Understanding the Persistence of Robocalls and Agency Solutions

Why Do Robocalls Persist & What Can Agencies Do? Consumer Federation of America Margot Saunders, National Consumer Law Center David Frankel, ZipDX LLC 7 February 2023 1

Four General Categories of Phone Traffic Conversational Family, friends, business-to-business Human-dialed Calls average several minutes Social Engineering Special category of Conversational Premeditated trickery to perpetrate fraud Auto-Dialed Machine-dialed; detects human answer Patches call through to call center agent Pre-Recorded Very high volume caller initially greeted by recording Typically transferred to human agent if caller takes the bait (press 1) 2

Our Focus Today: Pre-Recorded Robocalls Server Computer does all the calling Mastermind loads recorded (or artificial) voice Some calls are handled by robots Cheap calling lists readily available on the internet Robocallers must pay for every answered call Costs are a function of length of call Unanswered calls are free but voice mail counts as answered Robocalls on average are extremely short $1,000 to make 1 million calls Once target takes the bait, transfer to live agent (the dangerous part) 3

The Scope of the problem One billion scam robocalls a month are answered by US telephone lines, including Calls scaring seniors into believing that unless they turn over thousands of dollars, they will lose access to their Social Security or Medicare benefits Threats to immigrants that if they don t pay the caller they will be deported Fraud calls in which recipient is tricked into believing they have been refunded too much money by Amazon or Apple One billion likely illegal telemarketing robocalls are answered by US telephone lines, including selling Useless health insurance or medical equipment Valid automobile insurance Student loan (or other loan) consolidation and credit repair 4

The Scope of the problem -- 2 In addition to scam and illegal telemarketing calls, annoying and invasive calls include: Debt collection calls to the people who owe the money, but the calls are numerous and intrusive. Debt collection calls to wrong numbers Political survey and charitable solicitation calls NOTE all of these callers are required to stop calling when requested 5

The Scope of the problem 3 Last year almost 60 million Americans lost $29 billion to these scam callers These direct losses are in addition to the cost to all of us from the invasions of privacy and loss of efficiency from answering these calls FCC estimates that each of these calls has a societal cost of 10 cents Calls impair the value and efficiency of the U.S. telephone system Now 70% of Americans do not answer calls from numbers they do not recognize NCLC has a report on this -- https://www.nclc.org/wp- content/uploads/2022/10/Rpt_Scam_Robocalls_Exec_Summary_May- 2022.pdf 6

High Volume Calling FRAUD Did you order an iPhone from Amazon? Your visa is about to expire SSA here. There is a warrant for your arrest. Your power will turn off in 30 minutes. Qualify for 0% on all cards. Apple Support calling. Scare & Steal Need a good health insurance plan? Your auto warranty is expiring. Get your student loans wiped out. Likely Illegal Tempt & Take You qualify for a medical brace. You ve earned a free vacation. Voice Broadcasting Platform CableCo tech will arrive between 3 & 4 PM. Capital One Security Alert! Are you planning to vote this year? Legit within limits Will you support Smyth for Senate? Your United flight 2123 is delayed. Your payment is due on Friday. 7

Charting Out The Robocalls Notifications Alerts specific to the called party, who usually welcomes the call (except perhaps for debt collection). Flight Cancellation School Closing Prescription Ready Fraud Alert Appointment Reminder Payment (Over)Due Requested Callback Utility Outage Placed by companies of all sizes, typically to parties with which they have an explicit relationship. Legal if limits are obeyed. Promoting a product or service, often of dubious value. Caller claims consent from the recipient (perhaps in response to a web site visit); consent may be obtained unwittingly or not at all. May or may not be legal. Telesales Auto Warranty Health Insurance Pre-Approved Financing Employment / Get Rich Quick Free Vacation Disability Claim Home Security On-Line Business Listing Usually placed by smaller companies but may reference brand names (Blue Cross, Medicare, Marriott). Mostly USA-based. Not universally exempt. Callers often misrepresent themselves and have dubious messages. Political / Charity / Survey Fraud Calls are blatantly fraudulent and false but prey on the vulnerable. Steal money or identity from the victim. Illegal. Government Imposter 0% Interest Rate Unauthorized Charge Immigration Issues (Mandarin) Refund Owed Computer Virus Utility Disconnect Subscription Renewal Almost always placed by foreign scammers, but calls enter via USA gateways. 8

How Did We Get Here? In the beginning, Ma Bell controlled every phone number and charged high rates to call across the country Advancing computer technology made phone equipment cheaper Now all phone signals travel as digital bits The 1996 Telecom Act opened telecom to further competition Rates get pushed down even further Anybody can be a phone company Historically, the phone companies did not police the use of their services Some telcos got sloppy and greedy, allowing high-volume calling & spoofing The Internet enables callers to operate from anywhere, anonymously 9

