CONSUMER PROTECTION

NEW YORK STATE SENATE EXAMINES WHITE-COLLAR CRIME GAPS, STUDENT LOAN INDUSTRY ACCOUNTABILITY Albany — The New York State Senate held a joint hearing on white-collar crime and fraud patterns on Wednesday, with lawmakers expressing frustration over the refusal of major student loan servicers to answer questions about their practices and highlighting a 40-year gap in state fraud statutes. Sen. Zellnor Myrie, chair of the Codes Committee, opened the hearing with a scathing critique of the student loan servicing industry, detailing how companies including Navient, Aidvantage, Earnest, and MOHELA have declined to respond to legislative inquiries or attend the hearing. Myrie noted that Navient, formerly Sally Mae, was permanently banned from federal student loan servicing after the Consumer Financial Protection Bureau found it steered 1.5 million borrowers into costly forbearances, costing them $4 billion in unnecessary interest. The company and its affiliates faced combined penalties exceeding $2 billion but refused to answer basic questions about their practices. "A company permanently banned from its own industry, with $2 billion in combined penalties, and their answer to the New York State Senate is: We've left. Ask someone else," Myrie said, describing a pattern where companies shift responsibility between affiliates and regulators, leaving borrowers without recourse. Myrie emphasized that New York's fraud statutes have not been significantly updated since 1986, leaving them unable to address modern schemes involving cryptocurrency, digital payments, and complex corporate structures. "That is the legal framework we are working with today," he said, noting the statutes predate the internet, email, and online banking. Sen. Rachel May, chair of the Consumer Protection Committee, raised concerns about the federal government's abdication of consumer protection responsibilities, noting that the Trump Administration's attack on the Consumer Financial Protection Board has cost consumers $19 billion in the last year alone. She questioned why DFS received 200,000 complaints but issued only 134 enforcement actions, asking O'Malley to provide more granular complaint data to inform future legislation. Gabriel O'Malley, Executive Deputy Superintendent of DFS's Consumer Protection and Financial Enforcement Division, reported that the department has secured $765 million for consumers under Governor Hochul's leadership and addressed more than 200,000 complaints. He highlighted recent enforcement actions against cryptocurrency companies, including a $2 billion settlement with Gemini Trust Company for failing to protect consumers from fraud. Laura Campion, Deputy General Counsel of the Department of Labor, reported that 2025 was a landmark year for wage theft enforcement, with investigations recovering $35 million in stolen wages and collecting $2.2 million in penalties. Since 2017, the department has recovered $243 million in stolen wages. Sen. Dean Murray raised concerns about escrow fraud on Long Island, noting that 86 percent of claims paid by the New York State Lawyers Fund for Client Protection in 2024 involved real estate escrow funds being stolen. He also pressed for clearer definitions of "manual labor" under Part 191 of labor law to protect small businesses from unintentional violations. The hearing underscored a broader pattern: as federal oversight weakens, New York must strengthen its own consumer protection and fraud enforcement mechanisms. Lawmakers indicated they are considering legislative updates to address gaps in white-collar crime statutes and improve accountability for financial institutions and servicers. NEW YORK — The Senate Committee on Consumer Protection held a joint hearing Wednesday examining white-collar crime and fraud patterns, with state officials testifying that current laws inadequately penalize criminals who target multiple lower-income victims and that cryptocurrency platforms are obstructing law enforcement efforts to recover stolen assets. Attorney General representatives presented the starkest example of the legal disparity: a stockbroker who steals $1.1 million from a single wealthy client faces Class B felony charges, but a broker who steals the same amount by taking $1,000 each from 1,100 lower-income investors faces only misdemeanor and low-level felony charges. The AG's office cited a Madison County tax preparer who operated a Ponzi scheme for three decades, stealing over $50 million from 988 investors, but could only be charged with Class C felonies because no single victim lost more than $1 million. Stephanie J. Swenton, chief of the AG's Criminal Enforcement and Financial Crimes Bureau, proposed four legislative reforms: simplifying the introduction of business records in grand jury proceedings through certification; allowing remote testimony for victims more than 100 miles away; adding increased felony levels to the "scheme to defraud" statute based on monetary thresholds or number of victims; and expanding protections for elderly fraud victims. On cryptocurrency, Shamiso Maswoswe, chief of the AG's Investor Protection