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 March 4, with lawmakers sharply criticizing the student loan servicing industry for evading legislative oversight through corporate structures and portfolio transfers. Sen. Zellnor Myrie, chair of the Codes Committee, delivered a scathing opening statement detailing how major student loan servicers have refused to answer legislative inquiries about their practices. Navient, formerly Sally Mae, was permanently banned from federal student loan servicing and ordered to pay $120 million by the Consumer Financial Protection Bureau, plus an additional $1.85 billion settlement with 39 state attorneys generals. The CFPB found Navient steered 1.5 million borrowers into costly forbearances instead of affordable repayment plans, adding $4 billion in unnecessary interest. Despite this record and 41,000 formal complaints, Navient declined to answer questions or attend the hearing, citing its exit from the servicing business. Aidvantage, a subsidiary of government contractor Maximus, picked up Navient's portfolio and now directly manages student debt for nearly 13 million borrowers and holds over $800 million in Department of Education contracts. The company also refused to testify, claiming inquiries should be directed to the federal government. MOHELA, which now services loans transferred from Navient and Earnest, similarly declined to provide documents or a point of contact. "No one is accountable, and the borrower is the one that is trapped inside," Myrie said, describing a pattern where companies point to each other and regulators, leaving consumers without recourse. Myrie emphasized that New York's fraud statutes have not been significantly updated since 1986 and are inadequate for modern financial crimes including cryptocurrency schemes, digital payments, and securitized loan portfolios. "That is the legal framework we are working with today," he said, noting the world has transformed with the internet, email, smartphones, and digital banking. Sen. Rachel May, chair of the Consumer Protection Committee, noted that the Trump Administration's attack on the CFPB has cost consumers an estimated $19 billion in the last year alone. She questioned why the Department of Financial Services received 200,000 complaints but issued only 134 enforcement actions, asking for more granular complaint data to inform legislative action. Government officials testified on enforcement efforts. Gabriel O'Malley, Executive Deputy Superintendent of DFS's Consumer Protection and Financial Enforcement Division, reported that DFS secured $765 million for consumers, addressed over 200,000 complaints, and collected $517 million in enforcement penalties under Governor Hochul's leadership. He highlighted recent cryptocurrency enforcement actions against Robinhood Crypto, Coinbase, Block, Gemini, and Binance, noting that Gemini returned $2 billion in digital assets to consumers after 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 wages and collecting $2.2 million in penalties. Since 2017, the department has recovered $243 million in stolen wages. She emphasized education and partnership with law enforcement as key strategies. Sen. Dean Murray raised concerns about escrow fund theft 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 reduce confusion and protect small businesses from unintentional violations. The hearing underscored a broader pattern: powerful financial entities use corporate structures to evade accountability while consumers bear the costs of fraud, wage theft, and deceptive practices. Lawmakers signaled intent to update New York's fraud statutes and strengthen consumer protections in the absence of robust federal enforcement. New York State Senate's Consumer Protection Committee heard testimony on white-collar crime and fraud patterns, with agency officials and prosecutors detailing systemic gaps in current law and calling for legislative reforms to strengthen enforcement. The Attorney General's office presented the most detailed reform agenda, with prosecutors highlighting a critical disparity in how fraud is penalized based on victim wealth. Stephanie Swenton, chief of the AG's Criminal Enforcement and Financial Crimes Bureau, described a case in which a Madison County tax preparer stole $50 million from 988 investors over three decades but faced only Class C felony charges because no single victim lost more than $1 million. By contrast, a stockbroker stealing $1.1 million from one wealthy client faces Class B felony charges. "The top counts charged are only C felonies," Swenton said, illustrating how current law fails to account for schemes targeting lower-income victims. Swenton proposed four legislative reforms: simplifying business records introduction in grand juries 