Joint Insurance Committees: Feb. 13, 2026

Senator Blake Johnson Members, if you would, find your seats and we can get started. Meeting jointly, Insurance and Commerce, House and Senate. Today, the committee is examining a growing threat, financial fraud in Arkansas. Fraud has evolved into organized, technology-driven schemes that target seniors, small business, and working families across our state.

 Our responsibility is clear, to protect Arkansas’ 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 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. Representative Maddox, you got anything? 

Representative John Maddox Sure, thank you, Mr. Chair. Good morning. 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 are proliferating all the time. So I look forward to maybe some solutions and some steps we can take to further assist our state. So thank you. 

Senator Blake Johnson Thank you, Chair. We’re going to begin with consideration to approve the minutes from the November 3, 2025, minutes. Has everyone had a chance to review those? I’ll entertain a motion. Motion by Senator Boyd, second by Senator Johnson. All in favor, say aye. All opposed, like sign. Thank you, members. We’re going to get into our financial fraud discussion. Lorrie Trogden, the Chief Executive Officer with Arkansas Bankers Association, come forward. Just introduce yourself and you’re recognized. Just don’t take too long. 

Lorrie Trogden Got it, got it. It’s Friday and you all 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 and Representative 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 threat landscape. 73% of US adults have experienced some type of online scan or cyber attack. 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 under-reported 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 remains significantly unreported. Arkansas, let’s talk about Arkansas from the FBI report. 4,238 fraud incidents were reported in 2024. And again, that number is probably far under reported. And that equated to 51.8 million in reported losses. 40% of those payments, so 40% of the 51. 8 million, were facilitated through cryptocurrency, which makes clawing that back much more difficult. 

And then seniors, 60 plus, 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 were 60 plus. And 53% of that monetary loss, 53% of the 52 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 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, spoofed bank email addresses, fake websites being promoted on social media, lotteries, too good to be true, deals on Louis Vuitton bags for $400, trying to steal your credit card, fake job postings on LinkedIn and other platforms that they impersonate, well-known companies. They 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 front line, their tellers, their managers, 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. Benda, 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, texts 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 them educate them. And you can utilize those on your social media or you all speak a lot at community organizations and in your churches and things like that. So those are something that you can share.

 And 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 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 been advocating with our meetings with the White House for a cross agency comprehensive task force that is solely committed to fraud because we can’t do it alone. It does take all of us and all the cross agencies to combat this every day. That is all I have unless somebody has questions. Thanks. 

Senator Blake Johnson Thank you, Lorrie. So just out of due consideration, whenever the bank– this may be for some of the later witnesses. Whenever this happens and they reimburse the person who had been fraud, so does that come out of the deposited assets or the profit margin of the bank? Or does the FDIC insurance reimburse the bank that has taken care of the person who’s been defrauded? 

Lorrie Trogden I’m going to let the bankers answer that specifically. I know the FDIC only covers very specific things, and I don’t think any of it’s due to fraud. But I will let the experts who are in the room talk about that. 

Senator Blake Johnson Thank you. We have some questions. Senator Mark Johnson. 

Senator Mark Johnson Thank you, Mr. Chairman. Lorrie, thank you for coming in on this important issue. I looked on my phone and I delete these things usually, but I hung onto this one. I’m glad I didn’t. I want to read it to you. 

It says, “Parking citation final notice. Our records indicate an outstanding parking citation associated with your vehicle. Failure to pay the balance by February 6 may result in continued non-compliance and suspension of driving privileges for up to 30 days.” This is a report of your violation to the Arizona Motor Vehicle Division. 

Well, I haven’t driven or parked in Arizona in certainly five years, maybe ever. And I said, 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 this so they can be investigated? 

Lorrie Trogden You should definitely– the little thing underneath the text messages, that says report spam, 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. Look up the Arizona department and call them directly off what you find. But never respond to the number that’s related to the text or email or click the link.

Senator Mark Johnson I had my debit card hacked. I think it was in New Orleans. And I think I even know the– I went to a jazz club and I paid for drinks with my debit card. And ever since then, I still get notices of Uber that– and I’ve got it. I mean, the credit union, this was through Arkansas Federal, they took care of me lickety-split the day I got back. 

But I’m still getting, every now and then I’ll get an ‘Uber 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 using the chip function. 

I try to use the tap when it’s available. But is there one method, one over the other that you would, when you say we talk to constituents we can share this information. Is there a safer way to use that card?

Lorrie Trogden My understanding is that tap is always the preferred method. My colleague, Mr. Benda, that is coming up next, he is the expert on all things fraud and so can probably give you a little more detail or one of the bankers in the room can as well. But to my understanding, always tap. 

Senator Mark Johnson I’ll wait for them then. Thank you very much. Thank you, Mr. Chair. 

Senator Blake Johnson Thank you, Senator. There’s a lot of people who want to ask you questions. They miss you. 

Lorrie Trogden I miss you all too. If they’re really technical, I’m probably not the person to ask, just FYI, since we have bankers in the room. 

Senator Blake Johnson Representative Dalby. 

Representative Carol Dalby Thank you, Mr. Chair. It’s good to see you, Lorrie. Mine is not a technical question. Mine is referring to your testimony 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 at some point you can share with some of us? 

Lorrie Trogden I do have it and I would be happy to share it. 

Representative Carol Dalby Okay, well I’ll be happy to visit with you. Thank you. 

Senator Blake Johnson Thank you. Representative Wooten. 

Representative Jim Wooten Thank you, Mr. Chair. Lorrie, thank you for being here. My question, I had two. One of them, Representative Dalby covered on the legislative part. And the other part of it is, how many of the scams that you know of, and you may not have this information, but originate in Arkansas, that we would have any control over at all? 

Lorrie Trogden The only numbers I have are those I reported from the FBI, which we know are under-reported. But that was the 4,238 that were actually reported. And then 51.8 million was the reported loss, the monetary loss on those. Those were specific Arkansas numbers. 

Representative Jim Wooten That was just Arkansas. And so 4,000 of them originated– I’m talking about the person who was creating the scam. 

Lorrie Trogden Oh, that, I don’t have the information on that. That was the people being defrauded. 

Representative Jim Wooten Okay, all right. Thank you. Thank You, Mr. Chairman. 

Senator Blake Johnson Thank you, Representative. Senator Flowers. 

Senator Stephanie Flowers Thank you, Mr. Chair. How does Arkansas compare with the numbers that FBI report offers? 

Lorrie Trogden 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 all the other states. 

