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Robocallers bombarded Americans with over 50 billion robocalls in 2021, with scams and spam calls representing roughly 60 percent of all robocalls.
A middle-aged woman in Massachusetts had just arrived home after an overnight shift when she picked up a call with a prerecorded message. The recording explained that a “Texas law enforcement agency” wanted to speak with her and told her to hold for further instructions. A person hopped on the line and told her that police found a vehicle registered in her name at a crime scene at an undisclosed location in the state. The truck had bloodstains in it.
The person said that the agency would press charges if she did not cooperate and told her to put several thousand dollars on Google Play gift cards to send to the Texas “agency.” Phone scammers often use this tactic to defraud consumers since the payments cannot be traced. To avoid raising the bank’s suspicions about the uncharacteristically large withdrawal, the caller directed the woman to go to multiple bank branches. All in all, she ended up withdrawing about $5000 from her account. At the fourth branch, frightened and dehydrated, she went inside the bank to ask an employee for water. One person asked her about her errand and got on the phone with the scammer, who quickly hung up.
According to the bank manager, who requested anonymity in order to frankly discuss the alleged fraud, the woman was typically “very sharp” and the scammers caught her at a vulnerable moment. She was just one of many scam victims that sought help from the bank after they’d been bilked. He noted that “at least one” scam victim comes into his small suburban branch every day, but on some days, he sees as many as four or five people.
Robocallers bombarded Americans with over 50 billion robocalls in 2021, with scams and spam calls representing roughly 60 percent of all robocalls. According to a new report from the National Consumer Law Center (NCLC) and the Electronic Privacy Information Center (EPIC), many of the most prominent scams are initiated by robocalls. Sixty million Americans lost money to scam calls in 2021, with total losses just under $30 billion. The median loss for most people was $1,800; for consumers over 80 years old, the median loss was $3,000.
In May, the Federal Communications Commission (FCC) imposed new rules on gateway telecom providers, which place foreign calls, the origin of most illegal robocall traffic, onto the U.S. network. The rule change puts pressure on gateway providers profiting off illegal call traffic from abroad. But federal regulators and telecommunications companies have yet to take up tougher measures to stop the scourge of nuisance calls and scams. Robocallers and their enablers proliferate because they make easy money and rarely face substantial consequences. The FCC can change that through a combination of proactive enforcement and stricter financial liability for complicit and complacent providers.
The most significant federal rule change is that gateway providers must now respond to traceback requests—which chart the call paths of illegal traffic to their point of origin—within 24 hours. According to EPIC law fellow Chris Frascella, it is a sign that the FCC is “turning up the heat a little bit on gateway providers.”
Though the new rules may make robocaller scammers sweat a bit, they are not game changers.
These companies are also required to register with the Robocall Mitigation Database (RMD), provide plans to combat robocalls, and apply caller ID authentication technology known as STIR/SHAKEN. However, according to the NCLC/EPIC report, registry for the RMD is as simple as “filling out a form and clicking a few boxes”: STIR/SHAKEN “is unlikely to cause a significant decrease in scam robocalls” because at best it only authenticates that a call is not “spoofed” (that is, displaying a false caller ID). Unfortunately, robocallers can also get around these requirements by renting “legitimate” caller IDs from providers passing along their calls.
The robocall deluge stems from the proliferation of small telecom companies using voice over internet protocol (VoIP), which led to a decrease in prices for Americans’ calls, but also allowed scam and spam robocalls to explode. In the past, one phone company, like AT&T, would deliver calls from one person to another. But with VoIP, most calls go through four or more providers before they reach their destination, according to David Frankel, CEO of ZipDX, which developed the traceback technology that charts the pathways that robocalls take.
This decentralized network is vulnerable to bad actors, and telecom providers stand to gain by filling Americans’ phones with garbage calls. Frascella says some of the small telecom providers “police traffic that comes in … and some of them don’t because for them this is like passive income and who cares?”
Each illegal robocall only nets fractions of a cent per minute for the providers, but millions of calls a day mean the money piles up fast. According to Frankel of ZipDX, the U.S. telecom industry makes $75 million annually from illegal robocall traffic, with originating providers paid about $2 million per month by illegal callers to put those calls onto the network.
The FCC has been after scammers for decades. The 1991 Telephone Consumer Protection Act (TCPA) prohibits robocalls except with the express pre-authorization of the person receiving the automated messages. Automated calls that comply with the law are commonly used by banks and health insurance providers for important alerts, but even these legitimate robocall uses are exploited by scammers; they often mimic the content of legitimate calls like those from Medicaid and debt collectors.
Lax regulation led to an explosion of robocalls in the late 2010s. Congress responded by passing the Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (TRACED) in 2019, and the FCC has currently delegated the authority to request tracebacks to the Industry Traceback Group (ITG), a consortium of industry partners led by USTelecom. ITG tracebacks findings allow federal and state agencies to take legal action against robocallers.
Though the new rules may make robocaller scammers sweat a bit, they are not game changers. Even if robocallers are successfully put out of business, they can pop up under a different name and continue criminal activity. Frankel says that real solutions would involve FCC regulatory shifts like proactively removing robocallers from the RMD and speeding up enforcement actions.
The FCC did not respond to the Prospect’s requests for comment.
The NCLC/EPIC researchers recommend that the FCC and the telecom industry take a more proactive approach, such as blocking scam calls as soon as they are discovered; under current rules, providers are only permitted to block calls they suspect are illegal according to certain safe harbor provisions. They also advocate for making tracebacks public, which would allow legitimate providers to avoid doing business with illegal robocallers and watchdogs and journalists to monitor bad actors. To counterbalance the financial incentive to pass along the calls, there should be stronger financial consequences for providers who knew or should have known they were transmitting illegal calls. The researchers point to the federal reforms that penalize credit card companies for fraud and have spared Americans the anguish that fraud produces. The FCC should compel telecom companies to take more forceful measures to crack down on these scams.