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 the definition of "vulnerable elderly person" to capture fraud victims who remain sharp but are still targeted by criminals. Cryptocurrency emerged as a major enforcement challenge. Shamiso Maswoswe, chief of the AG's Investor Protection Bureau, cited Chainalysis data showing crypto crime grew from $11 billion in 2020 to $54.3 billion in 2022, reaching $51.3 billion in 2024. He detailed how stablecoin issuers like Circle routinely refuse to freeze assets pending court action and delay compliance with court orders—in one case taking three days to comply, allowing stolen crypto to be transferred out. Maswoswe called for legislation requiring crypto entities to cooperate with state and local law enforcement on asset freezes and returns. The Department of Financial Services reported coordination through a quarterly consumer protection roundtable but acknowledged gaps. Gabriel O'Malley noted that consumers often lack remedies for student loan servicing abuses because they don't choose their servicers and are "held captive" in those relationships. He highlighted the Governor's proposal requiring private student loan lenders to disclose what federal protections borrowers would lose by consolidating federal loans into private ones. The Department of Labor reported that service industries face particular wage theft challenges but declined to confirm specific staffing numbers for wage enforcement, saying it would follow up with details. Sen. Myrie pressed for clarity on whether the state's approximately 235 wage enforcement staff have adequate resources to cover all workers and employers. Sen. May raised concerns about consumer access, proposing a "one-stop shop" where New Yorkers could file complaints and be directed to the appropriate agency rather than navigating parallel processes. She also questioned whether monetary thresholds make sense for cryptocurrency fraud penalties, given stablecoin valuation issues. The hearing reflected broader frustration with fragmented enforcement and outdated statutes that fail to capture the scope of modern fraud schemes, particularly those targeting vulnerable or lower-income populations. NEW YORK STATE SENATE HEARS URGENT TESTIMONY ON CRYPTOCURRENCY FRAUD EPIDEMIC TARGETING VULNERABLE NEW YORKERS Law enforcement officials and blockchain intelligence experts told the New York State Senate on Wednesday that the state urgently needs to modernize its white-collar crime statutes and establish criminal penalties for unlicensed cryptocurrency operations to combat an industrialized fraud epidemic that has cost New Yorkers hundreds of millions of dollars. The joint hearing of the Consumer Protection and Codes committees heard testimony that artificial intelligence is dramatically amplifying cryptocurrency scams, with impersonation schemes growing 1,400 percent year-over-year and scams using AI generating 4.5 times more revenue than those without it. Witnesses estimated that approximately $35 billion flowed into cryptocurrency fraud schemes globally in 2025, with more than $100 million in losses in New York alone. Alona Katz, chief of the Virtual Currency Unit at the Brooklyn District Attorney's office, provided emotional testimony about victims she encounters daily, including a retired New York City schoolteacher who lost her entire pension and a woman who invested her life savings in a fraudulent cryptocurrency platform hoping to pay for her terminal illness treatment. "There is no such thing as a typical victim in these scams," Katz said, describing how scammers use targeted Facebook advertising in specific languages to prey on immigrant communities. Manhattan District Attorney Alvin Bragg testified in strong support of three bills: the SCAM Act, which would create stratified penalties for fraud schemes based on scale and impact; the CRYPTO Act, which would criminalize unlicensed virtual currency operations with criminal penalties up to 15 years imprisonment; and a modernization of grand jury procedures to allow sworn affidavits instead of in-person witnesses for business records. Bragg noted that New York is the only state requiring in-person custodial witnesses for routine business records authentication, a procedural burden that slows investigations. "New Yorkers lose billions to frauds and scams," Bragg said, emphasizing that current penalties do not adequately deter sophisticated actors. He highlighted a case involving a popular financial figure in the Luna/Terra cryptocurrency scheme who secretly sold assets while promoting them on Twitter, ultimately resulting in a $200 million settlement. Albany County District Attorney Lee Kindlon testified that New York's white-collar crime statutes "have not been substantially updated for decades" while criminal tactics have