Senator Stephanie Flowers I’d like to see a comparative of states. 

Lorrie Trogden They do have a breakdown state by state. I’ll get that to you, Senator. 

Senator Stephanie Flowers Okay. Is there a link for this? Can you provide that to staff? And then, Mr. Chair, staff can send it out to the members. 

Lorrie Trogden I will. Absolutely. 

Senator Stephanie Flowers I’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? 

Lorrie Trogden Apologies, I do not. 

Senator Stephanie Flowers Some banks go across state lines. So are these numbers that you got from the FBI, do they comprise those, if you want to call them sister banks or affiliate banks across state lines or how is that working? 

How do you break it down just to Arkansas banks if there are banks that have offices and banks in other states? I know Simmons has got banks in other states. So I’d like to know how does it, those numbers work across the state lines with banks that have multiple locations and out of state. 

Lorrie Trogden Those numbers aren’t reported by bank. They’re just reported 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, whatever it was, a crypto kiosk, those numbers come from the actual police reports that have been filed. 

Senator Blake Johnson Go ahead, Senator. Oh, did you shut yourself off? Sorry about that. 

Senator Stephanie Flowers One other thing. I heard you mention crypto. Can you elaborate on that a little bit? How is that impacting this fraud? 

Lorrie Trogden I don’t want to seal her thunder. I think the bank commissioner may be going to talk about that because they had some legislation in 2025. But 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, your hard earned cash, to get the crypto, and once you 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 its own industry and way of paying that’s separate from banks. And so we can’t go back and track that. But I think the commissioner may have a little more on that. I don’t want to speak on her behalf. 

Senator Stephanie Flowers I look forward to hearing from the commissioner. Thank you, Mr. Chair. 

Senator Blake Johnson Does anybody know or used one of those crypto kiosks? I had never even seen one of these. Have you?

Lorrie Trogden Don’t use it. 

Senator Blake Johnson I don’t even trust that. 

Lorrie Trogden You shouldn’t. 

Senator Blake Johnson Well, I mean, we did– it’s not U.S. currency. That’s what we passed on that. Representative Perry. 

Representative Mark Perry Thank you, Mr. Chairman. Thanks for being here, Lorrie. You know, I do a lot of work in the senior market, and it’s once a week when I get a client or someone that has done this. Actually, I had a family member that was scammed out of close to $50,000. 

And I turned it over to the FBI and never heard anything, which is kind of disturbing. Maybe I have the wrong email or communication when you try to reach out to them. But you mentioned the consumer information that we could share with people, I would love if the group could put those together and share with the staff and distribute. 

Lorrie Trogden Absolutely.

Senator Stephanie Flowers I didn’t hear his question. 

Lorrie Trogden I think it was an ask to share to all of us to put our information into one packet that can be shared with consumers and get it to the committee, which we’re happy to do. 

Senator Blake Johnson Representative Tosh. 

Representative Dwight Tosh Thank you, Mr. Chair. Lorrie, 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 original initial contact is going to be with the local jurisdiction or the law enforcement having authority over that jurisdiction. 

And some of those jurisdictions, to be able to investigate these types 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 they can reach out to that would assist them? 

Because some of these are going to be crimes that’s going to require a lot of investigative work and a lot of resources made available to them to be able 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 types of fraud crimes? 

Lorrie Trogden The Attorney General’s Office is here and I think they would probably be better suited to answer that. 

Senator Blake Johnson All right, thank you, Lorrie. We’ll go on to our next. It’s Paul Benda, Executive Vice President of Risk, Fraud, and Cybersecurity of the American Bakers Association. Okay, he’s apparently online.

Paul Benda I am online, sir. And I appreciate the opportunity, being flexible, allowing me to participate. 

Senator Blake Johnson Just introduce yourself, who you’re with, and you’re recognized. 

Paul Benda There we go. I think I’ve been unmuted. Can you hear me now? 

Senator Blake Johnson Yes, we can hear you. 

Paul Benda Perfect. Thank you, sir. I appreciate the opportunity to be here and your flexibility allowing me to participate online. My name is Paul Benda. I’m the executive vice president for risk, fraud and cybersecurity at the American Bankers Association. I also serve– 

Senator Blake Johnson Paul, you muted yourself or some kind of technological mess up. Does anybody know what’s going on? Staff? We’re going to go on to our next one. We’ll go back around. 

Paul Benda –or colleagues. 

Senator Blake Johnson All right. We was afraid you got hacked, Paul. 

Paul Benda Uh-oh. Am I back? 

Senator Blake Johnson You’re back. Hey, there he is. We can even see you now. We can see you. 

Paul Benda Excellent. We’re cooking with gas. 

Senator Blake Johnson Just go ahead. 

Paul Benda Alright, perfect. So I assume you didn’t hear anything else that I had said earlier. 

Senator Blake Johnson Just the first little piece there, but you’re welcome to start over. 

Paul Benda So my name is Paul Benda, executive vice president for risk, fraud and cyber at the American Bankers Association. I serve as the chair of the International Bank and Federation Scam and Fraud Working Group, but I also sit on the global advisory board 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. People wonder, how do people fall for these scams and these frauds when people call them up. And what they forget is during the pandemic, we had a massive rash of unemployment insurance fraud. 

Many of you might have experienced this or heard colleagues experience this. They created a massive drive for personal information, work histories, things like that. The Department of Labor estimated over 300 billion in fraudulent claims were filed, 300 billion. So think about that. How many people filed these claims to get this data? 

Well, your name and your address and your social security number and your date of birth don’t really change that often, right? So what happens? Someone calls you up on the phone. My dad’s 87. If his phone rang and his caller ID said it was his bank with that bank’s phone number, and they called up and say, Mr. Benda, is that you? Do you live at this address? This is the last four of your Social 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’d probably get pretty good at it. And what we don’t recognize is, these are transnational criminal organizations. 

The State Department estimates there could be as many as 400,000 people operating in scam centers around the world that are targeting not just the U.S, but consumers all around the world. And so what this has led to is a massive increase in scam losses. Not just for the U.S., but for the world. So the FBI estimates losses increased from 2023 to 2024 by 33%. The FTC estimates it went up by 25%. The FBI loss is 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 potentially lost by Americans. A lot of that is going overseas. A lot of it is going to criminals here based in the U.S. 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. 

