year, more than 110,000 military consumers filed fraud 
reports with the agency and reported a collective loss of 
approximately $267 million. That's a 162 percent increase over 
the $102 million lost to fraud in 2020.
    As chairman of the Task Force on Financial Technology on 
the Financial Services Committee, I can attest that the 
emergence of innovative financial technologies, alternative 
payment systems, and digital currencies has augmented this 
risk.
    Younger servicemembers and their families are especially 
susceptible to exploitation given their relative lack of 
financial experience and understandable need for assistance 
amid frequent relocations, overseas deployments, and their 
eventual transition back to civilian life.
    Meanwhile, America's veterans remain vulnerable to 
financial scams seeking to defraud them of their pension, 
disability, and other service-connected benefits that they have 
earned through their dedicated service to our Nation.
    It is especially shameful that the scammers would prey upon 
their targets' sense of duty and patriotism toward their fellow 
servicemembers and veterans in order to exploit them.
    The Biden Administration, as well as the Federal Trade 
Commission, the Federal Communications Commission, and the 
Consumer Financial Protection Bureau, have all undertaken 
meaningful action to increase financial literacy among our 
military and veteran communities, as well as to assist military 
consumers in identifying and protecting themselves against 
financial scams.
    These efforts have been reinforced by private sector 
initiatives, led by nonprofit organizations, such as AARP and 
the Cybercrime Support Network, in partnership with our 
veterans service organizations.
    To better safeguard our servicemembers, veterans, and 
military families against financial fraud and other predatory 
activity, Congress has also enacted the Military Lending Act, 
the Servicemembers Civil Relief Act, and other statutes 
offering essential protection for military consumers.
    Last year, Congress passed, and President Biden signed, the 
American Rescue Plan which eliminated what was known as the 
``90/10 loophole,'' which incentivized for-profit colleges to 
aggressively--and sometimes deceptively--recruit prospective 
military students.
    In further support of robust public and private sector 
collaboration, this week I am introducing H.R. 8321, the 
Military Consumer Protection Task Force Act of 2022, and I'm 
grateful to have the support of Ranking Member Grothman as the 
lead Republican cosponsor on this bill.
    This legislation, which I have also introduced as an 
amendment to this year's National Defense Authorization Act, 
would establish a joint task force led by the Secretary of 
Defense and the Secretary of Veterans Affairs, in coordination 
with representatives from the veteran service officer community 
and other nongovernmental partners, to combat military consumer 
fraud.
    The task force would issue regular recommendations to 
Congress about how we can better warn servicemembers and 
veterans about the risk of financial scams and frauds, as well 
as strengthen our enforcement mechanisms and toughen criminal 
penalties for those who would seek to take advantage of our men 
and women in uniform.
    I look forward to hearing from our esteemed panel of 
witnesses about how we can advance our collective efforts to 
prevent military consumer fraud and protect the financial 
security and well-being of America's servicemembers, veterans, 
and their families.
    With that, I will now yield to the distinguished ranking 
member from Wisconsin, my friend, Mr. Grothman, for his opening 
statement.
    Mr. Grothman. Thank you very much for having this hearing.
    I'll start off by saying: There is no hell too hot for 
those people who would target our veterans with one of these 
rip-off schemes.
    I'm pleased to have the opportunity today to highlight the 
importance of protecting our veterans from schemes that target 
their sensitive information.
    The 2021 AARP report about veteran scams paints a damning 
picture of the sad reality we find ourselves in today, a 
reality in which bad actors scam our Nation's greatest and 
steal their sensitive financial and user data.
    In short, the report found that veterans, military members, 
and their families are significantly more likely to be targeted 
by scam artists than the average American. We must swiftly 
bring these con artists to justice and prosecute them to the 
fullest extent of the law.
    A huge problem in my district and a practice that was 
identified in the report are robocalls. My constituents and 
many Americans report receiving several of these robocalls a 
week.
    The Federal Government must find solutions to this 
unwelcome practice that will continue to increase as scammers 
become more and more creative.
    Upon leaving Active military service, veterans are 
confronted with a new set of personal challenges. The ever-
evolving threat environment extends far beyond traditional 
robocalls and phishing emails.
    One of the most famous social media apps in the world--
TikTok--is a sophisticated surveillance tool masquerading as a 
short-form video service.
    TikTok is owned by Beijing-based ByteDance, which presents 
an extraordinary set of national security concerns. It was 
recently reported that individuals in China had access to U.S. 
user data. This is not only a massive national security risk 
but poses a threat to military members, veterans, and their 
families.
    The Chinese Government, who the FBI Director just last week 
said was the biggest long-term threat to our economic and 
national security, has the sensitive data of millions and 
millions of Americans at their fingertips, including veterans 
and servicemembers.
    This data goes far beyond the genre of 30-second videos 
someone prefers to watch. It includes browsing history, 
biometric data, location data, metadata, and a trove of other 
sensitive and personal data.
    This data can be used by the Chinese Government to exploit 
American citizens and gain a security edge.
    By no means political, the national challenge that TikTok 
presents is a bipartisan concern.
    Mr. Chairman, in 2019 you wrote that given the 
pervasiveness of smartphone technology in the U.S., foreign 
adversaries may be able to collect sensitive information about 
U.S. citizens, which presents serious and immediate risks for 
U.S. national security.
    I agree, Mr. Chairman, and believe that we cannot have a 
conversation about veteran scams without talking about the 
information theft that is occurring on foreign-owned apps like 
TikTok.
    I thank all the witnesses for appearing today, live and in 
person, and look forward to a robust discussion about the 
unique threat environment facing our veterans today.
    Thank you, Chairman Lynch, and I yield back.
    Mr. Lynch. The gentleman yields back.
    I'm now happy to introduce our witnesses.
    First, we're joined by Ms. Malini Mithal, who is the 
Associate Director of the Federal Trade Commission's Division 
of Financial Practices, where she supervises the division's 
investigations of and enforcement actions challenging unfair 
and deceptive practices for nonbank financial services.
    Welcome and thank you.
    Next, we will hear from Mr. Jim Rice, who is the Assistant 
Director of the Office of Servicemember Affairs at the Consumer 
Financial Protection Bureau.
    Prior to joining the CFPB, Mr. Rice had a distinguished 
three-decade career in the U.S. Army, serving as a medic and in 
several command positions from the platoon to brigade levels.
    We will then hear from Mr. Brendan Carr, who is a 
Commissioner on the Federal Communications Commission, where he 
has focused extensively on efforts to expand the United States 
5G infrastructure.
    Mr. Carr also previously served as the FCC's general 
counsel before being confirmed as Commissioner.
    Fourth, we are joined by Troy Broussard, who is a senior 
advisor for AARP's Veterans and Military Families Initiative, 
where he establishes strategies and opportunities to support 
AARP's veterans and military family members, including on 
financial literacy.
    Mr. Broussard is also a veteran of the U.S. Army, having 
served during Operation Desert Storm.
    Fifth, we will hear from Mr. Robert Burda, who is the 
interim chief executive officer of the Cybercrime Support 
Network, which is dedicated to helping individuals and small 
businesses impacted by cybercrime.
    Before joining CSN, Mr. Burda had an extensive career with 
the FBI, including as a unit chief of the National Joint 
Terrorism Task Force, and he also served in the U.S. Navy as a 
naval flight officer, earning the rank of lieutenant commander.
