By Dean Maddox

California’s growing online fraud problem is taking a more sophisticated turn, with criminals using technology to impersonate federal agents, create convincing government websites and target people who have already been victimized by scams.

The FBI issued a new warning in July 2026 after identifying an ongoing scheme in which criminals impersonated employees of the Internet Crime Complaint Center, or IC3, the federal government’s primary online reporting system for internet crime. Investigators said scammers have used AI-generated videos depicting FBI officials and spoofed IC3 websites to collect victims’ personal and financial information.

The warning illustrates how quickly technology is changing the fraud landscape — and why federal lawmakers face increasing pressure to strengthen the nation’s response.

The scale of the problem in California is substantial. FBI data show California victims reported more than $3.67 billion in internet-crime losses in 2025, the largest state total in the country. More than 73,000 Californians filed complaints with the FBI’s Internet Crime Complaint Center.

Investment fraud accounted for approximately $1.65 billion of the reported losses. Business email compromise generated more than $430 million, while technology-support scams accounted for more than $416 million. Government-impersonation schemes produced another $229 million in reported losses.

Older Californians were particularly vulnerable. More than 22,000 victims age 60 and older reported approximately $1.4 billion in losses in 2025.

The FBI’s latest warning shows that even victims who have already reported a crime can become targets again. In so-called recovery scams, criminals pose as law enforcement officers, banks or cybersecurity professionals and promise to recover money lost in an earlier fraud. The FBI said criminals may use AI-generated video, spoofed websites and other technology to make the deception appear legitimate.

Federal officials say scammers’ tactics are constantly evolving.

“The data we’re releasing today shows that scammers’ tactics are constantly evolving,” said Christopher Mufarrige, director of the Federal Trade Commission’s Bureau of Consumer Protection, following the release of the agency’s fraud data. The FTC reported that consumers lost more than $12.5 billion to fraud, a 25% increase from the previous year.

Impersonation has become one of the most effective tools in the criminal arsenal. Scammers can create convincing websites, social-media profiles, emails, text messages and phone calls designed to appear as though they come from banks, businesses, government agencies or other trusted institutions.

“The billions of dollars American consumers lose at the hands of impersonators is staggering,” Mufarrige said as the FTC highlighted its enforcement efforts against business and government impersonation scams.

Artificial intelligence is adding another layer to the problem. Criminals can use AI-generated text, images, audio and video to make fraudulent communications more convincing and impersonate people victims know or trust.

The FBI has warned that criminals are using AI-generated videos and spoofed websites in schemes that impersonate FBI personnel and target people who have already been victimized by fraud. In some cases, scammers pose as officials who claim they can recover money previously lost to another scam.

Artificial intelligence is not the only emerging tool.

The FBI has warned that cybercriminals are using fraudulent online advertising and malicious traffic-routing systems to redirect people from legitimate websites to fake login pages and other sites designed to steal credentials, financial information or deliver malware.

Businesses are increasingly being targeted as well. Criminals have expanded beyond traditional bank-account schemes to payroll systems, unemployment programs and health savings accounts. For small businesses, a successful scam can drain operating accounts, disrupt payroll, expose sensitive customer information and damage years of customer trust.

Nonprofit organizations face similar risks. Money stolen from a charitable organization can mean fewer resources for education, health care, family assistance and other community programs.

Cryptocurrency has also become a major component of the fraud problem. California recorded 978 complaints involving cryptocurrency kiosks in 2025, with more than $24 million in reported adjusted losses, according to the FBI. Nationwide, losses involving such kiosks increased 58% from the previous year.

The growing complexity of online fraud presents a challenge for law enforcement agencies investigating criminal networks that can operate across state and international borders.

It also creates a growing policy challenge for Congress.

Lawmakers face calls to provide additional resources for federal, state and local agencies investigating organized fraud networks, improve information sharing among law enforcement and financial institutions, and develop a coordinated response to criminal organizations operating across state and international borders.

A permanent federal task force focused on organized fraud could bring together law enforcement agencies, financial institutions, technology companies and telecommunications providers to identify emerging schemes and trace stolen funds more quickly.

Congress also faces pressure to make fraud reporting easier for victims and more useful to investigators. Security experts suggest a that a national system allowing information from financial institutions, technology companies and law enforcement agencies to be shared more efficiently could help investigators connect individual complaints to larger criminal operations.

International cooperation could also be increasingly important as many online fraud operations targeting Americans operate outside the United States, making arrests and recovery of stolen funds more difficult for domestic law enforcement agencies.

The growing threat of online fraud now demands a response that matches the scale and sophistication of the crime. Security experts suggest that Congress has an opportunity — and a responsibility — to move beyond piecemeal measures and establish a coordinated national strategy that gives law enforcement the resources, technology and authority needed to identify and dismantle organized fraud networks. 

Strengthening information sharing, improving victim reporting, pursuing international criminal operations and targeting the technology that enables these schemes would give investigators a better chance of stopping fraud before Americans lose their money. With billions of dollars at stake and criminals rapidly adopting new tools, congressional action is increasingly critical to making online scams a national law-enforcement priority rather than a collection of individual crimes.