Who here hasn’t gotten a fraud alert from their bank? We’re now seeing check fraud on the rise. That’s leveled off, but it’s still at a historically high level. Banks are taking to 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 things, by the time a customer is willing to make a payment, by the time they’re willing to withdraw funds to put in a crypto ATM, or whether they’re going 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 spoof caller ID phone call, or the social media site has pretended to be their bank and has convinced them that they’re talking to someone who they believe is trustworthy. 

So we have our Banks Never Ask That campaign that’s out there. You can go to banksneveraskthat.com. We’ve got some funny videos that we’re trying to educate consumers on what your bank will and won’t ask, such as 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 it’s the old adage, an ounce of prevention’s worth a pound of cure. We really need– I’m a former Department of Defense employee, former Air Force veteran. We got to move left of boom. 

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 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 caller IDs. There’s no reason that a telecom should be enabling a criminal to present a bank’s 1-800 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 Google Photos or Apple Photos. I can put a picture of my daughter into Google Photos and it’ll 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 crypto investment schemes. 

You’re telling me a multi-hundred billion dollar technology company can’t figure out how to stop these things? Of course they can. 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 estimate 10% of that revenue, $16 billion, goes to scams and fraud. 

You know how hard it is to take on a scam ad by Meta? It takes up to eight to 32 strikes. So you can have an ad up there that has been reported 25 times and Meta’s like, yeah, you know, we’re not quite sure that’s a scam ad so we’re going to leave it up just a little bit longer. So they need to be taking more proactive action.

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 legislation you can look at, that can stop these telecoms from hosting these spoof caller IDs, can stop these social media sites from putting 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 Coinbase or some other exchange. These crypto ATMS will charge you a 20 to 30% fee. And when they’ve been looked at and been sued by state AGs, 80 to 95% 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 in trying to hold these telecoms and social media accountable. Happy to answer any questions. 

Senator Blake Johnson Thank you, Paul. Is there any questions? Senator Flowers. 

Senator Stephanie Flowers Thank you, Mr. Benda. Your name is Benda? Has your organization been before Congress? 

Paul Benda Yes ma’am, I have personally testified in front of Congress multiple times. 

Senator Stephanie Flowers How long ago has your last presentation been? 

Paul Benda I would say it was about four months ago, maybe five months ago. I’d have to look it up. It was last year. 

Senator Stephanie Flowers Do you have any indication that Congress is willing to act on a national level to curtail what is happening with financial fraud? 

Paul Benda I do, ma’am. We worked closely with Senator Gallego and Senator 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 the FTC to approve those programs, 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 forward in the legislative process. 

Senator Stephanie Flowers Thank you for that. The other question I have is your take on artificial intelligence. How is that going to play into this financial fraud scam? Sounds like it’s going to explode. But I’d like your opinion. 

Paul Benda Yes, ma’am. That’s a great question. We’re already seeing the impact on that. You know, five years ago, you might have said, oh, look for those errors in the email. Look for the misspellings. Look for wordage that seems different. Well, anyone can go on ChatGPT and put in and get a perfectly tailored email that looks exactly right. Artificial intelligence is allowing these criminal elements to operate at scale, where they can quickly reproduce websites that look exactly like your bank website. 

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 use this ghost tap software where they can then 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 put 1,000 hooks in 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 had asked the questions, where does Arkansas stand? I looked at the FBI’s IC3 report. Arkansas by losses is ranked 41 by the FBI and by the number of complaints at 35th. 

Senator Stephanie Flowers By the what? The last part? The 35th? 

Paul Benda Oh, the last one was the number of complaints filed by Arkansas residents. You rank 35th in the number of complaints filed. You ranked 41st by the number of losses. 

Senator Stephanie Flowers And the last question, Mr. Chair, is, has the association consulted or advised or expressed concern of this problem with Congress and the administration concerning AI since they want to nationalize regulation and rules for AI? 

Paul Benda So we have provided feedback to the administration that we would love to see a White House office of fraud 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 can do better. So we think it is a whole of ecosystem approach, and AI is certainly part of that conversation. 

Senator Stephanie Flowers And I suppose you’ve gotten some feedback from the administration or the congress people that you’ve talked to? 

Paul Benda So they’re 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 center strike force, so we’ve been appreciative of that. But we still think a national strategy is essential and have not yet been able to make that happen yet. 

Senator Stephanie Flowers I have one last question, but if you need to go to someone else– 

Senator Blake Johnson Yeah, Senator, we got a pretty extensive– 

Senator Stephanie Flowers Well, it’s a short question. 

Senator Blake Johnson One final question, thank you. 

Senator Stephanie Flowers 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 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? 

Paul Benda All I can say is we tried to partner in the past with the CFPB in the last administration to help with education programs and they neglected to partner with us. So when it comes to the scam side of thing focused on the things, on the bad actors we see from overseas and other pieces, they weren’t really helpful, at least to us, in trying to combat that. 

Senator Blake Johnson Thank you. Representative Wooten, we’re going to have one question per person. We have an extensive list. Please get whatever you need into that one question. Thank you. 

Representative Jim Wooten Thank you, Mr. Chairman. Mr. Benda, thank you for being here and taking time out of your busy schedule. 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 relative to your membership, have you all explored the possibility of an executive order from the current president relative to the fraud division that you’re talking about? 

Paul Benda We have not. I will say that we do have other states– I was actually just in Nebraska testifying on a bill to hold social media companies liable. So other states are looking at options that they can execute on this. An executive order is obviously much faster and much quicker, but doesn’t necessarily hold the force of law. 

It really becomes 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 shields Internet companies from liability for user posted content. It’s important because it provides 1st Amendment protections. 

We don’t believe that ads that you take money for are the same thing as user posted content and that’s why that scam act is really important. So the executive orders can be really valuable in certain respects. In other respects when case law is less clear, they can have less of an impact. 

Representative Jim Wooten Well, I appreciate your response to that, but the problem is– 

Senator Blake Johnson Thank you,Representative Wooten. Representative Warren. 

Representative Les Warren Thank you, 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 like? We’d love to, I mean, if they’re already doing something, we’d love connect with them. 

Paul Benda Representative Warren, thank you so much for that question. I would say great minds think alike. So we have just started an effort underway to try and track each of the fraud legislative initiatives that each of 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 try to identify what has really worked 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 with Lorrie who can get them to you so that you can look at, there might be potential things that you’d be interested in exploring. 

Representative Les Warren That would be great. Thank you very much. 

Senator Blake Johnson Thank you, Paul. If there’s no other questions, we’re going to go on to the next presenter, which is Brandon Moss with First Security Bank. Brandon, just introduce yourself and your title and who you’re with. And you’re recognized. 