    So, Ms. Mithal, Mr. Rice, and Mr. Carr, it's customary for 
us to swear in our witnesses, so could you please rise? And, 
Mr. Broussard and Mr. Burda, would you please unmute yourselves 
in order that we can hear you when we swear you in.
    OK. Please raise your right hand.
    Do you swear or affirm that the testimony you're about to 
give is the truth, the whole truth, and nothing but the truth 
so help you God?
    Thank you very much. Thank you. You may put your hands 
down. Thank you.
    Let the record show that the witnesses have all answered in 
the affirmative.
    I want to thank you. And without objection, your written 
statements will be made part of the record.
    With that, Ms. Mithal, you're now recognized for your five 
minutes of testimony. Thank you.

        STATEMENT OF MALINI MITHAL, ASSOCIATE DIRECTOR,
DIVISION OF FINANCIAL PRACTICES, BUREAU OF CONSUMER PROTECTION, 
                    FEDERAL TRADE COMMISSION

    Ms. Mithal. Chairman Lynch, Ranking Member Grothman, and 
distinguished members of the subcommittee, thank you for the 
opportunity to talk about the FTC's work on the critical issue 
of military financial fraud.
    I'm Malini Mithal, the Associate Director of the Division 
of Financial Practices at the Federal Trade Commission. As you 
know, my remarks today are my own and not necessarily those of 
the Commission or any individual commissioner.
    Military frauds cause significant harm to consumers. As you 
noted, last year we received more than 200,000 reports of 
military fraud, reporting over $267 million in losses.
    To combat this significant problem, the FTC uses a 
multifaceted approach. We are a law enforcement agency, and 
we're not shy about using litigation to strike down harmful 
practices.
    For example, in 2021 the top fraud reported by military 
consumers was imposter fraud. We've all gotten calls from the 
Social Security Administration or from the IRS that were 
actually calls from someone else, people that were 
impersonating the government to get our money or personal 
information.
    And recently we took an action against people who were 
doing just that, but they were pretending to be from the 
military. They lured in people who were interested in serving 
our country, got their personal information, using sites like 
Army.com, and pretended to be an official recruiting channel.
    But then they turned around and sold that information to 
for-profit schools, who in turn used that information to make 
deceptive claims and get people to enroll.
    The FTC has also brought actions targeting companies that 
target consumers, including military consumers, when they are 
making critical, large-dollar purchases, whether it's a home, 
their education, or a car.
    So, for example, we've taken action against a large 
mortgage refinancer that promised bogus rates to the military. 
We've taken action against for-profit schools that promised 
veterans jobs that didn't pan out.
    And recently the FTC announced an auto rulemaking where we 
took what we learned at military workshops so that we could 
address the most pressing problems facing the military 
community.
    Now, enforcement and rulemakings are just part of the FTC's 
work here. We have long emphasized education and outreach to 
consumers--to military consumers--as a critical priority.
    Through our Consumer Sentinel Network, the FTC collects 
reports from consumers, including military consumers, about 
fraud and other illegal practices they encounter, and then we 
use that information to tailor our education and outreach 
materials. And we make sure that these materials are easily 
accessible to military consumers.
    The cornerstone of the FTC's work to connect with those who 
serve our country is MilitaryConsumer.gov, launched in 2013. 
This resource informs servicemembers, veterans, and their 
families about fraud and other consumer issues affecting them.
    The same year we created the site, we reached out to DOD 
and the CFPB to launch the first Military Consumer Day, which 
has since expanded to a full month, and as you noted, it's this 
month, the month of July.
    This annual event raises awareness about spotting and 
avoiding financial scams and sharing that knowledge with family 
and friends. Our agencies have worked closely together on 
virtual presentations, webinars, and social media events to 
reach military consumers, their families, and the 
intermediaries who work with them.
    The FTC also works closely with the VA to inform veterans 
and their families about fraud and consumer issues. For 
example, in two days, we'll be participating in a VA conference 
where we will discuss financial scams and other issues that are 
important to military consumers.
    Thank you for the opportunity to discuss the FTC's work to 
combat military fraud. I'd be happy to answer any questions.
    Mr. Lynch. Thank you very much.
    Mr. Rice, you're now recognized for five minutes for an 
oral presentation of your testimony. Welcome.

     STATEMENT OF JIM RICE, ASSISTANT DIRECTOR, OFFICE OF 
           SERVICEMEMBER AFFAIRS, CONSUMER FINANCIAL
                       PROTECTION BUREAU

    Mr. Rice. Chairman Lynch, Ranking Member Grothman, and 
distinguished members of the subcommittee, it is my pleasure to 
be with you today to discuss the CFPB's ongoing work to protect 
servicemembers, veterans, and military families from scams and 
harmful practices as they navigate the financial marketplace.
    I proudly served in the U.S. Army, first on Active Duty as 
an enlisted medic, then with the Wisconsin Army National Guard, 
then for over 30 years as an officer in the Army Medical 
Service Corps.
    I served as the director of the Army Wounded Warrior 
program and finally as chief of the Health Service Division on 
the Joint Staff.
    I know firsthand how the financial well-being of 
servicemembers and their families affects their ability to 
focus on the mission and their careers.
    I am proud to lead the Office of Servicemember Affairs, or 
OSA, at the CFPB. Our mission is to address the challenges that 
adversely affect military families' financial well-being. Today 
I'd like to discuss some key areas of our work.
    First is the evolving nature of the threat that scams and 
fraud pose to the unique military experience. I want to share 
some accomplishments but also where more work needs to be done.
    Finally, I want to share how our work with the interagency 
partners is key to our success.
    It's unfortunate but a fact that our men and women in 
uniform are prime targets for scams and bad actors in the 
financial marketplace.
    Our younger servicemembers do not have much experience with 
money but get a steady paycheck. This creates an opportunity 
for lenders and businesses to target our military 
servicemembers for their hard-earned money.
    Just look at the statistics. The CFPB has received over 4.2 
million complaints, including over 286,000 complaints from 
servicemembers, veterans, and military family members.
    They come from every branch of the military and of every 
rank, from all over the United States, including the District 
of Columbia and the territories, and from military bases around 
the globe.
    Those who have served in uniform know that relocation is 
part of military life, and orders mean a new home and other 
financial obligations. These are situations where a 
servicemember or spouse may need to share personal information, 
like their Social Security number, credit cards, and bank 
account information with a wide range of actors, most 
legitimate, others less so.
    We are concerned that servicemembers are subject to 
increased risk of identity theft, data breaches, and other 
scams.
    Recently, OSA published our annual report highlighting the 
challenges that servicemembers face when dealing with credit 
reporting companies.
    In 2021 servicemembers submitted more than 17,000 credit or 
consumer reporting complaints, making it our No. 1 complaint 
category.
    When issues with credit reporting are not resolved, the 
consequences for servicemembers and military families can 
include additional costs to get a car loan and more difficult 
time to find suitable housing.
    Negative credit can also result in denial of a security 
clearance and even separation from service.
    These are high stakes.
    We also see problems with medical billing. Despite the 
assumption that military service means full medical coverage, 
we find that servicemembers experience a wide range of debt 
collection and credit reporting on medical expenses.
    In 2021 we saw over 1,500 complaints related to incorrect 
medical bills on credit reports. While the national credit 
reporting companies agreed to remove most medical billing in 
credit reports by 2023, servicemembers can't afford to wait.
