Following a series of hearings and engagement with industry stakeholders, including California’s Credit Unions, the Little Hoover Commission has released its comprehensive report: A California Strategy to Stop Financial Scams.

Rather than holding financial institutions responsible for losses inflicted by sophisticated criminal enterprises, the commission recommends that California provide these institutions with stronger tools, better data-sharing capabilities, and a more streamlined investigative infrastructure to combat fraud at the source.

The report is the culmination of two days of public testimony held in late 2025. These sessions brought together fraud prevention experts, law enforcement, consumer advocates, industry leaders, and leadership from the California Department of Financial Protection and Innovation (DFPI). Since 2020, Californians have filed more than 637,000 fraud reports, with total losses exceeding $2.7 billion.

A consistent theme emerged from those hearings: fraud cannot be fought in a vacuum. Witnesses from both the public and private sectors argued that any successful strategy must be holistic. The commission’s framework centers on three pillars:

• Cross-industry cooperation to bridge the gap between telecommunications companies, social media platforms, and financial services.
• Scaling local successes statewide.
• A centralized investigative hub for reporting that reduces the friction victims and institutions face when alerting authorities.

The commission also identified demographic trends that should inform education programs. The key distinction is frequency versus severity, and understanding this distinction allows financial institutions to tailor outreach and prevention resources more effectively:

• Younger members are targeted more frequently, often through online shopping or payment app fraud, but typically sustain smaller losses.
• Older members are contacted less often but suffer significantly higher financial losses per incident — typically through complex investment or imposter schemes.

California’s Credit Unions played a central role throughout the commission’s study, providing testimony to ensure credit unions’ member-owned philosophy was represented. The resulting report reflects a meaningful advocacy victory.

The commission acknowledged the proactive role credit unions already play and has made a series of recommendations that would provide financial institutions with more tools to detect and disrupt scams before funds are wired or transferred. By focusing on balanced liability, the report recognizes that placing the full burden of losses on financial institutions could stifle innovation and restrict member access to services. This represents a shift — one that ideally would move the conversation in the state legislature toward a whole-of-government defense approach that empowers financial institutions.

The advocacy team at California’s Credit Unions will continue monitoring how these recommendations translate into legislative proposals and keep credit union leaders informed.