Brandon Moss 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 scams that they’ve dealt with are, I did also want to 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 sweepstakes. With that, she was required to pay taxes in advance of receiving her winnings. 

We were able to stop part of that through the foresight of the person that was working at the UPS store that she went to. She was instructed to tape $5,000 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 her of $44,000. 

The next scam, our customer John is 75. 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 Smith Grant for $30,000. 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 Dollar Tree 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 Dollar Tree 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 Dollar Tree. 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 shoe box or other container, tape it closed and leave it on his front porch, and someone would 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 a 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 victim of multiple scams– and requested to withdraw $30,000. She was instructed to go to a different branch than her normal branch where somebody might not be as familiar with 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 caller 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, been the victim of spoofed telephone numbers. Most recently, our customer support number in Searcy 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 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 are 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 are 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 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 to find alternative sources of payments for anyone that you need to pay. 

Senator Blake Johnson Thank you, Brandon. I appreciate those examples. You’re dismissed. And we’re going to the next presenter, Shamikah Johnson with the Attorney General’s Office. Go ahead and introduce yourself and who you’re with, and you’re recognized. 

Shamikah Johnson My name is Shamikah Johnson and I am an investigator at the Attorney General’s Office in the Consumer Protection Division and I handle mostly scams and fraud in our division. 

Justin Brasher My name is Justin Brasher. I’m a senior assistant attorney general with our office. 

Shamikah Johnson Okay, in 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 Division, we handle anything, consumer transactions if there’s a dispute. And also, if they’re violating any of the ADTPA, which is the Arkansas Deceptive Trade Practices Act, we can investigate under the Arkansas Deceptive Trade Practices Act. And with that, with scams and fraud in our division, normally with the mediation, the consumers will file a complaint with our office if they have been a victim of a scam or a fraud. 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 the consumer submits a complaint and we contact the method of payment that they used in the scam. So what we have been seeing is a lot of consumers have been being affected by the government imposter scams, where the scammer is creating a sense of urgency and 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 there’s an ad maybe on Facebook saying 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 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 posing as legitimate businesses. So they may be posing as Microsoft or any other legitimate business. And then they are taking these consumers’ monies pretending to be these businesses. And we have seen an increase in those types of complaints. 

And last year, in April 23 of 2025, the Attorney General established a Financial Fraud Task Force. 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 believes 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 the 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 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 might have been scammed out of maybe $500, and then 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 another $500. So there might be $1,000. 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 around 58 years old. 

And also, these losses are huge now because of pig butchering. And a 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 in pig butchering scams. So normally, what the consumer will do, they will create, 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 company. 

And then they would have them to download an app that is created by them to transfer their crypto in. So the crypto is getting transferred for a second time. And when it gets transferred for second time, normally that’s not a legitimate platform. And they will, in this app 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 cryptocurrency app, then their money’s 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 try to take their money out. So that’s what we’re seeing as far as pig butchering. And I always advocate for consumers to file complaints with our office if they have been scammed. With the Financial Fraud Task Force that Attorney General Griffin established, we have been able to recover funds along with the help of our Financial Fraud Task Force. 

On January 6th, we were contacted by one of our bankers on the task force. Elderly victim 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 January, 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 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 of the company about over the phone. The consumer, based on the email, initiated the wire for $25,000. And he called his closing agent to 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 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– 

Senator Blake Johnson Shamikah, we’ve got a long list. There’s two other examples on C4, members. If you would, please close so members can ask questions. 

Justin Brasher That’s all we got. We just thank, Mr. Chair, we thank you for putting this together. Thank Lorrie Trogden for organizing this as well. Thank you for all this. And we continue to, if you have constituents, people who have this kind of stuff happen to them, we’re more than happy to provide more examples like this and see if we can create the next example of getting funds back at the AG’s office. So thank you. 

Senator Blake Johnson Thank you very much. All that presentation is in C4. Members, just a reminder, it’ll be one question per member and you can get back in the queue if you need to. Senator Flowers. 

Senator Stephanie Flowers Thank you. I’m curious about the online governmental databases, such as, I don’t know if you’re familiar with www.atdatascout, 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 victimize these consumers? 

Justin Brasher Thank you for that question, Senator. Is that something that we’re seeing? 

Shamikah Johnson Are you saying based on that website is that what the scammers are using? 

Senator Stephanie Flowers 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 some information beforehand. 

Shamikah Johnson I think it was more of a business email compromise from the title company. Maybe someone compromised the title company’s email. 

Senator Stephanie Flowers I’m concerned about what’s online now in terms of what governmental agencies are able to report and you can see it online. You can see divorce cases. All your court cases are online now. You see names of individuals involved, it just seems like this digitization has brought us to a point where inexplicable how people’s information is out there and being used for some illegal purpose. 

Justin Brasher Yes, Senator, and that very well could be something that’s being done. We haven’t seen any specific situations where that has been, where people’s data has then been used. We haven’t seen any specific instances of that. Doesn’t mean that it’s not happening, though. 

Senator Blake Johnson Thank you, Senator. Representative Ferguson. 

Representative Kenneth Ferguson Thank you, Mr. Chair. A quick question, but I want to say that your consumer protection division has done a great job. I’ve had at least three or four constituents that you guys have helped retrieve money for and kept them from being scammed. But my question is regarding gift cards. 

I had an 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 or the online, because 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 $1,500 worth of Amazon gift cards. And then they wanted $500 more for transportation. At that time, I got a phone call and I told them to reach out to you guys, but I told him 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, and if you guys are able to help trace back to the IP address that sometimes some scammers will use it. 

Justin Brasher Thank you, representative. And I don’t know that we can speak to that one specific situation, but in general, is that something that we’ve seen? 

Shamikah Johnson Normally, what we do, scammers have been asking for methods of payments in different ways and gift cards is one way that the scammers do ask for payment. And normally what has been done is that how we do it is that we contact the gift card company. 

So 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 normally how it works. Because normally, some gift card companies do not offer refunds. 

Representative Kenneth Ferguson Thank you, Mr. Chair. 

Representative Fred Allen Thank you, Mr. Chairman. Thank you all for being here today. You mentioned the financial fraud task force. You said it was made up of bankers. Are there any consumers on that task force or it’s just made up of exclusive bankers and business people? 

Shamikah Johnson Yes, that’s the only– there are no consumers on the task force. 

Justin Brasher The intent behind the creation of the task force– and thank you for that question, Representative– that particular task force was to get the different scams that are being seen on the banking end because these things are typically they’re reported to or seen by banks and get everyone who’s seeing 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 were included. 