    I commend the VA for their recent debt reporting rule 
change, as it will improve the lives of millions of vets and 
largely eliminate a coercive collection technique.
    The MLA remains one of the most important financial 
protections available to servicemembers. Given the heightened 
risk servicemembers face in the financial markets, the CFPB has 
taken legal action to ensure compliance by lenders, including 
consent orders and lawsuits for MLA violations.
    My military career goes back just far enough to remember a 
time when we were paid in cash. Now servicemembers can bank, 
borrow, and sign a contract for a wide range of financial 
products on their smartphone. The market is moving fast, and we 
must ensure servicemember protections keep pace.
    As we monitor the marketplace, we have identified some 
areas where we think further work may be warranted, such as 
``buy now, pay later,'' abuses of the military allotment 
system, and other emerging products and services in the digital 
space.
    I'd like to close by mentioning some of the collaborative 
efforts our office has taken with our stakeholders.
    As part of our mandate under Dodd-Frank, OSA works closely 
with the DOD, VA, FTC, DOJ, and others. This work is vital and 
pays dividends.
    There is no higher calling than the defense of our country, 
and the Office of Servicemember Affairs is committed and proud 
to be a strong advocate for those who answer that call.
    I want to thank the chairman, ranking member, and other 
members of the subcommittee for holding this important hearing 
and for the opportunity to appear before you. I look forward to 
answering your questions.
    Mr. Lynch. Thank you, Mr. Rice.
    Mr. Carr, you are now recognized for a five-minute 
summation of your testimony. Welcome.

  STATEMENT OF BRENDAN CARR, MINORITY WITNESS, COMMISSIONER, 
               FEDERAL COMMUNICATIONS COMMISSION

    Mr. Carr. Thank you.
    Chairman Lynch, Ranking Member Grothman, distinguished 
members of the subcommittee, thank you for the invitation to 
testify. It's an honor to appear before you.
    Too often those who've dedicated their lives to defending 
this country are the targets of online scams. At the FCC, we've 
long worked to crack down on these fraudulent schemes. So I'm 
pleased to join these witnesses to advance our shared goal in 
protecting servicemembers.
    While the threats our Active military and veterans face 
come from a range of online vectors, I want to focus on one 
particular threat today--TikTok--an application with millions 
of U.S. users including servicemembers, that is owned by 
Beijing-based ByteDance.
    While many of the frauds we see on other platforms are also 
perpetrated on TikTok, there is a unique set of national 
security concerns when it comes to this app.
    For one, TikTok has engaged in a pattern of 
misrepresentations regarding both the amount and extent of data 
it's collected, as well as how much has been accessed from 
inside China.
    For another, the flow of this nonpublic sensitive data into 
China is particularly troubling given the PRC's track record of 
engaging in espionage and other nefarious acts.
    Indeed, FBI Director Wray stated just last week that ``the 
Chinese Government . . . poses the biggest long-term threat to 
our national security'' and the CCP is ``set on using every 
tool at their disposal'' to achieve its ends.
    Many Americans, servicemembers included, have not been 
viewing TikTok as a national security threat. They treat it as 
just another app for sharing funny videos or memes.
    But that's simply the sheep's clothing. At its core, TikTok 
functions as a sophisticated surveillance tool that harvests 
extensive amounts of sensitive data from search and browsing 
history, to key stroke patterns, location data, and biometrics, 
including face prints and voice prints.
    All of the concerns with TikTok are heightened in the 
military context. Indeed, Chairman Lynch raised many of these 
same concerns about TikTok's overseas ties back in 2019 in a 
letter to Apple and Google.
    Now, despite its vast data collection, TikTok has grown in 
popularity among servicemembers. Just one example is the viral 
TikTok trend where servicemembers upload video of their 
barracks. In other cases, it's U.S. military equipment and 
maneuvers.
    For years, TikTok has been asked point blank whether any of 
the sensitive data it collects has been accessed from inside 
China, and for years TikTok has offered a series of assurances.
    But according to a recent BuzzFeed News report that 
obtained leaked audio from TikTok meetings, TikTok's claims 
about protecting U.S. users' data have been nothing other than 
gaslighting. Turns out, ``Everything is seen in China,'' 
according to a TikTok official quoted in that reporting.
    Thankfully, multiple military branches have banned TikTok 
from government-issued devices. Government officials have also 
urged troops and their dependents to erase the app from their 
personal phones.
    And these concerns are bipartisan. Most recently Senators 
Warner and Rubio asked the FTC to investigate TikTok for its 
misrepresentations about data flows into China.
    TikTok's recent statement that it's moving U.S. data to 
Oracle servers doesn't eliminate the national security 
concerns. Indeed, one TikTok employee threw cold water on that 
safeguard, stating, ``It remains to be seen if at some point 
product and engineering can still figure out how to get access, 
because in the end of the day, it's their tools. They built 
them in China,'' according to that BuzzFeed News report.
    Given TikTok's pattern of misrepresenting data flows, I 
called on Apple and Google recently to apply their app store 
policies and remove them from the app store. While I'm still 
waiting for Apple's response, there's no reason that we need to 
bet our national security on those companies choosing to do the 
right thing. The government needs to act.
    So here's some ideas.
    First, the executive branch agencies should bring their 
ongoing national security reviews of TikTok to a close and do 
so with speed. That includes the CFIUS review being run out of 
the Treasury Department as well as the Commerce Department's 
proceeding.
    Second, TikTok should provide a full accounting of all 
nonpublic U.S. data that's been accessed from inside China.
    Third, I would encourage the FTC to take up Senate Intel's 
call for a Federal investigation and complete that review 
quickly.
    Fourth, the government should address the continued use of 
TikTok on military installations, as well as any use that 
depicts U.S. military operations.
    In closing, I want to thank you for the opportunity to 
testify. I look forward to your questions.
    Mr. Lynch. Thank you, Mr. Carr.
    Mr. Broussard, you are now recognized for a five-minute 
summation of your testimony. Thank you. Welcome.

   STATEMENT OF TROY BROUSSARD, SENIOR ADVISOR, VETERANS AND 
               MILITARY FAMILIES INITIATIVE, AARP

    Mr. Broussard. It's a pleasure to be here.
    Chair Lynch, Ranking Member Grothman, and members of the 
Subcommittee on National Security, I want to thank you for the 
opportunity to testify today. My name is Troy J. Broussard, 
senior advisor with AARP's Veterans and Military Families 
Initiative, and most proudly a United States Army Desert Storm 
veteran.
    AARP has nearly 6 million members who have served or are 
currently serving the United States military. It's an honor to 
share the depth of AARP's engagement to help veterans and 
military families fight back against criminal scammers who 
target them and where we believe congressional action is 
needed.
    You know, AARP has a long history of supporting those who 
have served in the United States Armed Forces. We launched the 
Veterans and Military Families Initiative back in 2018 to 
support this critical community's overall health and well-being 
as they navigate life's transitions.
    And our initiative focuses on caregiving, fighting fraud, 
securing employment, and connecting veterans and their families 
to earned service benefits.
    Fraud is on the rise across the country. We are here today 
to talk about one of those key pillars of our work--fighting 
fraud.
