The chair of the Senate Banking Committee, Senator Sherrod Brown, has written letters to the CEOs of Google’s parent firm Alphabet and Apple calling for the technology companies to offer information on the ways they prevent various apps from promoting crypto scams.
Brown is calling for US lawmakers and watchdogs to address crypto scams:
“Industry shouldn’t be allowed to write the rules that they want to play by.”
Based on the letters published on July 28, Brown asked Apple CEO Tim Cook and Alphabet CEO Sundar Pichai for the strategies that the tech giants were taking in the approval of apps on Android and Apple devices.
The senator requested information related to the way the firms assessed whether apps were “trusted and secure,” prevented potential phishing apps through fraudulent apps, and reported these apps to the users. Brown stated:
“Cyber criminals have stolen company logos, names, and other identifying information of crypto firms and then created fake mobile apps to trick unsuspecting investors into believing they are conducting business with a legitimate crypto firm.
While firms that offer crypto investment and other related services should take the necessary steps to prevent fraudulent activity, including warning investors about the uptick in scams, it is likewise imperative that app stores have the proper safeguards in place to prevent fraudulent mobile application activity.”
Brown’s letters came after the Federal Bureau of Investigation (FBI) issued a public warning about phony crypto apps on July 18. The bureau reported that scammers had pilfered over $42 million from 244 people between October 2021 and May 2022, including a case where an app used the name of a former legitimate crypto exchange.
Speaking at a July 28, 2022 hearing with the Senate Banking Committee on “Understanding Scams and Risks in Crypto and Securities Markets,” Brown appeared to place a lot of the burden of addressing cryptocurrency scams on platforms and apps on legislators and regulators rather than firms:
“We hear industry players call for rules of the road when a big fraud is uncovered, and after a big actor has knowingly violated the law. The rules are there, the roadmap is clear, and [the Senate Banking Committee] needs to make sure our regulators enforce the law and protect the workers and families that keep this economy rolling […] Industry shouldn’t be allowed to write the rules that they want to play by.”
Protecting Investors and Savers: Understanding Scams and Risks in Crypto and Securities Markets
— Senate Banking and Housing Democrats (@SenateBanking) July 28, 2022
The president of the Financial Industry Regulatory Authority Investor Education Foundation, Gerri Walsh, said in written testimony for the hearing that some of the $57 million in fines the financial watchdog charged trading app Robinhood in June 2021 would be used for educating crypto investors, including the ones using online accounts and mobile apps.
Walsh also said that scammers are using dating and messaging apps to convince unsuspecting users to send money or invest in fake crypto platforms and he said misinformation on social media was a major factor in the propagation of these scams. He was responding to a question on Instagram posts.
The Federal Trade Commission reported in June 2022 that nearly 46,000 people in the United States had lost nearly $1 billion in cryptocurrency to scams in 2021. The commission stated at the time that nearly half of all the crypto-related scams originated from social media platforms via ads, messages, and posts.