Representative Fred Allen Okay, well, I applaud you all. Thank you. 

Senator Blake Johnson Representative Dalby. 

Representative Carol Dalby 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 little card or something regarding fraud? Are we working across state agencies to get the information out about your department is my question. 

Justin Brasher Thank you, Representative. Do we have that?

Shamikah Johnson Yes, we do. We do work with other state agencies. We work with the Arkansas Securities Department. We worked 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 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. 

Senator Blake Johnson Thank you. Thank you for coming and being here. We’ll go to our next. You’re dismissed. This is David Norris with the Arkansas Mortgage Bankers Association. David, if you could introduce yourself and you’re recognized. 

David Norris Perfect. Thank you, Mr. Chair. 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 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 were 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. 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 alluded to that. An impersonation. Fake social media accounts. Fake ads that we see 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 title company, lender databases and change wiring instructions and send those out to consumers. And a lot of times those funds are not able to be recovered. A big thing 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 identity-based mortgage fraud where fraudsters, scammers will actually assume the identity, take out credit in other people’s names using their social security numbers and even their financial information. Those are some of the more common scams that we see on our side. 

And then the latter part of my testimony, I really want to focus on what consumers, what Arkansans 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. 

Verify independently. Before sending money, verify the source where it’s going or where it is coming from using credible searches. It’s very, very important to verify independently. Be skeptical of online offers. You’d think that would go without having to say, but warning signs include guaranteed approvals, no documentation requirements, unverified government programs. 

Confirm 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 multi-state licensing system we do refer to that as the NMLS. And 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. 

Education 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 trigger lead bill goes into effect on March 5, so we’re excited about that with some additional consumer protection for Arkansans. 

Senator Blake Johnson Thank you, David. Senator Mark Johnson. 

Senator Mark Johnson Thank you, Mr. Chairman. Mr. Norris, thank you for being here. I have not experienced this. I don’t know anyone who has. But when I see advertisements from 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 has been paid off for several years and suddenly they’re coming after you to foreclose. And that’s scary. 

David Norris Sure is. 

Senator Mark Johnson And I mean, and all this fraud is scary and concerning. But the very idea that, and obviously, it’s probably going to be seniors because they spent 30 years paying that mortgage off. How prevalent has that been in Arkansas? 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 I worry about is someone sees, oh, these guys are doing that. 

Well, that’s almost like an instruction booklet for another fraudster to try to go on that. And 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, as you said, you can go online and look at what a lawsuit is and what all the parties are and who the mortgage holder is. 

And 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 just wondering, is there more we should do in Arkansas? And what recommendations would you have to stop this kind of fraud? 

David Norris 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. The Land Title Association, it would be a great representative 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  states like Florida that have a larger senior population, also higher property values than what we have here in Arkansas. Unfortunately, I’m not able to answer your first question with any sort of fact-based data, but I’m sure that it is there. 

We do have situations where the big thing that we see is that impersonating of a seller and trying to sell that property for reduced cost or whatever. And a lot of times they only get a non-refundable deposit ahead of time, 10%. And then they walk away and then nothing ever happens. The seller or the buyer is out of that money. So that’s another one. 

And then, one of the things that Senator Flowers brought that up was the abundance of Information on the internet as it relates to property records, divorces, bankruptcies, lawsuits, etc, etc. I think that until something is done from a legislative standpoint as it relates to– those are public records. So until that changes, then I think we’re still going to have those issues. 

I don’t know of anybody that has used, to Senator Flower’s question, I don’t know of anyone that has fabricated a warranty deed or a quit 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 often times are incorrect. 

They’re wildly inaccurate due to the data entry 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. You might be able to but there are some checks and balances there. But I’m afraid I can’t answer that question either. But the prevalence for online data is certainly a concern and understandable. But until public record, until real estate filings, as an example, are no longer public and accessible online, the fraud risk still remains. 

Senator Blake Johnson Senator Flowers. 

Senator Stephanie Flowers Thank you, Mr. Chair. It’s not the county clerk where you’re going to find those deed records. It’s the circuit clerk. You might find them in the county clerk under a probate matter. 

David Norris My apologies, Senator. 

Senator Stephanie Flowers 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 seemed 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 Arkansans?

David Norris No ma’am, I don’t. 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 walk into First Security Bank, as an example, if I’ve got colleagues from First Security or Arvest 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. 

Senator Stephanie Flowers Thank you. I can’t ask another question. 

Senator Blake Johnson No, we’re about halfway through here, Senator. We’ve got plenty of other presenters. Thank you, David. We’re going to go on to Susanna Marshall. Members, this is on Exhibit 2 if you want to look. Try to keep this presentation as concise as you can, because members have a copy of this. Thank you very much. 

Susannah Marshall Thank you, Mr. Chair. Good morning. Good morning, members of the committee. I had quite a few prepared remarks today, but I’m going to apologize. I’m going to apologize. 

Senator Blake Johnson Introduce yourselves, both of you, and you’re recognized.

Susannah Marshall Yes, Susanna Marshall, Commissioner of the Arkansas State Bank Department and State Securities Department. 

Karen Tierney Karen Tierney with Arkansas Securities Department. 

Susannah Marshall I had quite a few comments to make, but many of them are, 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 risk 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 non banks. This volume of fraud that continues to increase, and you’ve heard 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 and Arkansans and our friends and colleagues, it’s done so with fear, threat and quite frankly embarrassment, as has been said earlier today. 

And so shining a lot on this topic, helping Arkansans figure out a way as leaders how we can help them perhaps combat this, both 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 D.C. And when I visit our federal delegation, as Ms. Trogdon said earlier, we’re constantly bringing this topic up with our federal members of Congress and our senators. And so 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 Carlton, pardon me, Representative Carlton Wing led the Safe 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 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 were one of the first states in the country to have that legislation, and it has paid off in huge dividends. And Ms. Tierney 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 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 Ms. Tierney 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 large groups of individuals may gather. And we educate about potential fraud and other risks. One of the big highlights 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 and education will be key for all of us coming together. And I’m hopeful about future legislative opportunities to combat this.

Karen Tierney Thank you. And as Commissioner Marshall mentioned, there is a slide in your deck about the Bitcoin kiosk scams that we’ve worked with. We really appreciate the support of this legislation because we’re able to help consumers in real time, as Shamikah from the AG’s office mentioned that they’re also doing. And we have a handout for you today. 