    Scammers steal billions of dollars from unsuspecting 
consumers every year. The impact on victims and their families 
is far-reaching, and it can be financially and emotionally 
devastating, especially for older Americans.
    Last year, consumers reported $5.9 billion in fraud losses 
to the Federal Trade Commission. There are three fraud-related 
trends that are particularly troubling, which cut across 
different scams and demographics: the use of gift cards, 
cryptocurrency, and internet safety.
    These tactics are the backbone behind most criminal 
schemes. Addressing these problems could be the most effective 
way to stop these criminals.
    Gift cards. According to our AARP survey conducted earlier 
this year, one in three adults say they or someone they know 
have been asked at some point to purchase a gift card to pay a 
bill or some other debt or obligation to claim a prize.
    Roughly one in four adults who were contacted reported they 
bought the cards, approximately 13 million U.S. adults ages 18 
and older.
    The availability of these gift cards, the relatively high 
limits on the amount of money that can be added to cards, and 
the ability to access these funds instantly make them a weapon 
of choice to these criminal scammers.
    Cryptocurrency. That's another scam that's accelerating and 
consumers have lost about a billion dollars in the past year, 
again, according to the FTC. The vast majority of these losses 
come from scammers asking victims to pay with crypto.
    Internet safety. Consumers appear to be especially 
vulnerable online. According to 2021 FTC data, approximately 19 
percent of these scams, contact with the victim came across 
online ads or social media.
    However, 64 percent of these targets resulted in the victim 
losing money. Comparatively, only nine percent of them reported 
phone call scams resulted in the loss of money.
    These scams can range from fraudulent products to fake 
websites and online imposters.
    The impact that this has to our servicemembers and veterans 
and their families. According to the report that we released, 
which was ``Scambush: Military Veterans Battle Surprise 
Attacks,'' we found that veterans and Active-Duty 
servicemembers are 40 percent more likely to lose money to 
scams and fraud than other families. And based on our research, 
we found that fake veteran charities were high, the United 
States Department of Veterans Affairs home mortgage loan 
schemes, and bogus free medical equipment.
    Scammers use military jargon and specific government 
guidelines to craft an effective pitch to steal the money. 
Roughly one in three servicemembers reported losing money to 
these types of service-related scams: benefit buyouts, 
fraudulent records scams, and fake charities.
    So, again, what we want to focus on is that we're committed 
to help fighting fraud against all people of all ages and all 
backgrounds through our Fraud Watch Network, our Fraud Watch 
Helpline, BankSafe, and our Veterans Fraud Center.
    We look forward to working with you on this critical 
mission to serve and support veterans and their families.
    We want to thank you again, Congressman Lynch and 
committee, for allowing me to bring attention to this critical 
issue, targeting veterans and their families. I really 
appreciate the opportunity to provide this testimony today. 
Thank you.
    Mr. Lynch. Thank you, Mr. Broussard.
    Next, Mr. Burda, you're now recognized for a five-minute 
summation of your testimony. Welcome.

STATEMENT OF ROBERT BURDA, INTERIM CHIEF EXECUTIVE OFFICER AND 
       CHIEF STRATEGY OFFICER, CYBERCRIME SUPPORT NETWORK

    Mr. Burda. Thank you.
    Chairman Lynch, Ranking Member Grothman, members of the 
subcommittee, thank you for inviting me here today to speak 
about the state of cybercrime and the impact it has on our 
military and veteran community.
    My name is Robert Burda, and I serve as the interim CEO for 
the Cybercrime Support Network, or CSN. CSN is a U.S.-based 
nonprofit with a mission to serve individuals and small 
businesses impacted by cybercrime.
    We accomplish that mission in a number of ways, including 
FightCybercrime.org, an extensive website of resources to help 
cybercrime victims recognize, report, and recover from over 45 
different types of cybercrime; our Peer Support Program, a 10-
week virtual support group for romance scam survivors; and our 
Military and Veteran Program, a program that enables us to 
deliver cyber safety training and education to Active-Duty 
servicemembers, veterans, and their families at no cost to 
them.
    This program will be the focus of my testimony today.
    The military and veteran community is diverse. It's made up 
of Active Duty, reservists, guardsmen, veterans, and their 
families, totaling more than 22 million Americans. Throughout 
their service, these individuals encounter service-related 
transitions.
    Cyber criminals take advantage of these transitions to 
steal hundreds of millions of dollars from this community each 
year.
    Let me share with you some of these transitions and how 
they can make the military and veteran community more 
vulnerable to cybercrime.
    Entering Active Duty. Often for servicemembers entering 
Active Duty, this is their first time on their own, away from 
home, and with a regular paycheck.
    Scammers look for people lacking financial literacy and 
financial literacy resources. New servicemembers often fall 
into this category. Potential scams include financial purchase 
scams, credit card scams, and bank account scams.
    Deployments. Scammers can take advantage of situations 
where a spouse or a partner is not always available. Single 
servicemembers face unique challenges trying to deal with the 
inevitable issues which arise during a deployment.
    Deployments make servicemembers and their families more 
vulnerable to almost every type of cyber scam and fraud.
    Permanent change of station, or PCS moves. PCS moves are a 
frequent reality for most military personnel and their 
families. Moving to a new location, often with limited time, 
also makes the military community more vulnerable to cyber 
fraud, including real estate scams, rental scams, job scams, 
and financial purchase scams.
    And discharge or retirement. Discharge or retirement is a 
big transition for military personnel and their families. It 
makes them vulnerable to all the same issues as a PCS move and 
government impersonation scams as they seek hard-earned veteran 
benefits and investment scams.
    CSN launched our Military and Veteran Program in April 2021 
with the belief that education and awareness were critical.
    In the first phase, the program successfully developed an 
alliance of over 40 military service organizations, veteran 
service organizations, corporations, foundations, and Federal 
agencies, including the Department of Veterans Affairs, 
Disabled American Veterans, Comcast, AT&T, Deloitte, and many 
others.
    A highlight of the first phase of this program is a public 
service announcement aired by Comcast over 33,000 times in ten 
military-centric markets, including Fort Myers, Florida, and 
Colorado Springs, Colorado.
    Our partnership with the Veterans Administration has 
provided us the opportunity to air the same PSA in 85 VA 
medical centers and 30 community-based outpatient clinics, with 
more than 108,000 veteran patients visiting these facilities 
daily.
    In the next phase of the program, we plan to leverage this 
alliance to deliver more cyber safety training and education 
directly to the military and veteran community at no cost to 
them.
    In closing, CSN would like to encourage the Federal 
Government to fund nonprofit organizations, such as CSN, who 
are working to make the military community more aware of the 
cyber threat and encourage safe data care practices.
    Additionally, we encourage your support of the Cyberspace 
Solarium Commission's proposal for a Federal National 
Cybercrime Victim and Assistance Recovery Center to serve as a 
nationwide cybercrime reporting and recovery program to aid not 
only the military and veteran community, but civilians and 
small businesses as well.
    Thank you, and I look forward to answering your questions.
    Mr. Lynch. Thank you very much, Mr. Burda.
    I will now recognize myself for five minutes of questions. 
But before I do, I want to just say thank you to all of our 
panelists today, both in person and remotely, for your 
willingness to protect our servicemembers, our veterans, and 
their families from this exploitation.
    It's honorable that you spend your time and your skills in 
such a noble effort. And we really are thankful for your 
willingness to come before us and to help us figure out ways 
that we can lend our energies and resources to this same 
mission.
