Evolution of U.S. Public Policies to Protect Consumers

Exploring the timeline of how U.S. public policies on consumer protections have evolved over time, including major legislative acts, hearings, and anti-fraud initiatives.

The landscape of consumer protection and fraud prevention in the U.S. has undergone significant transformations as Congress has responded to emerging challenges. From early legislative efforts to recent hearings addressing digital fraud, this timeline provides an in-depth look at how public policies have evolved in an effort to safeguard consumers from fraud, money laundering and scams.

The Early 20th Century: Foundation of Consumer Protection

1914: Federal Trade Commission Act

In 1914, the U.S. Congress took a monumental step in consumer protection by passing the Federal Trade Commission Act. This landmark legislation established the Federal Trade Commission (FTC), tasked with combating unfair and deceptive business practices. This early effort laid the groundwork for federal oversight of commercial activities, including efforts to address fraud. Since its inception, the FTC has become a critical agency in consumer protection, handling over 3.2 million fraud reports in 2022 alone.

1938: Wheeler-Lea Act

The Wheeler-Lea Act, passed in 1938, expanded the FTC’s authority to address deceptive advertising practices more comprehensively. This Act enabled the FTC to enforce standards for truthful advertising, marking a significant enhancement in the federal government’s ability to combat consumer fraud. By the late 20th century, the FTC had tackled thousands of cases involving deceptive practices, solidifying its role as a protector of consumer rights.

The Late 20th Century: Modernizing Fraud Prevention & AML

1968: Fair Credit Reporting Act (FCRA)

The Fair Credit Reporting Act, enacted in 1968, marked a critical development in fraud prevention. This legislation regulated the collection and use of consumer credit information, aiming to protect consumers from inaccuracies and misuse of credit reports, and addressing the growing issue of identity theft. Identity theft reports to the FTC surged to 1.4 million in 2021, highlighting the ongoing importance of credit protection laws.

1970: Bank Secrecy Act (BSA)

Administered by the Financial Crimes Enforcement Network (FinCEN), the BSA was enacted to combat money laundering and fraud by requiring financial institutions to report suspicious activities. The Act has been crucial in detecting and preventing financial crimes.

1978: Electronic Fund Transfer Act (EFTA)

The EFTA was enacted to protect consumers in electronic fund transfers, such as ATM transactions and direct deposits. The law limited consumer liability for unauthorized transfers, a crucial step in safeguarding against electronic fraud.

1991: Telephone Consumer Protection Act (TCPA)

As telemarketing fraud became more prevalent, the Telephone Consumer Protection Act of 1991 was enacted. This law aimed to restrict unsolicited marketing calls and the use of automated dialing systems, significantly curbing fraudulent telemarketing practices and providing consumers with greater control over unwanted communications. By 2022, spam calls still accounted for over 18 billion complaints, illustrating the continued relevance of the TCPA in protecting consumers.

1999: Gramm-Leach-Bliley Act (GLBA)

The Gramm-Leach-Bliley Act of 1999 required financial institutions to explain their information-sharing practices to their customers and to safeguard sensitive data. This was an important step in enhancing consumer privacy and preventing identity theft in the financial sector.

The 21st Century: Adapting to Digital Fraud & Deception

2001: USA PATRIOT Act

In response to the 9/11 attacks, this Act expanded the BSA’s provisions, enhancing the government’s ability to track and prevent money laundering and terrorist financing. It has played a critical role in monitoring financial transactions for fraud.

2003: CAN-SPAM Act

With the rise of email as a primary communication tool, Congress passed the CAN-SPAM Act in 2003. This Act targeted deceptive email practices by setting standards for commercial emails and providing consumers with the ability to opt out of unwanted messages, addressing a new wave of spam and email-based scams. Despite these efforts, email fraud remains a significant issue, with phishing attacks contributing to an estimated $54 billion in losses globally in 2021.

2009: Credit CARD (Card Accountability Responsibility and Disclosure) Act

The Credit CARD Act, enacted in 2009, aimed to curb deceptive and abusive practices by credit card companies. The Act sought to increase transparency in credit card terms and protect consumers from unexpected fees and rate increases.

2010: Dodd-Frank Wall Street Reform and Consumer Protection Act

In response to the 2008 financial crisis, the Dodd-Frank Act was enacted in 2010. This comprehensive legislation established the Consumer Financial Protection Bureau (CFPB), tasked with overseeing financial products and services. The CFPB’s creation marked a significant enhancement in regulatory oversight and consumer protection, including efforts to prevent financial fraud. The CFPB handled over 540,000 consumer complaints in 2022, demonstrating its pivotal role in addressing financial misconduct.

Recent Developments: Addressing a New Threat Landscape

2018: Economic Growth, Regulatory Relief, and Consumer Protection Act

This Act provided relief for smaller financial institutions while strengthening protections against identity theft and fraud. It included provisions to improve consumer access to credit reports and protect against data breaches.

2021: Anti-Money Laundering Act (AMLA)

The Anti-Money Laundering Act of 2020, passed as part of the National Defense Authorization Act for Fiscal Year 2021, aimed to combat financial crimes by modernizing and strengthening anti-money laundering regulations. This Act expanded the powers of regulatory bodies to monitor and prevent financial crimes, including scams.

2022: Senate Hearing on Cryptocurrency Fraud

As digital currencies gained prominence, the 2022 Senate Hearing on Cryptocurrency Fraud examined the regulatory gaps in cryptocurrency markets. This hearing highlighted the need for updated regulations to protect investors in the rapidly evolving world of digital finance. With cryptocurrency fraud accounting for over $2 billion in losses in 2021 alone, the need for robust oversight is clear.

2022: Federal Anti-Robocall Efforts

In 2022, the TRACED Act was implemented, focusing on reducing illegal robocalls. The law increased penalties for violations and required telecom companies to implement measures to detect and block unwanted calls. Reports indicate that over 80% of Americans receive robocalls, demonstrating the Act’s importance in tackling fraud through unwanted communication channels.

2023: Digital Privacy Act

In 2023, the Digital Privacy Act was enacted to enhance consumer privacy online. The Act required companies to implement stronger data protection measures and increased transparency about data collection practices, aiming to reduce online fraud and identity theft.

2024: Senate Hearing on Zelle

The 2024 Senate Hearing on Zelle brought attention to the vulnerabilities and fraud issues associated with digital payment platforms. This hearing underscored the challenges of securing digital transactions and Prompted discussions on how financial institutions handle fraud & scams. Zelle and similar platforms accounted for over $440 million in consumer-reported losses in 2022, illustrating the critical nature of these discussions.

Moving Forward

The timeline of Congressional policies on scams reflects a continuous adaptation to emerging threats and advancements in technology. From foundational legislative acts to modern responses to digital fraud, Congress has consistently evolved its approach to protect consumers. As new challenges arise, however, legislative and regulatory efforts will need to be updated constantly to keep up and remain able to safeguard the public from fraud. Collaboration between legislators, regulators and industry players is a must, but it is no easy task. Especially as the sophistication of attacks ramps up, cross-industry collaboration drives complexities, victims experience more damage than ever before, and liability hangs in the balance.

But just because it’s hard doesn’t mean there aren’t folks fighting the good fight. From banks, to activists, to public entities there are pockets of devoted scam fighters trying to rally the forces for good. They are leveraging technology, data, collaboration and education to evangelize the fight against scams. 

Only time will tell how well we collectively combat the scam epidemic, but one thing is for sure, if we don’t fight back – scammers WILL NOT STOP.