evolved dramatically. He emphasized the particular vulnerability of seniors and immigrant populations, noting that many victims are too ashamed to report scams. Ari Redbord, global head of policy at TRM Labs and a former federal prosecutor, characterized the "pig butchering" scam networks targeting New Yorkers as "the most pervasive and economically destructive financial crime threat" he has encountered in his career. He recommended deploying blockchain intelligence tools across NYPD and district attorney offices statewide and making digital asset literacy mandatory in the NYPD academy. Sen. Myrie, who chairs the Codes Committee and sponsors the SCAM Act and CRYPTO Act, noted that white-collar and street crime are becoming increasingly intertwined through cryptocurrency mechanisms, citing examples of investigators discovering gun trafficking through fraud investigations. The hearing underscored the urgency of legislative action as scammers operate with increasing sophistication, often from overseas locations beyond the reach of state and local prosecutors. Witnesses emphasized that without modernized laws and specialized investigative tools, New York—the nation's financial capital—remains vulnerable to exploitation by organized fraud networks. The New York State Senate Consumer Protection Committee held a joint public hearing on March 4, 2026, examining white-collar crime and fraud affecting New Yorkers, with testimony revealing alarming trends in cryptocurrency scams, elder financial exploitation, deed theft, and foreclosure manipulation. Cryptocurrency industry representatives from TRM Labs and Chainalysis warned that scams constitute organized crime operations primarily based in Southeast Asia, with New York experiencing $100 million in losses from so-called "pig butchering" romance-investment scams. Ari Redbord of TRM Labs reported that only 15 percent of cryptocurrency scam victims report crimes, and that crypto ATMs see double the illicit activity of the broader ecosystem. He characterized the schemes as "economic violence" targeting Americans across all demographics, not just seniors. Kristen McManus of AARP New York presented FBI data showing elder fraud increased 50 percent with associated losses up 43 percent, equivalent to older New Yorkers losing $30,000 per hour to scams. New York ranks sixth nationally in elder fraud. McManus advocated for bank teller training to recognize exploitation signs and place transaction holds, a practice already adopted in 40 states for investment advisers and 26 states for bank tellers. Charles Johnson of the NAACP New York State Conference testified that deed theft—fraudulent property title transfers—has generated over 6,000 complaints since 2014, disproportionately harming elderly and disabled homeowners. While praising 2023-2024 state reforms criminalizing deed theft, Johnson urged stronger prevention measures including early warning systems and LLC transparency requirements. Attorney Mark Anderson presented a class-action lawsuit alleging banks systematically miscalculate and overcharge interest on foreclosures across over 10,000 auctions statewide. His client, Dr. Mark Bond of Citadel Cathedral in South Brooklyn, testified that his church lost a $140,000 surplus after auction and faces homelessness without resolution. Sen. Myrie, chairing the hearing, pressed witnesses on how blockchain transactions remain traceable yet criminals escape detection. Sen. May focused on consumer-level protections and victim support mechanisms. Sen. Murray expressed skepticism about transaction hold mechanisms, citing a personal experience where his bank incorrectly blocked legitimate transactions under fraud protection claims. NEW YORK STATE SENATE CONSUMER PROTECTION COMMITTEE HEARS TESTIMONY ON WIDESPREAD FRAUD TARGETING VULNERABLE NEW YORKERS The New York State Senate Consumer Protection Committee held a joint hearing on March 4, 2026, examining white-collar crime and fraud affecting New Yorkers, with testimony revealing systemic vulnerabilities in consumer protection enforcement and a surge in predatory financial schemes targeting vulnerable populations. Testimony focused on three major fraud categories: deed theft targeting elderly and immigrant homeowners, student loan identity theft and fraudulent counseling services, and fintech "earned-wage access" products charging interest rates exceeding 330 percent APR—far above New York's usury caps. Mark Anderson, an attorney litigating foreclosure-related fraud, testified that deed theft schemes exploit homeowners through fraudulent mortgage modification offers and forged documents. He documented that out of 14 to 15 foreclosure firms examined, all calculated surplus amounts incorrectly, and alleged that servicers are dictating calculation methods to their