Bureau, detailed how digital assets facilitate crime. He cited Chainalysis data showing cryptocurrency crime grew from $11 billion in 2020 to $54.3 billion in 2022, reaching $51.3 billion in 2024. Maswoswe testified that stablecoin issuers Circle and Tether routinely refuse law enforcement requests to freeze assets, forcing prosecutors to obtain court orders. In one case, Circle took three days to comply with a court order, allowing stolen crypto to be transferred out. Maswoswe warned that crypto schemes disproportionately target vulnerable populations, including communities of color and young people, using celebrity endorsements and influencers to promote unregulated products without appropriate risk disclosures. Department of Labor official Laura Campion testified that service industries are a high-risk area for wage theft but declined to confirm specific staffing numbers for wage enforcement, saying the department would provide follow-up information. Sen. Myrie questioned whether 235 wage enforcement staff can adequately cover all workers and employers statewide. Department of Financial Services official Gabriel O'Malley discussed student loan servicing as an area where consumers are "held captive" by servicers they do not choose, and noted that federal policy changes may push borrowers into private loans where they lose protections like income-driven repayment plans. Sen. May proposed creating a centralized "one-stop shop" for consumer complaints, arguing that the current system of parallel processes across multiple agencies is confusing. The hearing occurred as the legislature considers budget allocations and potential legislative reforms to strengthen white-collar crime prosecution. New York State Senate committees heard testimony Wednesday on modernizing the state's white-collar crime and fraud statutes, with law enforcement officials and cryptocurrency industry experts warning of an industrialized scam epidemic targeting New Yorkers and calling for enhanced criminal penalties and investigative tools. The joint hearing of the Consumer Protection and Codes Committees focused on three proposed bills: the SCAM Act, which would enhance penalties for scheme-to-defraud offenses; the CRYPTO Act, which would criminalize unlicensed virtual currency operations; and the Rip-Off Act, which would modernize evidence procedures for cryptocurrency crimes. Manhattan District Attorney Alvin Bragg testified that New Yorkers lose billions annually to fraud and scams, and that current laws inadequately penalize complex schemes. He noted that attempted fraud faces the same penalties as completed fraud regardless of scale, and that unlicensed cryptocurrency operators in New York face only civil penalties, unlike the federal system where such violations carry up to five years in prison. "These are people who are availing themselves of shadowy corners of our markets," Bragg said, "using the anonymity to prey on individual victims." Albany County District Attorney Lee Kindlon emphasized that New York's white-collar crime statutes have not been substantially updated for decades while criminal tactics have evolved. He highlighted particular concern for vulnerable populations, including seniors and immigrants, and described the need for wage theft provisions to combat shell companies and labor brokers. Alona Katz, chief of the Virtual Currency Unit at the Brooklyn District Attorney's Office, provided detailed accounts of cryptocurrency scam victims, including a retired New York City schoolteacher who lost her entire pension and a woman who invested her life savings hoping to pay for her family's medical bills. She noted that most scammers operate overseas, limiting state prosecution, and that fraudsters increasingly use targeted Facebook advertising in specific languages to exploit immigrant communities. Blockchain analytics firms Chainalysis and TRM Labs presented alarming data: scam operators received over $12 billion in cryptocurrency payments annually in recent years, with 2025 estimated at $14 billion to $17 billion. Impersonation scams grew 1,400 percent year-over-year, with artificial intelligence enabling scammers to extract 4.5 times more revenue per operation. TRM Labs estimated $35 billion flowed into cryptocurrency fraud schemes in 2025, with only 15 percent of victims reporting the crime. Sen. Myrie, who chairs the Codes Committee and sponsors the SCAM Act and CRYPTO Act, emphasized the need for greater state investment in white-collar crime enforcement comparable to street crime investments. He noted the increasing intersection of white-collar and street crime in cryptocurrency cases, citing DA Bragg's example of a gun trafficking suspect whose fraud investigation led to solving a shooting. The hearing underscored the urgency of legislative action as organized scam networks operate with the sophistication of multinational corporations, with AI accelerating fraud schemes and compressing money-laundering timelines to days. NEW YORK STATE SENATE EXAMINES WHITE-COLLAR CRIME SURGE, FOCUSES ON CRYPTO FRAUD AND ELDER EXPLOITATION The New York State Senate Consumer Protection Committee held