A fraud expert warned a House Oversight subcommittee that the federal government lacks the tools, policies, and deterrence needed to counter criminals exploiting artificial intelligence against taxpayers.
Testifying before the Government Operations Subcommittee, the researcher said fraud has evolved from isolated schemes into a durable, specialized criminal infrastructure.
He told lawmakers that criminals exploit gaps between agencies because government defenses are built program by program, while criminal networks operate across all of them.
Intelligence gathered from thousands of underground markets revealed fraudsters trading stolen identities, forged checks, and step-by-step tutorials for attacking government and financial systems.
One major challenge is speed: criminal operations are adapting faster than federal agencies can deploy new fraud-prevention tools.
The expert said bad actors now use AI to generate fake documents, phishing emails, and deepfake videos that bypass identity verification and liveness checks at banks and tax preparers.
In a prior Medicaid investigation, his team found providers billing roughly $2 million while claiming staff and caregivers who did not exist at listed physical addresses.
He urged the government to verify identities using trusted historical data rather than images or selfies that AI can easily fabricate.
Beyond financial loss, he said every dollar lost to organized fraud is a dollar diverted from the people the programs were designed to serve.
After years of monitoring dark web and messaging platforms, the expert concluded law enforcement has uncovered only a fraction of the organized fraud operating today.