attorneys rather than the reverse. Anderson proposed implementing a state calculator to standardize foreclosure surplus calculations and deter fraud through severe consequences. Charles Johnson of the NAACP highlighted deed theft targeting asset-rich but cash-poor homeowners, particularly in communities of color, and recommended community outreach and education at multiple points in the homeownership lifecycle. Andy Morrison of the New Economy Project testified that fintech earned-wage access companies have extracted over $500 million from working New Yorkers since 2019 by falsely claiming their products are not loans subject to usury laws. He called for passage of the Stop Taking Our Pay Act (S8939) to clarify that EWA advances are loans. Winston Berkman-Breen of Protect Borrowers presented data showing CFPB complaints from New Yorkers nearly doubled from 180,000 in 2024 to over 300,000 in 2025, while the percentage of complaints closed with consumer relief decreased from 51 percent to 41 percent. He attributed this to federal abdication of consumer protection under the Trump Administration, which he said has cost households over $18 billion. Berkman-Breen advocated for strengthening New York's consumer protection law with a private right of action, noting that New York's UDAP law is weaker than 42 other jurisdictions. Scott Buchanan of the Student Loan Servicing Alliance testified on student loan fraud schemes but cautioned against legislation that could drive out legitimate actors through overly broad standards. Sen. Myrie, the committee chair, expressed frustration that servicers funded by taxpayer dollars refused to answer his inquiry letters, with one firm misspelling his name and refusing to respond on advice of counsel. He pressed Buchanan on whether servicers would answer the committee's questions, arguing that accountability should work both directions. Sen. Murray asked detailed questions about deed theft mechanics and appropriate intervention points for consumer education. Sen. Brisport requested specific dollar amounts for HOPP funding by the end of the week, citing the April 1st budget deadline. Sen. May asked about regional disparities in CFPB complaints, particularly in upstate regions. NEW YORK SENATE COMMITTEES HEAR TESTIMONY ON WAGE THEFT, PAYDAY LENDING, AND CONSUMER FRAUD — Advocates and attorneys told a joint Senate hearing on Consumer Protection and Codes on March 4 that New York State lags far behind most of the nation in protecting workers and consumers from white-collar crime, with current penalties so weak they fail to deter illegal conduct. The hearing focused on three major areas of concern: payday lending practices that extract an estimated $500 million annually from New Yorkers; wage theft affecting low-wage and immigrant workers, estimated at $1 billion to $3 billion per year; and forced arbitration clauses that prevent workers from pursuing claims in court. Winston Berkman-Breen testified that New York is one of only eight states with weaker consumer protection laws, while 42 states have stronger protections. He criticized current statutory damages of $50 under New York's Unfair and Deceptive Acts law as "meaningless" and proposed increasing them to $1,000 to $2,000 per violation, with higher penalties for violations against protected classes like seniors and veterans. Emma Kreyche of the Worker Justice Center of New York presented data showing the Department of Labor recovers only 1 percent of stolen wages. She advocated for passage of 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 just $2.2 million collected last year. Kreyche emphasized that immigrant workers often fear reporting wage theft due to concerns about immigration enforcement, making civil remedies essential. Christopher Marlborough, an attorney with the National Employment Lawyers Association's New York affiliate, detailed how employers use forced arbitration agreements to strip workers of rights to court proceedings and class actions. He noted that more than half of New York workers are subject to such clauses, which disproportionately affect minorities and women. Marlborough cited California's transformation under PAGA as evidence that stronger enforcement makes employers "rightfully afraid of violating the law." Senators pressed witnesses on enforcement mechanisms and penalties. Sen. Murray emphasized that meaningful punishment is essential to deter bad actors, while Sen. May raised concerns about rural communities' inability to fight predatory practices and introduced a transparency bill on arbitration. Committee Chair Sen. Myrie noted in closing remarks that the legislature has a responsibility to address wage theft and fraud as fundamental pocketbook issues, and indicated the committees would develop legislative responses.