a joint public hearing on March 4, 2026, examining escalating patterns of white-collar crime and fraud, with particular emphasis on cryptocurrency-related scams, elder financial exploitation, and systematic foreclosure abuses. Testimony revealed alarming scope: cryptocurrency-related crime reached a record $158 billion globally, with $100 million in losses in New York alone, according to Ari Redbord of blockchain intelligence firm TRM. Despite representing only 1.2% of overall crypto activity, illicit transactions cause devastating personal losses. Redbord noted that only 15% of cryptocurrency fraud victims report crimes, a statistic that prompted concern from multiple senators. A particularly predatory scheme called "pig butchering"—a romance scam that evolves into investment fraud—was detailed by both Redbord and Richard Bouras of Chainalysis. The scams originate primarily from Southeast Asia and target victims across demographics, with New York identified as a top target state alongside Massachusetts. Victims receive initial payouts to build credibility, then are coaxed into sending increasingly large amounts before criminals disappear with all funds. Crypto ATMs emerged as a critical vulnerability. Bouras testified that unlicensed machines allow thousands of dollars in transactions without identification or verification, while legitimate ATMs display warnings and require KYC compliance. Redbord noted TRM sees double the illicit activity on ATMs compared to the broader crypto ecosystem. Elder financial exploitation presents a parallel crisis. Kristen McManus of AARP New York cited FBI data showing elder fraud increased 50% with associated losses up 43%. Older New Yorkers lose approximately $30,000 per hour to scams and fraud, she testified, with New York ranking sixth nationally in elder fraud cases. McManus advocated for bank teller training to recognize and halt suspicious transactions—a practice already adopted in 40 states for investment advisers and 26 for bank tellers. Deed theft, a white-collar crime involving fraudulent property title transfers, has generated over 6,000 complaints statewide since 2014, disproportionately affecting seniors and disabled homeowners, according to Charles Johnson of the New York State NAACP Conference. While New York enacted civil protections in 2023 and criminalized deed theft in 2024, Johnson called for stronger enforcement in historically targeted communities and increased funding for victim legal assistance. A separate crisis emerged regarding foreclosure interest rate manipulation. Attorney Mark Anderson detailed a class-action lawsuit involving over 10,000 auctions across New York where banks systematically miscalculated interest charges. Dr. Mark Bond, pastor of Citadel Cathedral in South Brooklyn, testified that his 30-year-old congregation faces homelessness after the bank took a $140,000 surplus following auction, with the Lutheran Synod having added thousands in shifting charges that prevented timely payoff. Sen. Myrie, committee chair, sought to clarify for the public how blockchain's transparent, immutable ledger coexists with successful fraud. Redbord explained that while every transaction is traceable, bad actors move funds faster than law enforcement can respond, necessitating rapid public-private coordination and AI-enhanced tracking tools. Sen. May, Consumer Protection Chair, focused on consumer-level safeguards, questioning ATM signage requirements and advocating for digital asset literacy training for police. She expressed strong support for a private right of action allowing consumers to sue bad actors directly. Sen. Murray raised concerns about transaction holds potentially overreaching, citing personal experience where fraud protection blocked legitimate transactions. She emphasized education as key to prevention and suggested banks need better training on communicating fraud protection measures. The hearing underscored that while regulatory frameworks have improved, enforcement gaps remain, victim reporting remains critically low, and coordination across law enforcement, financial institutions, and social services requires strengthening to protect New Yorkers from increasingly sophisticated, globally-organized criminal networks. NEW YORK STATE SENATE CONSUMER PROTECTION COMMITTEE EXAMINES SURGE IN FRAUD TARGETING VULNERABLE NEW YORKERS The New York State Senate Consumer Protection Committee held a joint public hearing on March 4, 2026, to examine escalating patterns of white-collar crime and fraud affecting New Yorkers, with testimony revealing systemic vulnerabilities in consumer protection enforcement and a collapse of federal oversight. Testimony focused on three major fraud categories: deed theft targeting elderly and immigrant homeowners, student loan fraud, and fintech schemes charging interest rates exceeding 330 percent APR—far above New York's 16 percent usury cap. Mark Anderson, an attorney litigating foreclosure-related fraud, testified that deed theft schemes exploit vulnerable populations through fraudulent mortgage modifications and forged documents. He revealed that in examining 14 to 15 