Bill to establish Covid-19 Consumer and Investor Fraud Working Group

by Karen Torrent, Policy Counsel
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Bill to establish Covid-19 Consumer and Investor Fraud Working Group

On September 21, 2020, the House passed the COVID-19 Fraud Prevention ActH.R. 6735, aimed at protecting consumers and investors from fraud during the COVID-19 crisis. The legislation would create the joint Consumer and Investor Fraud Working Group between two agenciesthe Securities and Exchange Commission (SEC) and the Consumer Financial Protection Bureau (CFPB) 

Rep. Cynthia Axne (D-IA) authored H.R. 6735 to address the increase in investment scams seeking to exploit consumers and investors during the coronavirus pandemic. 

Examples of fraudulent Covid-19 investors schemes identified so far include:  

If H.R. 6735 is passed into lawthe working group will remain in effect until the end of 2021The group’s primary mission would be to promote collaboration between the two agencies to deploy their respective resources and expertise to protect consumers and investors against fraud during the pandemic and assist victims of fraud with legal aid. The group would also be required to issue quarterly reports to Congress documenting the resources it has made publicly available and any enforcement actions taken either by the group or its two member agencies.  

Among the agency resources that will benefit the Working Group’s mission is the SEC whistleblower program, established by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The SEC’s whistleblower program has become a critical part of the Commission’s efforts to protect investors and markets against securities fraud. Over the past decade, the SEC has recovered over $2 billion in financial remedies from wrongdoers and awarded approximately $387 million to whistleblowers. 

This experience and record of success will be essential in responding to fraudulent Covid-19 investors schemes. As history has shown, whistleblowers are often on the frontlines of fraud and have historically blown the whistle on major schemes such as in the cases of EnronDanske Bank, and others.    

The House unanimously passed H.R. 6735 by voice vote and the bill was referred to the Senate Banking and Housing Committee for further consideration.  

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