    I also want to recognize Mr. Rice, Mr. Broussard, and Mr. 
Burda for your military service. I think having you as 
veterans, as men who have served and who have gone through this 
experience, offers a very valuable perspective, I believe, in 
helping us to understand the nature of this problem.
    One of the other--so I'm the chair of this committee, but I 
also chair the Task Force on FinTech in another committee. And 
I know that we have had a growing--this problem has grown along 
with the explosion of financial technology that is being used 
by our sons and daughters in uniform.
    And one of the problems that we have is that it's a 
personal device, so that it's not as if DOD or the Army or Navy 
or Marine Corps or Air Force or the Reserves could possibly 
come up--or the Coast Guard--could come up with a way to 
intervene before those solicitations come to the individual 
soldier or person in uniform.
    And I'm just wondering, you've all got a wealth of 
information, how much cooperation are we getting? I was just 
down in Fort Hood. I did a couple of trips down there on an 
investigation unrelated to this.
    But as I was pulling into Fort Hood, I see these big 
billboards, for loans, and buy an automobile with no money 
down, those type of advertisements right outside the base. So 
you know they're targeting our young people.
    How much cooperation are we getting? Now, that's on private 
land, it's not on the base, but it's across the street from the 
base. I want to make that clear.
    But how much cooperation are we getting from DOD, the 
military, the VA, how much cooperation are we getting from them 
on this mission to protect our veterans and our servicemembers 
and their families from financial fraud?
    Mr. Rice.
    Mr. Rice. Thank you, Chairman.
    It is, as I mentioned in my testimony, it's a close working 
relationship that we have with the Department of Defense, 
particularly the Office of Financial Readiness. It is a 
multiple-times-a-week conversation that we have on a variety of 
topics.
    Their mission primarily is to educate their population, so 
looking at the soldier, sailor, airman, marine, coast 
guardsman, and guardian, to make sure that they're aware of the 
risks that are out there.
    We take that obligation seriously from that level, the 
servicemember level, to the installation level, to across the--
to working with the industries who you mentioned are 
advertising to those soldiers.
    At the senior levels at the Bureau, I know that the 
Director has had several conversations with the Under Secretary 
of Defense for Personnel and Readiness, Mr. Cisneros. They're 
in agreement about approaches that need to be taken to protect 
servicemembers, and we'll continue to work on those.
    Mr. Lynch. Very good. Thank you, Mr. Rice.
    Anyone else? Mr. Broussard or Mr. Burda or Ms. Mithal, do 
you have any--or Mr. Carr--any perspective on that?
    Ms. Mithal. Sure. I'll just add--oh, I apologize.
    Mr. Lynch. Ms. Mithal, you're recognized.
    Ms. Mithal. Thank you.
    So we work closely with our partners on this issue. And I 
will just echo Mr. Rice's statements. We meet regularly with 
the DOD's Office of Financial Readiness, with the CFPB's Office 
of Servicemember Affairs, with the VA, to name a few.
    We work on joint branding. We put out messages to military 
consumers and make sure they're distributed effectively. And we 
participate in webinars together. We have social media events. 
So this is an area where we're working very closely, and we're 
prioritizing outreach.
    Mr. Lynch. Very good.
    I'm not sure if that was Mr. Broussard or Mr. Burda that 
wanted to jump in there, but whoever it was, you're welcome, 
you're recognized.
    Mr. Broussard. I'll jump in really, really, really quick 
here, Chairman. Thank you for the opportunity.
    As it relates to the VA, I will tell you that, throughout 
our 53 states that we do have, we have connections that we work 
very closely with the Veterans Administration.
    And then what we also do is, we do tele-town halls with 
them to make sure that we get the word out, to share some 
things, the scams that are going on, and it's a really good 
relationship working with both.
    So I just wanted to make sure to add that bit of 
information to this topic. Thank you.
    Mr. Lynch. Thank you.
    Commissioner Carr, given the fact that a lot of this is 
being promulgated on these fintech apps and platforms, is there 
any countermeasure that we're applying to sort of police that 
or to intervene on behalf of our servicemembers?
    Mr. Carr. Yes. From the FCC's perspective, we work in 
partnership with FTC, DOJ, state AGs even, we've had 
partnerships with Department of Veterans Affairs as well, to 
look at all of these ways that these frauds and schemes, from 
robocalls to the online platforms that you've mentioned.
    Mr. Lynch. OK. I notice the trend is, when we gave the 
numbers, the trends from even over one year was increased 
almost 70 percent. So we're just concerned about whether we're 
keeping pace with the volume of this that's going on.
    With that, I want to yield to--my time is expired--I want 
to yield to my colleague, Mr. Grothman, the ranking member, for 
five minutes, for his questions.
    Mr. Grothman. Thank you.
    I'll start off with Commissioner Carr.
    Little bit concerned about TikTok here. Could you give me--
you mentioned in your initial statement--but could you 
elaborate on the risks involved with the Chinese Government 
having access to personal data?
    Mr. Carr. Yes. I mean, if you look, again, last week with 
FBI Director Wray saying that China is our biggest long-term 
national security threat, using every tool at their disposal.
    One of those tools is the massive amounts of data that 
apparently they're having access to that's being pulled off of 
millions and millions of Americans. They have a long track 
record of engaging in business industrial espionage, blackmail, 
and other nefarious acts. So we're very concerned about that 
data flow back into Beijing.
    Mr. Grothman. OK. Could you elaborate on, what's the danger 
to our country, though, when they have that data?
    Mr. Carr. Yes. We've seen this same type of concern, for 
instance, with Huawei, with ZTE, where they have set up their 
infrastructure around military installations. We've taken 
action there.
    And think about now with TikTok, this is a device right in 
your pocket that's going inside of the military installations. 
You're looking at location data, which can give people 
information about troop movements. There's a range of ways that 
that sensitive data going back to Beijing with their 
sophisticated AI could ultimately be used to harm U.S. national 
security.
    Mr. Grothman. OK. I would think then the military would be 
doing something to say: Stay off of TikTok. I guess I'll ask 
you or anybody else here, are we aggressively educating our 
servicemembers to stay off of TikTok?
    Mr. Carr. Several military branches have affirmatively 
banned it from official devices, but that continues to see 
pervasive use on personal devices. So I think that's a 
challenge that we need to continue to address.
    Mr. Grothman. Servicemembers are using it anyway?
    Mr. Carr. Correct.
    Mr. Grothman. OK. I mean, I would think, like I know, for 
example, some servicemembers, they aren't even allowed to tell 
their family members where they are located, at times, and to 
me this is tantamount of telling the Chinese where they're 
located, right?
    Mr. Carr. Yes. We saw this with a similar application, 
Strava, an exercise app, pulling location data from smart 
watches, for instance, that was being disclosed. And so there's 
very serious concerns about this nonpublic location data, 
biometrics.
    And, again, it's one thing if TikTok was straightforward 
and said: We're storing it all in the U.S., it's never been 
accessed inside of China. But that's far from the case 
according to this reporting.
    Mr. Grothman. Could the military be doing more? I'll put it 
that way. Or I'll ask the others. Could the military be doing 
more to telling our troops, or our members, to stay off of 
TikTok?
    Mr. Carr. Yes. I think the government itself can be doing 
more. I think we have a Commerce Department review that's 
pending. We have a CFIUS review out of Treasury that's pending. 