Earlier this week, a police officer from the Centerton 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 the fraud had happened that day. So we’re just asking you to help get the word out about this. 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 to 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 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 potential victim that’s buying these gift cards and help protect them in real time. 

Senator Blake Johnson That flyer that you’re talking about, I don’t see it. 

Karen Tierney I have hard handouts I was going to give to staff to hand out. I’m sorry. 

Susannah Marshall Our team has met with 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. 

Senator Blake Johnson Thank you guys. Representative Beaty, try this again. 

Representative Howard Beaty Thank you, Mr. Chair. 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 question is, we’ve talked about a lot of the fraud that’s been detected and losses and how we’ve recovered, but do you have any statistics on the amount of fraud that’s being prevented and what’s been stopped and just by best practices and training at our institutions. Is there any information you can share with us on that? 

Susannah Marshall Representative, personally, I do not. We’ll see if Ms. Tierney 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 of events that are actually happening. But it is a great point that we are stopping a lot before it happens. And we are able to claw back at times from folks that have been harmed. But we’re losing the game. 

Representative Howard Beaty Well, I just wanted to highlight that point that what we hear are the worst-case scenarios. And you’re right, bankers probably spend a lot of time filling out suspicious activity reports on their efforts to prevent and stop crime. But I just want to 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 is harmed. 

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 doing a good job that’s stopping a lot of these issues from ever going to impact the consumers. 

So I think we would all be impressed by just the amount for all 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. Chair. 

Senator Blake Johnson Is there a question in that, Representative Beaty? Okay. Representative Wooten. 

Representative Jim Wooten Thank you, Commissioner, and you, too, for being here. My question will be very quick. Is there a place where bankers can look at what they’re doing and maybe improve upon it? Do they analyze their outreach?

I know one bank, when you call the bank, they put you on hold, which is normal. But then they make a comment about fraud. But it’s just, it’s not specific. Is there a clearinghouse or do the bankers get together and talk about it from the standpoint of they need to message this versus what they’re doing? 

Susannah Marshall Yes, sir. I would believe that through membership such as the Arkansas Bankers Association, the American Bankers Association, or the Independent Community Bankers of America, that those are real life opportunities for them to exchange ideas, express concerns, 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 Beaty’s point, very proactive in taking care of their customers and their citizens. So the dialogue is real time and we all are committed to highlighting and continuing that dialogue. 

Representative Jim Wooten Thank you. Thank you, Mr. Chairman. 

Senator Blake Johnson Senator Flowers.

Senator Stephanie 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, we have consultants, you have those people that handle 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, 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 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. As a lawyer, we even had to start paying for our filing fees by credit card and you had to upload the information online to get your pleading file. I’m just not that– well, I don’t engage in the practice anymore. 

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. 

Susannah Marshall Yes, ma’am. Well, your first question about other state agencies. I would think we would probably be best served to visit with maybe Legislative Audit to ensure if there was any stats or statistics on that. Certainly I’m not aware of anything 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. 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 and many, many thousands of customers do so every day in a safe manner. 

And that is 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 I know that they are committed to creating a structure and framework where their customers can utilize all their products and services in a safe and sound manner. 

Senator Blake Johnson Thank you, guys. We’re going to go on and you’re dismissed. Dan Reber with the State Insurance Department. And if you would just introduce yourself and you’re recognized. 

Dan Reber My first time here. My name is 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 enforce the Arkansas Insurance Fraud Act and the Arkansas Criminal Code. In 2016, the FBI estimated there was $80 billion in insurance fraud that was occurring throughout the United States. 

In 2025, that’s gone up to $300 billion of insurance fraud nationwide. The impact to the consumer is estimated at $400 to $700 in increased premium payments. Some experts expect that to top a trillion dollars by 2035. That’s nationwide. The bulk of that is 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 the Middle East, and out of Central Europe. Our office is, like I said, structured as a law enforcement agency. We have seven certified law enforcement officers.

 We have spaces for seven certified law enforcement investigators, two special prosecutors, and myself as also an attorney who prosecutes cases. We have authority to arrest. We have the authority to serve warrants. We have an authority 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. But let me back up. So in 2023, we had about 1,100 referrals that were sent into our office for investigation. Over the last 10 or 15 years, we’ve been running roughly around 1,000. So 1,100 was a bit of a step up. In 2024, that went to 1,400. Last year, we topped out at 1,978 referrals. So it’s a 25% increase over the last year in 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. 

Of the 1,976, 567 were referred for investigation to our investigators. The reason that many– that’s about a third. That’s a lot of 30 percent of the referrals that went on for investigation. Every referral goes through a preliminary inquiry. Every single one is read and made a determination if there’s enough problem, reasonable suspicion to go forward for investigation. 

And from investigation, probable cause to go to an attorney to later go on and file. The different reasons why they don’t get investigated, the statute of limitations has run, we don’t have jurisdiction, it’s multi-jurisdictional, therefore an FBI issue, as well as it’s just not insurance fraud. Trends. 

So 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 going to hit the wave tops. We tend to play whack-a-mole at CID. There’s a scheme that’s in vogue. It happens all the time over a two-year period. We prosecute it 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 schemes were card cases. This is where individuals would get on Facebook and say, hey, let me know if you need insurance. For $40, I’ll get you an insurance card. All I need is your VIN number and your address and that sort of stuff and I’ll meet you at the Kroger parking lot and I’ll give you a USA card, Progressive, Geico. Whatever you need, we can do that. And when they get caught down at the DMV, we get notified. 

We opened a case file and we prosecuted those things hard. We prosecuted 100% of those that came across our desk and we’ve prosecuted them as felonies. Over a two-year period, we had 61 convictions. After that, it started to tail off. We only had four in 2025 But now I have a meeting next Tuesday with the chief of police with DFA because it’s starting to ramp back up again. 

And we’re going to collaborate on best practices on how to combat this going forward. When I say we prosecuted this hard, we had 79 years of probation, fines of $33,000, 215 hours of community service on those 61 cases. Agent cases, there’s 195,000 non-resident 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 been painstakingly reviewed. And the ones where we found probable cause, we prosecuted to the fullest extent and got a large amount of restitution. Most of them didn’t go to prison because, to stay out of prison, they had to make restitution to the victims of the money that they stole. 

Best practices on this, when I would tell consumers, is be cognizant of your coverage. Confirm what coverage that you actually have, and ensure that the correspondence that you’re receiving from the consumer is coming to you. 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 send in a forged policy to the insurance company, they get a commission, and then later on that policy cancels for non-payment. 