foreclosure firms, all were performing surplus calculations incorrectly, and that servicers are dictating calculation methods to their attorneys rather than the reverse. Anderson advocated for a state-mandated calculator system to standardize foreclosure calculations and deter fraud through severe penalties. Charles Johnson of the NAACP highlighted how deed theft disproportionately affects communities of color, particularly elderly individuals and migrants in the Bronx who face language barriers and financial illiteracy. He committed to providing the NAACP's recommended funding amount for the Home Ownership Preservation Program by the week of the hearing. Winston Berkman-Breen of Protect Borrowers presented alarming data on federal enforcement collapse: CFPB complaints from New Yorkers nearly doubled from 180,000 in 2024 to over 300,000 in 2025, while consumer relief on closed complaints plummeted from 51 percent to 41 percent. He attributed this to the Trump Administration's gutting of the CFPB, which fired nearly all staff and stopped complying with at least 87 statutory responsibilities—costing households over $18 billion. Berkman-Breen stressed that New York's consumer protection law is among the weakest in the country and called for a strong private right of action to address unfair, deceptive, and abusive practices. Andy Morrison of New Economy Project testified that fintech "earned-wage access" companies are extracting over $500 million from working New Yorkers' paychecks since 2019 by falsely claiming their products are not loans. The Attorney General has found APRs as high as 750 percent in enforcement actions. Morrison urged passage of the Stop Taking Our Pay Act (S8939) to clarify that EWA advances are loans subject to usury caps. Sen. Myrie, who chaired the hearing, expressed frustration with servicers' non-responsiveness to his inquiries, noting that law firms ignored his letters and one referred to him as "Senator Mylie" while refusing to answer questions. He pressed witnesses on accountability, noting that servicers paid with taxpayer dollars should answer to elected officials. The hearing underscored the urgent need for stronger state consumer protection laws and enforcement mechanisms as federal oversight collapses and predatory practices proliferate across New York. NEW YORK SENATE COMMITTEES HEAR TESTIMONY ON WAGE THEFT, PAYDAY LENDING, AND CONSUMER FRAUD ENFORCEMENT GAPS The New York State Senate's joint Consumer Protection and Codes committees held a hearing on March 4, 2026, examining white-collar crime and fraud patterns, with particular emphasis on wage theft and predatory lending practices that cost New Yorkers an estimated $1 billion to $3 billion annually. Testifiers painted a stark picture of enforcement failures and legal barriers protecting bad actors. Emma Kreyche, director of advocacy at the Worker Justice Center of New York, testified that the Department of Labor recovers only about 1 percent of stolen wages, while immigrant workers—a particularly vulnerable population—often fear immigration retaliation if they report wage theft. She advocated for the Empire Worker Protection Act, modeled on California's successful PAGA law, which would generate an estimated $211 million annually in civil penalties compared to the $2.2 million collected last year. Winston Berkman-Breen testified that New York ranks among the weakest states for consumer protection, with only 8 states having weaker laws than New York's 42 peers. He criticized current statutory damages of $50 as "meaningless" and proposed $1,000-$2,000 per violation, with enhanced penalties for protected classes like seniors and veterans. Christopher Marlborough, a practicing employment attorney, detailed how forced arbitration clauses and independent contractor misclassification schemes stack the deck against workers. He noted that more than half of New York workers are subject to forced arbitration agreements that eliminate class-action rights and reduce the statute of limitations from six years to six months—erasing over 90 percent of potential damages. He cited California's transformation under PAGA as evidence that strong enforcement changes employer behavior. Andy Morrison testified about payday loan predation, describing an industry backed by Silicon Valley venture capitalists and Wall Street banks that preys on workers living paycheck to paycheck. He cited a report titled "$500 million and counting" documenting regional wealth extraction across New York. Senators engaged substantively on enforcement mechanisms. Sen. May raised concerns about smaller municipalities lacking resources to combat predatory practices and questioned arbitration transparency. Sen. Murray focused on penalty adequacy, expressing belief that meaningful punishment is necessary to deter violations. Committee Chair Sen. Myrie emphasized the need for both criminal and civil enforcement, noting that workers often fear reporting to law enforcement and that the legislature has a responsibility to protect New Yorkers from financial exploitation. He indicated the committee would develop legislative responses to the hearing.