We need to bring those to a close ASAP with the urgency that 
this national security threat demands.
    Mr. Grothman. OK. Now I'll broaden the questions a little 
bit. And this could be for anybody.
    Where do these scams originate from? They have to originate 
from somewhere. Are they in this country? Are they other 
countries? Could someone elaborate both where they believe the 
scams are coming from?
    And when we catch people, where are they from? Could you 
give me some sort of stereotype of who's doing this?
    Mr. Burda. Sure. I'll jump in, sir.
    I'm not sure that information is widely available. My 
inclination is, is that you would find that they're in the 
United States and outside the United States as well. I think 
all of the above.
    Mr. Grothman. Well, haven't we ever caught anybody?
    Mr. Burda. I'm sure we've caught some people, sir, I'm 
sure.
    Mr. Grothman. And when we catch them, where are they?
    It's a secret? It can't be.
    Mr. Burda. I don't know, sir.
    Mr. Grothman. OK. We got five experts here today and nobody 
knows when we catch somebody where they're located? That's a 
problem. Nobody knows.
    Mr. Rice. Sir, let me address this from the Bureau.
    I'm not aware of any enforcement action that the Bureau has 
taken that involves a foreign actor, that they are all 
continental United States actors.
    But that is not tied in any way--my answer is not tied in 
any way to TikTok. That's enforcement actions against various 
lenders or organizations that we supervise.
    Mr. Grothman. OK. So can somebody just tell me a little 
bit? Is there any case that you have in your mind that came up 
in the last year that you can tell us about, like how these 
people decided to do this, or where they came from, what their 
background is?
    Ms. Mithal. Sir, if we can broaden the question to not 
TikTok also, I can tell you----
    Mr. Grothman. No, anybody, yes, that's right.
    Ms. Mithal. OK.
    Mr. Grothman. Anybody. We have a hearing for protecting 
military servicemembers.
    Ms. Mithal. Sure.
    Mr. Grothman. Where do these frauds originate? Where are 
they sitting around planning this?
    Ms. Mithal. Sure. So the top fraud area in 2021 reported by 
military consumers was imposter fraud. So that's people calling 
and pretending they're from the SSA or the IRS to get your 
personal information.
    And we've taken action, for example, against that military 
recruitment scheme. That was actually not a scam that was 
located abroad. So we were able to get relief for those 
consumers. We shut down----
    Mr. Grothman. And where were they located?
    Ms. Mithal. They were located within the United States, so 
we were able to go after them and get relief.
    We have seen imposter scams where the actors are located 
abroad. In those situations it is more difficult.
    At the FTC, we have an Office of International Affairs that 
has relationships with other countries, and we work to leverage 
those relationships to see what we can do.
    Mr. Grothman. And could you tell us what other countries 
they were located in?
    Ms. Mithal. Oh, for the fraud that I was talking about, 
they were located here.
    For the ones that are located abroad, a lot of those 
matters are ones that either--we've pursued people who live, 
for example, with crypto cases, in France. That's just one 
example. But they could be located anywhere.
    Mr. Grothman. Are they French? Are they immigrants? What's 
the deal?
    Ms. Mithal. So sometimes they are people who are from 
France. Sometimes they are people who are here and have moved 
to France.
    Mr. Grothman. OK. Well, I guess we--I've got my time. But 
I'd still like to learn a little bit more about the type of 
people who do this.
    Mr. Lynch. The gentleman yields back.
    The chair recognizes the gentleman from Georgia, Mr. 
Johnson, for five minutes.
    Welcome.
    Mr. Johnson. Thank you, Mr. Chairman, for holding this very 
important hearing.
    While everyone can be targeted by scammers, the men and 
women who serve in our Armed Forces face a disproportionately 
higher risk of financially being targeted by scammers.
    Our Nation's veterans have done their duty and deserve to 
be protected from fraudulent schemes that prey upon them. This 
is one of the few hearings that has been held on this issue and 
this has resulted in scammers stealing from veterans an 
estimated $40 million in 2020.
    So I thank you, Mr. Chairman, for shedding light on this 
issue, to ensure that our veterans are protected.
    Ms. Mithal, we know that veterans are over 40 percent more 
likely to experience scams and lose money than 
nonservicemembers. What are some of the factors or 
circumstances that make military servicemembers and veterans 
prime targets for financial scams and fraud?
    Ms. Mithal. Yes. Agree that, unfortunately, servicemembers 
and veterans are attractive targets for fraudsters. Things like 
a steady paycheck, GI Bill benefits, and pensions make them 
very attractive targets, and we have taken action at the FTC 
when people are trying to take advantage of those things.
    Mr. Johnson. Thank you.
    How can the agency investigative practices be improved to 
ensure that this vulnerable population is adequately protected?
    Ms. Mithal. So I think it's a multifaceted approach. We 
cannot rely on cases alone or even rulemakings alone. Education 
outreach is critical.
    So, for example, when we have consumers report fraud to the 
FTC's website, right away we turn--we kind of give out some 
customized tips that they can use right then and there to try 
to recover their losses.
    We have things like relationships with personal financial 
managers and legal aid groups that interface directly with 
members of the military so that they are on the ground, hearing 
what's happening, and we are providing advice and working with 
each other there. It really has to be work on all fronts. It 
can't just be one solution.
    And of course another important one is coordination with 
the people sitting at this table so that we can make sure to 
leverage our resources.
    Mr. Johnson. Thank you.
    Is there anything that you can tell veterans right now to 
help make them less susceptible to being scammed?
    Ms. Mithal. I would say that it's incredibly important to 
visit MilitaryConsumer.gov. That's a one-stop shop that 
provides tips on detecting and avoiding scams.
    For example, if someone calls and asks you for money or 
your personal information, hang up. Don't be rushed. Go online, 
check out the company or the product and type in the word 
``scam'' and see what pops up.
    And to harken back to something an earlier person said, do 
not pay by gift cards, cryptocurrency, wire transfer. That's 
the sign of a scammer.
    And then finally if you do find yourself to be a victim of 
a scam, please report that to the FTC. Again, we use that 
information to tailor our work and we provide advice right then 
and there, customized tips on getting your money back.
    Mr. Johnson. Thank you, Ms. Mithal.
    Mr. Broussard, in April 2022 the AARP launched the Veterans 
Fraud Center to protect veterans from malicious actors. Please 
explain how this program has successfully assisted 
servicemembers and veterans, as well as how the program intends 
to improve these services in the future.
    Mr. Broussard. Thank you very much, Rep. Johnson.
    I will tell you, our Vets Fraud Center was an opportunity 
for us at AARP to put all resources into a one-stop shop for 
our military, veterans, and their families.
    It's a digital online platform that helps veterans and 
their families protect themselves from coast to coast. The 
great part about this is that you can have veterans that can 
go--and their families--can go into--there's what we call a 
scam-tracking map.
    And this scam-tracking map, you can put in your ZIP Code, 
and it will tell you what scams are right near in your area and 
to be aware of. Because the No. 1 thing to really focus our 
attention on is to be prepared.
    Education is key, but it's extremely important that with 
this fraud center that you could get to, it directly helps you 
to be wary and to develop that ``no'' script. When you get a 
phone call or email or anything along those lines, you are 
ready and armed to fight back and say, ``No, I'm not going to 
provide you my military records or Social Security number or 
any of those opportunities there.''
