Operation Choke Point Helps Crack Down on Scammers


We support reforms to the financial marketplace that protect consumers from unscrupulous banks and lenders.

By Consumers Union on Monday, July 14th, 2014

The Department of Justice (DOJ) is finally taking action against banks that allow fraudsters to operate. But the agency’s anti-scam effort is under attack.

Under Operation Choke Point (OCP), the DOJ investigates financial services providers, like banks and payment processors, that continue to knowingly honor illegal transactions despite unambiguous signs of fraud. In January 2014, the DOJ filed a suit against and settled with Four Oaks Bank for allegedly continuing to process transactions for a pyramid scheme.

Critics of the program in Congress are doing their best to shut down OCP. Luckily, consumer advocates are rushing to its defense. Last week, Lauren Saunders of the National Consumer Law Center (NCLC) published an op-ed in The Hill that shows how much fraud victimizes consumers, businesses, and banks alike. Saunders points out that fraud:

  • Costs senior citizens $2.9 billion each year, according to a MetLife study;
  • Encourages consumers to buy pricey identity protection services;
  • Can lead to frozen consumer bank accounts;
  • Hurts retailers when consumers are reluctant to shop; and
  • Harms the banks that are left to foot the bill when a consumer is scammed.

OCP helps make sure banks are doing their part to shut down scammers and illegal activities. This is crucial, because most scams simply can’t operate without a bank or a payments processor. That’s why Consumers Union, along with 26 other consumer advocacy organizations, supports OCP.

Have you been the victim of a financial scam? Please share your story!

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