Enough of that happens and then they send it to us and we investigate it and we prosecute it hard. Forged policies, where they forge the name of the potential insurance entity, and again, that’s for churning commission. 

Canceled policies, we see these a lot with large policies like farm policies, small business policies. 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 are 50, 60, $100,000. And they 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 says, hey, that farmer wants to cancel that policy. Please send the refund to me and 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 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 the same scheme in a different variance. Again, the farmer or the small trucker or whoever takes out the policy, and then the agent contacts, and he pays full price for the policy. But then the agents contacts a premium finance company and gets the premium finance 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 hundreds of schemes, but 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. They don’t pay their premium, their policy cancels, they get in an accident. Let’s say they got in an accident today, February the 13th. Well, 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 out a policy with full coverage from that time after the accident has occurred when they weren’t covered. And then they’ll wait a week and they’ll call in a claim, hey, I was just in an accident and these are called bash and buys. And it’s probably the number one scheme that is done throughout the nation. 

What most people don’t realize, if you file a claim within 30 days of changing or establishing coverage, the insurance company is going to put a microscope 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. It’s in their neighborhood and 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 file claims. They all go to the hospital. They all get medical receipts and submit their claims and get paid. And the money that they’re getting paid is based on the medical bills. And sometimes it’s quite substantial. 

Staged accidents, car crash rings. Back in early 2000, between 2005 and 2010, 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 crash. And it only shows up when you start to get into double digits. We had one that there were 48 crashes done by two individuals who had different schemes that they would do. 

Either they would purposely cause a car accident with an innocent third party, or they would have co-conspirators 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 MRIs. They get CAT scans. They get all kinds of stuff. They never have health insurance. And the insurance company 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 the 48 crashes that these two individuals were involved in, the insurance companies paid out over $2 million in medical bills and Baptist Hospital got $0 of that. 

They were both prosecuted and both got 10 years in prison. And there’s still a condition of their parole. They’re still having to pay the restitution, which they’ll have to pay for probably the rest of their life. U-Haul cases–

Senator Blake Johnson All right, we’ve hit the top of the wave, Dan. 

Dan Reber Okay, I got you. 

Senator Blake Johnson Is there any questions on the insurance fraud? Go ahead, Stephanie– or Senator Flowers. 

Senator Stephanie Flowers I wanted to know about false advertising of insurance. Does your office, your division deal with that?

Dan Reber We have. We’ve actually had cases of 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 agent. Had the t-shirts or the collared shirts and everything and showed up at a car dealership, whose name I won’t pass, but they represented themselves to be Progressive agents and said, 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. They were legitimate policies. They went on the Progressive website, they bound the coverage, took cash, never forwarded the money and the policy ultimately canceled. Those two individuals were prosecuted. 

Senator Stephanie Flowers Where would your office do the follow up the prosecution? Do you send that out to the AG or the local prosecutor? 

Dan Reber We do it. 

Senator Stephanie Flowers You all do it? 

Dan Reber So the prosecutor controls the courthouse. He gets to decide who prosecutes in his district. Probably in 80% of the districts in Arkansas, we get appointed. There’s a few that they handle it through plea and 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 that comes across our desk. For instance, Sebastian County. That’s perfectly fine. We’re 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 prosecute it all the way to sentencing. After sentencing, it becomes the AG’s office for– 

Senator Stephanie Flowers Appeal. 

Dan Reber Appeal. 

Senator Stephanie Flowers The issue that– 

Senator Blake Johnson Senator Flowers. 

Senator Stephanie Flowers Okay, it has to do with seniors and defrauding seniors with this supplemental Medicare. 

Dan Reber Yeah, that’s going to be DHS. That’s going to be the Department of Health and Human Services who deal with Medicare. We have no jurisdiction over that. 

Senator Stephanie Flowers And Mr. Chair, I think my questions probably would have been more appropriately answered by the Attorney General’s office in terms of consumer protection. Because I’m seeing information being disseminated to seniors about their need for supplemental Medicare policies and that’s not often what they need. 

Senator Blake Johnson I’m not even eligible for Medicare yet, and they’re calling me three or four times a day right now. 

Senator Stephanie Flowers Well, you’re on the edge then. 

Senator Blake Johnson I feel like I’m– but I mean, this is our initial. I mean, this is an initial meeting on this. I mean this, we need to go farther into this and have more discussions. And because it is about protecting seniors and the affordability of these things because all this impacts insurance cost in the long run, same way in banking. But we need to move on if that’s all right with you. 

Dan Reber So health insurance is– from private health insurance is my department. Medicaid is the AG’s office, and Medicare is the Department of the Inspector General with DHHS on the federal level. 

Senator Blake Johnson Thank you, Dan. Appreciate you coming today and your patience. Chris McCoy with AARP. Chris, if you would introduce yourself and read about half of whatever you’ve got in front of you there. 

Chris McCoy I’ll do so. Thank you, Mr. Chair, members of the committee for having me today. My name is Chris McCoy. I’m the Associate State Director of Advocacy for AARP Arkansas. Keeping it very brief, very top line here, we discuss a lot of these numbers thrown out here. 

I’ll give you some of the AARP numbers and then open up for questions from anybody. In a recent survey from AARPS, it shows that 41% of adults across the country, it’s nearly 110 million people, have had money or sensitive information stolen through fraud. Nearly nine 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. 

From 2024 to 2025, we discussed a little bit earlier with some of the other speakers that fraud is up about 30% 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. Fraud has risen exponentially over the last five years, according to a recent report from the Federal Trade Commission. We discussed earlier report losses surged to $12.5 billion, which could be as high as almost $200 billion, potentially, a 25 percent increase from the previous year. 

The rise was driven by an increase in percentage of people reporting financial losses due to fraud, which grew from 27 percent in 2003 to 38 percent in 2024. So from this fraud survey that we put into the field last year, these are some of the findings that we had. Of the adults that we surveyed, 59% worry about fraud. Their top concern, obviously, is becoming a victim. Those very concerned about fraud increased from 30% to 37%, 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 point to all of this. 

We’re getting to, why are the numbers going up? There are many reasons why, but they’re getting more comfortable starting to report these crimes. So 78 percent, according to the FBI, did not actually report fraud last year that happened to them. According to the FTC, that’s 86 percent didn’t actually report. Additionally, 57 percent– 

Senator Blake Johnson All right, that’s enough percentages. 

Chris McCoy So, if anybody has any questions. 