    So that Vet Fraud Center online, and it really works, very 
fantastic for our members and military veterans as well.
    Mr. Johnson. So can you give the web address and a phone 
number?
    Mr. Broussard. Absolutely. What we can do is, you can go to 
www.vetsfraud--www.aarp.org/vetsfraudcenter, and it's a free 
site that you click on, and then it will bring everything up 
for you. It will bring our AARP Fraud Watch, our helpline 
number as well, and it's a one-stop shop to where you can 
access these free resources.
    Mr. Johnson. Thank you, and I yield back.
    Mr. Broussard. Thank you, Rep. Johnson.
    Mr. Lynch. Thank you. The gentleman yields back.
    The chair now recognizes the distinguished gentleman from 
Ohio, Mr. Gibbs, for five minutes.
    Mr. Gibbs. Thank you, Mr. Chair.
    Commissioner Carr, I wanted to followup a little bit more 
on TikTok. Do we know who owns TikTok?
    Mr. Carr. The parent company is an entity called ByteDance 
with their headquarters in Beijing.
    Mr. Gibbs. OK. So it's a Chinese company?
    Mr. Carr. And the Chinese Government actually has a small 
ownership stake in ByteDance as well, and there's been reports 
of over a hundred CCP members located in just the Beijing 
office of ByteDance alone.
    Mr. Gibbs. So it's pretty obvious and clear that the 
Chinese Communist Government has access to TikTok.
    Mr. Carr. The reporting is that there is virtually no 
distinction between ByteDance and TikTok and that there's 
employees at ByteDance that work 10 to 7 for ByteDance, and 
then they work a double shift to work on TikTok matters, 
according to BuzzFeed reporting.
    Mr. Gibbs. OK. So how come the Administration or FCC or 
some one of our entities can't declare a national security 
threat and just completely ban TikTok access? Am I missing 
something here?
    Mr. Carr. We can. I think we should. The Commerce 
Department has a proceeding underway that I think they need to 
bring to a close quickly that's looking at TikTok. Treasury, 
CFIUS, the foreign investment group, according to TikTok 
itself, is negotiating an agreement with TikTok right now. I 
think that needs to be brought to a close immediately.
    Mr. Gibbs. Because the technology just really impresses me, 
all the changes in my lifetime, in the last 20 years or less. 
And I just upgraded my iPhone. And I was amazed. I always put 
it off to upgrade my iPad and my laptops and all that, because 
it was always such a pain transferring it all.
    I upgraded this iPhone. And the technology, you can 
download from the iCloud. Or the way I did it, I set my old 
iPhone next to it and within five minutes everything on my old 
phone came onto this phone, the apps, the passwords, 
everything. I mean, it was incredible. And it was really kind 
of a nice experience because it wasn't a pain.
    But it does make you wonder, if they have access to the 
servers from the TikTok, for example--and I'm not familiar with 
TikTok--and I see the way the technology works, that I don't 
know if you have firewalls or what. You know what I'm saying?
    Mr. Carr. It's a challenge. There's a baseline level of 
data that all applications are pulling that's concerning. In 
fact, there's work right now in Congress. Cathy McMorris 
Rodgers, Republican leader on E&C, is working on a privacy bill 
that would address that.
    But with TikTok, it's especially concerning given, one, 
their pattern of misrepresenting where the data is going. They 
have been asked point blank: Has this been accessed from inside 
China? And they say: Well, we've never given it--or shared it, 
in their words--with the Chinese Government. That's not the 
question.
    Mr. Gibbs. You can't believe anything the Chinese 
Government, that a Communist government tells you. If you are, 
I've got some land to sell you somewhere.
    But, yes, I mean, it should be a national security threat 
and we should address it that way and move forward.
    Commissioner Carr, on robocalls, I mean, have you ever met 
anybody that doesn't get robocalls and is not upset about it?
    Mr. Carr. It's unbelievable. It is an absolute scourge. 
It's rendered the traditional telephone network almost 
unusable. People don't pick it up. I get them all the time. 
When I walk down the street in my neighborhood, my neighbors 
yell at me: Why aren't you doing more?
    We are doing a lot, but there's no question that we need to 
do more. We're increasing fines. We're working more with state 
AGs.
    Mr. Gibbs. Can you give any examples, without specifically 
naming, have we taken down entities that are doing robocalls? 
And have they been prosecuted? I mean, what's the status on 
that?
    Mr. Carr. We have. We issued hundreds of millions of 
dollars' worth of fines. These are boiler rooms. They pop up 
all over the place. It's like whack-a-moles.
    One thing that our FCC Chair has advocated for is giving 
the FCC authority to go to court to enforce and collect on our 
fines, because right now we issue fines and it moves over to 
DOJ to decide whether to go to court.
    Mr. Gibbs. Now, I assume a lot of these robocalls are from 
foreign source, not domestically. So that's another challenge. 
How do we address that?
    Mr. Carr. They are. We have an authentication process in 
place called STIR/SHAKEN that we're applying in the U.S. 
network to combat robocalls.
    But the networks abroad don't necessarily have that same 
sophistication. So we're getting calls in from abroad that 
carriers can't really identify where they're coming from. And 
that makes it harder to trace back and, therefore, block the 
fraudulent ones.
    But a lot of this is coming from overseas.
    Mr. Gibbs. Yes. I think it's pretty clear. And I just see 
here in my notes that U.S. consumers received nearly 4 billion 
robocalls per month in 2020. I mean, I'm sure it's correct 
because I get several, I don't know, maybe half a dozen or more 
a day.
    And it's interesting, sometimes they come up potential 
scam--potential spam, I should say--and then some you don't 
know who they are. And so I just let them go to voicemail. Of 
course they never go to voicemail. They never leave a 
voicemail.
    So I don't know what the solution is. We had the registry 
where you sign up to help prevent getting those. I don't know 
how effective that's been, because I still get them and you 
still get them.
    So any last comments on that?
    Mr. Carr. Yes. We're working on it. We're standing up this 
call authentication framework. But there's still plainly a lot 
more that we need to do to break the back of these robocalls.
    Mr. Gibbs. Thank you. Yield back.
    Mr. Lynch. The gentleman yields back.
    The chair now recognizes the ranking member for any closing 
remarks or questions he might have.
    Mr. Grothman. I'm sure I'm going to followup a little bit 
what we talked on last time.
    First of all, if you catch somebody, what happens to them? 
What do we do? Can you give me an example of when somebody has 
been prosecuted, what type of sentence they got?
    Mr. Carr. In the FCC's case, for instance, we will issue 
hundreds of millions of dollars in fines. Collecting those 
fines then moves over to DOJ to go to court.
    That's why that idea has been raised about giving the FCC 
authority, potentially with state AGs, to go directly to court, 
so we don't have to wait on another agency with their own 
docket of priorities to bring those to a close.
    Mr. Grothman. That would be a good thing.
    Does anybody go to prison or is it just a civil thing or 
what do we do?
    Mr. Carr. In the FCC context, it's just fines, monetary 
fines.
    Mr. Grothman. That's not very good, is it?
    Mr. Carr. I think there's more that could be done. That's 
why potentially pairing with state AGs and looking at other 
actions could be even more effective.
