Little Hoover Commission hears victims and experts urge platform accountability, data fusion and better law‑enforcement tools to curb rising scams

Pedro Nava, chair of the Little Hoover Commission, opened the Sept. 25 hearing by framing the problem in stark terms: "This is the Little Hoover Commission hearing on financial scams part 1," and by noting staff estimates that Californians have suffered billions in losses since 2020.

Two Californians described how the scams work and why victims often cannot get help. "I was convinced I was helping the federal government," Lynn told the commission, describing an imposter scheme that led her to make repeated withdrawals, buy gold and exhaust retirement accounts. She said fraudsters used remote‑access software and convincing callers claiming to be from banks and the Federal Reserve to extract cash and valuables, and asked the commission to require banks to add and notify trusted contacts, to allow three‑day holds on suspicious transfers and to require gold dealers to check ID.

Karina described a ‘‘pig‑butchering’’ scheme that began on a dating app and moved to private messaging and a fraudulent crypto trading platform. "By the time I realized what had happened, I lost $152,000," she said. Karina traced funds on the blockchain and identified a Thai exchange — but said U.S. law enforcement and platforms largely failed to help because of legal limits and lack of coordination. She urged carve‑outs to Section 230 for platform cooperation, specialist cyber‑fraud units, proactive chain‑analysis warnings that block known scam wallets, and broad victim support services.

Experts pressed for systemic reforms. Ken Westbrook of Stop Scams Alliance urged California to "stop fraud at the source" by adopting a coordinated prevention strategy with three pillars: clear strategy and authorities, centralized data fusion for faster threat intelligence, and stronger authentication to block spoofed calls, phony ads and fraudulent financial listings. He pointed to Australia and the U.K., where governments have combined measurement campaigns and regulatory steps that helped reduce losses.

Erin West of Operation Shamrock described work by multiagency task forces that trace crypto and seize funds, and argued that state and local resources must be expanded so victims do not "walk into the ocean" from despair. "We're up against Goliath," she said, urging funding for task forces, stronger international cooperation and pressure on platforms and telcos that enable scammers.

San Diego's approach was offered as a model. District Attorney Summer Stephan and prosecutor Scott Perillo described an elder justice task force that tracked roughly $134,850,000 in elder scam losses in a single recent year and has used coordinated local and federal efforts to recover funds and prosecute local participants. Perillo said prosecutors have pursued courier networks and RICO indictments, and that coordinated behavior by banks and gold dealers — and fast police response — made prosecutions feasible.

State agencies described their capabilities and limits. James Trajari of the California Department of Social Services said Adult Protective Services handled nearly 75,000 reports last fiscal year (about 28,000 reported as scams) and is building a case‑level database to improve statewide analysis. Jonette Jerone of the California Department of Justice said the cybercrime section has taken down scam websites and runs statewide training but has limited staff and must rely on federal and local partners for many prosecutions. Suzanne Martindale of the Department of Financial Protection and Innovation highlighted regulatory tools already in place: a crypto scam tracker, expanded consumer outreach, and the Digital Financial Assets Law (licensing to begin 07/01/2026) that already enforces a $1,000 daily limit on crypto kiosk transactions; DFPI recently secured restitution and a penalty in a kiosk enforcement action.

Across testimony, commissioners and witnesses converged on several policy options:

- Increase platform and private‑sector accountability (including legislative changes that would require cooperation with fraud investigations and limit immunity where platforms enable scams). - Build centralized data‑fusion hubs so banks, platforms, telcos and law enforcement can share fraud intelligence quickly and safely. - Fund and expand statewide and regional cyber‑fraud task forces and training so local agencies can respond promptly to reported scams. - Require or incentivize banks to add and notify "trusted contacts," to flag suspicious large withdrawals, and to apply holds or additional confirmation for irregular transfer patterns. - Regulate or limit crypto kiosk and on‑ramp transactions (already partly achieved via DFPI's kiosk limit) and require exchanges to cooperate with subpoenas and tracing.

Commissioners pressed witnesses on next steps and legislative options. Several asked staff to pursue further hearings and to coordinate with legislative offices on possible bills; the panel also discussed public awareness campaigns targeted at different platforms and communities. Multiple witnesses urged a victim‑first framing to reduce shame and improve reporting.

What comes next: the commission scheduled a follow-up hearing and directed staff to continue outreach to legislative offices and to invited industries (banks, platforms) for future testimony. Officials at federal, state and local levels told commissioners the combination of prevention, improved reporting, law‑enforcement capacity and targeted regulation can make scams harder to execute and easier to disrupt.

Quotes used in this article are drawn directly from witness testimony and staff presentations at the Little Hoover Commission hearing on Sept. 25, 2025.