Senator Blake Johnson So, I mean, there’s a lot of AARP commercials and what they give. They need to, in my opinion, need to help in their advertising of AARP, help these seniors recognize that, whether it be one of these different bank frauds that’s going on, don’t go buy debit cards or whatever. 

That’s just a recommendation from me. We can do stuff legislatively, but you can also be educational to those seniors that we serve. And I think that would be very helpful because I’ve had to give that advice out about the gift cards and anything you gotta pay for where it sounds better than– if it’s just not, it’s not good. But those educational purposes would be great through AARP in Arkansas and around the nation. 

Is there any other questions? Seeing none, thank you for coming, Chris, 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 going to go on to Joe– I’m going to I’m going to go with Pirat. Close enough? 

Senator Mark Johnson I’m sure that Mr. McCoy might remind you to join AARP, you need to be 50. So you can certainly be involved in that now. Thank you. 

Senator Blake Johnson Thank you, Senator Johnson. Joe, if you would, clarify your last name for us and you’re recognized. 

Joe Pieratt Thank you, Mr. Chairman. My name is Joe Pieratt. 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 text scams. 

We average probably two to three of these a month with our bank, and each instance probably impacts 10 to 15 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 hearty few who clearly had big breakfasts and were able to avoid an early lunch haven’t heard, but I would say that I would echo what Mr. Moss said from First Security. 

I’m not a politician, I’m not a lobbyist. I am 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. I get a ticket every time that we have a fraud instance, and I had one come in 11:10 a.m. Customer 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. 

A customer is visiting a local branch as soon as possible to close the 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 to this customer is they’ve got to change their account. 

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 gotta change it. The account changed. Their debit card’s getting changed. There’s a cost to the bank. There’s a cost to 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 Reg E, 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 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 between $500,000 and a million dollars just for our small community bank in Magnolia. Our biggest issue are spoofed calls and text. We get a hundred, hundreds, we get these every day. Senator Mark Johnson, I’m going to try to go back and capture some of the questions that may have not gotten answered, if I may, Chairman. 

You asked about tap. Tap is much more secure than EMV or swipe. Reason being that when you tap that card without that direct touch, it generates an algorithm, it puts a one-time code in there, and that’s much harder for the fraudsters to actually capture the guts of your card and duplicate that. Representative Tosh, I think, has since left, but he asked a question about the investigative process beyond local. 

What we have seen, because of the volume of fraudulent events that we encounter, local police departments generally aren’t interested in prosecuting anything that’s under a significant amount. So if it’s just your general $500 to $1,000, local PD won’t even touch it. We eat it and go on. If it’s significant enough, then we can get local PD involved and they will escalate to FBI or Arkansas State Police. 

Representative Beaty asked a question, and he has since left, but he asked the question, how much fraud gets stopped? We estimate that we stop five times what gets through. Our tellers are trained, our bankers are trained, our contact center people are trained. And when someone brings a check in to us that has certain characteristics to it, our folks ask questions. Some people don’t like to be asked questions. 

But if you come in and want to cash your check for $5,000 and it’s going to someone that is not local and not a business, we train our tellers to try to question these people. What’s your relationship with these folks? Did they do something for you that you’re giving them money? Did they sell something to you that you are giving them money? 

You would not believe how many people fall for the scams of, I’m going to send you this $4,000 check, you send me $3,000 back and keep $1,000. And then by the time that check clears, it’s bad. They’ve lost their three grand and the bank eats the rest. So it’s tough. It’s tough. I don’t really have anything else to cover, but I’m happy to answer any questions. 

Senator Blake Johnson Thank you, Joe. I think you covered questions that wasn’t even asked and I appreciate that because we were listening. And members had those questions and you handled it before it was asked. Representative Wooten. 

Representative Jim Wooten Thank you, and I’ll be very brief. Thank you for being here, Mr. Pieratt. 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 that when you get on the dollar amount that’s impacted in age from up to 29 and then over 80 is even greater. And I know it’s a problem among older people, but do you find it’s older or younger at your bank? 

Joe Pieratt We see both. But Representative Wooten, what we see is the younger people are more prone to use the Cash apps and the Venmos and those people are much less apprehensive about reporting fraud. And they’re generally smaller numbers. 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 I also see is that they are much less likely to report because of the embarrassment. The elderly people, they don’t want that stigma of, I’m slipping and I don’t want somebody to think that I can’t handle my own finances anymore. 

So we have to be very careful. And we watch our elderly customers as closely as we can. We try to take care of them. We have a standard to meet with regard to elder abuse and we try to take care of them as much as possible. But they are much less likely to report an issue. 

We quite often have to go and ask, is this a check that you wrote, or did somebody write this on your behalf? Or was this payee somebody that is pressuring you to give them money, or is this something that you’re doing freely? So we have to ask our elderly customers questions quite often. 

Senator Blake Johnson Thank you, Representative Wooten. Senator Johnson. 

Senator Mark Johnson Thank you, Mr. Chairman. Mr. Pieratt, thank you for your information. It was very helpful. You mentioned that who eats this, the bank does? 

Joe Pieratt Yes, sir. 

Senator Mark Johnson Is there any insurance that you can carry to cover that? 

Joe Pieratt No, sir. 

Senator Mark Johnson Even like an umbrella where if it was really big, you wouldn’t go under? 

Joe Pieratt We carry cyber insurance. So if somebody were to actually hack into us and cause us an issue, we have insurance against that. But we can’t carry insurance against fraud losses for customers. 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 customers getting defrauded. 

Senator Mark Johnson Okay, well, that obviously, and I know that there’s no such thing as nobody really pays because 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. 

Joe Pieratt It does. If you think about it, we’re a community bank, but we do have shareholders. We’re not publicly traded, but we do have shareholders. And our shareholders are people in the community. And those are the ones that ultimately pay the cost. 

Senator Mark Johnson Thank you, sir. Thank you, Mr. Chair 

Senator Blake Johnson Thank you, Joe. Appreciate you. Very informative. Guys, look at your section D. We have a report from the Department of Human Services. There’s no action needed to be taken on it. But please bring this flyer with you about those virtual currency kiosks. And that way you can make copies of that, give it to your constituents, and tell them to use a bank, not a stinking cryptocurrency. 

Appreciate everyone’s time. Members, thank you for sticking it out. We need to continue this as legislation is passed. We’ll be in fiscal session this year. But as legislation is passed, we need to circle back around at a later time and review some of that new legislation and new forms of fraud that come up between now and the time when we go into general session. Thank you, Lorrie. Thank you for putting a lot of these presenters together. And thank you for your diligence, members. We are adjourned. Representative