    Mr. Grothman. There should be some sort of long prison 
sentence if you're ripping off people for hundreds of thousands 
of dollars, shouldn't it?
    Mr. Carr. I have no problem with throwing the full book at 
people that are engaged in these fraudulent schemes.
    Mr. Grothman. Yes, we got to up things a little bit.
    I'm going to followup on what we said last time. I'd like 
to know in general on these schemes where are they originating. 
Are they from American citizens? Are they from citizens abroad? 
Are they from people who have engaged in other criminal 
behavior?
    I mean, say, Commissioner Carr, do you have any examples 
that come to mind over the last five or six cases on your desk? 
Tell us a little bit about where these came from.
    Mr. Carr. Yes. I can look and provide you more details. 
Again, with robocalls, a lot of this is overseas, from India, 
from other countries. And I can provide you more a detail 
briefing on specifics.
    Mr. Grothman. Sure. Which countries?
    Mr. Carr. India is one. Pakistan is another one. But I can 
provide you even more details on that.
    Mr. Grothman. Yes, good. Let's find out about that.
    Do you guys have anything else to say about where these 
things are originating?
    Mr. Rice. Representative, the examples that I have--and 
I'll check with our enforcement folks and give you a more 
complete answer--but the examples I have are all U.S. 
companies, U.S.-based companies and actions that took place in 
the U.S. against servicemembers.
    Mr. Grothman. U.S. company is a little bit misleading. You 
mean like honest companies, or are these rip-offs and not even 
real companies?
    Mr. Rice. The examples that I have are real companies.
    Mr. Grothman. So real companies go into business just to 
scam people? I would think if I'm going to break the law, I 
wouldn't do it with a real company. But you can tell me, is 
that what goes on?
    Mr. Rice. I'm not sure that I can characterize it as a 
company that went into business to do that particular thing, 
but as a part of its business. And I'll cite one example.
    An operator was found in violation of the Military Lending 
Act and the Electronic Fund Transfer Act. So this company was 
originating loans, typically in the range of 500 to 10,000 
dollars, and they were a repeat offender. Those violations 
received a civil money penalty of $2.175 million.
    Mr. Grothman. What was their legitimate business? If you're 
implying it's a business, did they have another end of it that 
one could describe as legitimate?
    Mr. Rice. They were in the business of doing loans, sir.
    Mr. Grothman. OK. So, in other words, were they breaking 
that special bill for veterans, is that what you're talking 
about?
    Mr. Rice. They were violating the Military Lending Act, 
most likely by going above the 36 percent threshold.
    Mr. Grothman. OK. That's interesting that somebody would do 
that. So it's legal to do that if you're not dealing with 
veterans, and then they just got greedy and went for the 
veterans too? Is that the deal?
    Mr. Rice. I owe you more detail on that. I can't speak to 
the particulars.
    Mr. Grothman. OK.
    Anybody else have any comments on who's doing this sort of 
thing?
    Ms. Mithal. Sure. I'm happy to talk a little bit about the 
FTC's here.
    So we see frauds that happen from anywhere. They can be 
from the United States. Sometimes actors are located abroad.
    I will tell you the kinds of threats we've seen or the kind 
of issues we've seen include things like debt collection from 
callers within the U.S., where they call and they tailor their 
threats to military consumers. They may call, for example, and 
say: If you don't pay up, I'm going to tell your commanding 
officer. I'm going to ruin your military career.
    We've shut down operations like that, and we've gotten 
money back for consumers.
    We're also a civil agency, a civil law enforcement agency. 
So we don't put people in jail. We do work closely with 
criminal partners, and we refer cases to them to get their help 
as well.
    Mr. Grothman. It seems to me, and you can ask me whether 
this would be helpful, would it be good if you had the ability 
to put people in prison, if there were criminal penalties that 
would go with some of this stuff?
    Ms. Mithal. So we are a civil law enforcement agency, and 
those are the bounds within which we act.
    As for additional tools along those lines with Congress, I 
think the commissioners would speak better to that. I don't 
know that the Commission has taken a position on that.
    Mr. Grothman. Well, I'll give you one more question. Then 
my five minutes is up.
    It would seem to me that if I was engaging in illegal 
behavior and my only penalty is a civil penalty, I would think 
a lot of people who engage in criminal behavior kind of live 
day by day or spend all their money they get or whatever, in 
which a civil penalty is kind of meaningless. And if it is kind 
of meaningless, don't you think some sort of criminal penalty 
is in order?
    Ms. Mithal. I think that prison time, jail time, all these 
things are incredibly important, and that's why we work with 
our criminal partners. I agree that there are a lot of people 
that are going to continue doing fraud because it's profitable, 
and jail time is very important.
    Mr. Grothman. Thank you.
    Mr. Lynch. The gentleman yields back.
    Ms. Mithal, you just touched on a very good point. We 
hadn't discussed that yet. I know that DOD regards financial 
readiness and financial competence to be equally as relevant as 
operational readiness for a lot of these soldiers.
    And I know that a lot of our men and women in uniform who 
get into financial difficulty, they have one of these impostor 
incidents, oftentimes bad information goes on their credit 
report, and they end up losing their security clearance.
    And I know that the last numbers we have in this regard are 
from 2014. Those are the last numbers that are available. At 
least, we couldn't find any more recent.
    But in 2014, the DOD estimated that 80 percent of the 
security clearance revocations and more than 4,700 separations 
from the military were connected to financial difficulties. I 
mean, that's 80 percent of security clearance revocations. That 
really does, as you indicated, that threat of ruining their 
military career is very real.
    Do we have--and I offer this to all of the witnesses--do we 
have any countermeasures? Does the CFPB have anything to look 
at that, those consequences, that this person is being 
separated from the service because of financial difficulties? 
Do we have any more recent data on that?
    Mr. Rice. Chairman, I don't have any more recent data on 
the folks who either lost their clearance or were forced out of 
the service because of a financial difficulty.
    But I will say that the tools that are in place, the 
Military Lending Act, the Servicemembers Civil Relief Act, that 
it's incumbent on us--and I'm talking about all of our 
partners--to ensure that those are strengthened and that those 
are followed.
    In my earlier answer about how we work with DOD, I didn't 
mean to imply that it is all the servicemembers' 
responsibility. We have a huge responsibility to ensure that 
they're educated, but, by the same token, at the other end of 
the extreme, we've got to hold those bad actors accountable. So 
it is the strength of the MLA and SCRA that has to get that 
backbone to it.
    Mr. Lynch. Yes. It's bad enough that these kids--mostly 
kids--are being exploited, but then to have them punished for 
falling victim to this exploitation is beyond the pale.
    So I don't know if any of our remote witnesses had anything 
to add on that. OK.
    Well, I want to thank you all for your willingness to 
testify and help the committee with its work. I also want to 
thank you for your ongoing effort to protect our sons and 
daughters in uniform, our veterans, and the military families.
    In closing, I want to thank our panelists for their 
remarks, and I want to commend my colleagues for their 
participation and their very keen questions in this important 
conversation.
    With that, without objection, all members will have five 
legislative days within which to submit additional written 
questions for the witnesses through the chair, which will be 
forwarded to the witnesses for their responses.
    And I ask our witnesses, if any questions are forwarded to 
you, please respond as promptly as you are able.
    This hearing is now adjourned. Thank you.
    [Whereupon, at 4:54 p.m., the subcommittee was adjourned.]
    
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