Major Problematic Robocall Sources Today Outright FRAUD, any number of ruses to get victims to give up personal info & send funds Telemarketing, directly or via a lead generator, often with some degree of faulty consents Debt collection, incl. those purchased by 3rd parties Legitimate reminders & notifications Charity, political & survey calls, sometimes with for-profit motives Consumers face an endless onslaught of calls Many callers are evasive and/or rude Automation magnifies errors 10

How it works: Calls & $$$ Follow Same Flow Caller (typically overseas fraudster or US-based telemarketer): Fronts money for calling campaign Spends $1,000 per million robocalls Pays anonymously via PayPal Gateway or Origination Provider accepts payment to complete calls Providers pay each other in turn as call proceeds; each keeps a margin Intermediate provider(s) pass calls along Calls reach potential victims; some press 1 to talk to an agent Human closer extracts $50 - $500 - $5,000 - $50,000 from vulnerable Usually via gift cards or foreign wire transfer not traceable to recipient Good business for Caller/Fraudster and their provider! 11

Frequently Asked Questions Q: How do robocallers get the phone numbers displayed on caller ID? A: They make them up. Imagine if the DMV let you draw your own plate. Q: How do they get my telephone number? A: Some dial randomly and some use information entered on-line. But usually they are working from lists scraped from public directories or other sources on the internet. Q: Why do they ask for gift cards? A: Gift cards are anonymous, untraceable, easy to convert to cash. Q: How do they know my car warranty is expiring? A: They don t. The recording tells a million people, Your warranty is expiring. Some with expiring warranties press 1 (so do some others). Q: My name is on the DNC list; why did they call me? A: These callers are operating illegally. One more violation does not bother them. Q: Why do they call me when I don t speak Chinese? A: The computer calls millions of people. The ones that understand Chinese press 1. The others are just confused. Q: Are the robocallers in this country? A: About half of the calls start in the US. We can often track down the phone provider that is responsible for transmitting the call and make them stop. Q: The caller-ID said they were in Indianapolis. Can you go arrest them? A: Usually the caller-ID is made up. The caller could be in Indiana or India. 12

Traceback Process Sample Cycle Originating Provider engages w/ Caller to mitigate campaign else Intermediate Provider Engages w/ Originating Provider Hop 1: Verizon Wireless Hop 2: Pluto Telecom Hop 3: Daylight VoIP Hop 4: CallsRUS Hop 5: SuperTel Hop 6: Rogue River Tel Terminating Provider Traceback Caller FROM: 408-555-1215 TO: 408-555-9833 AT: 2021-08-12 9:45 PDT Originating Provider Intermediate Provider Intermediate Provider Intermediate Provider 13 Secure Traceback Portal

Sample Comments from Providers What the Provider Tells Us What We Found We respond promptly to every traceback. That is our robocall mitigation solution. This is completely inadequate but a common claim. A traceback indicates the provider s RMP is failing. This enforcement inquiry was the first I d heard about a potential problem. You previously received tracebacks and/or questions from other providers indicating there was a problem. The tracebacks you identified are a few exceptions out of the millions of legal calls that we handle every day. Those calls were the tip of the iceberg. Most of your calls are illegal robocalls. There was no way we could have known that our customers were sending us illegal calls Had you analyzed your CDRs the way we did, the illegal robocalling would have been apparent. As soon as we get a traceback, we block the ANI. The robocaller uses millions of different ANIs so the block has no effect. We are a small operation and do not have the resources to continuously monitor our customers. There are third-party services that can assist with monitoring. We are too far away from the call originator to spot illegal calls. Some intermediate providers are passing through or aggregating bad traffic they could have caught. 14

Robocall Economics Americans receive 4 Billion robocalls every month; half are illegal @ = 10 Originating providers get paid about $2 million/month by illegal callers in exchange for putting those calls onto the network. 15

Trickle-Down Robonomics Typical robocalls hop through 4 or more providers en route to the victims Intermediate Provider Illegal Robocaller Intermediate Provider Originating Provider $24 M Intermediate Provider Terminating Provider $15 M $19 M $12 M $5 M Every provider in the path charges its upstream a fee for those calls In aggregate, the US telecom industry gets about $75 million in revenue annually to deliver illegal robocalls to Americans. To the extent that we are successful in stopping these calls: Providers will lose that revenue Salespeople will no longer get commissions on that traffic Larger providers that were carrying the calls will lose revenue & profits The providers for whom this is their primary business will go bust 16

Why is stopping the calls so hard? 50+ years ago, the United States put a man on the moon The feat was accomplished less than 10 years after the start of the Apollo project. The original TCPA was passed in 1991, over 30 years ago The volume of robocalls billions per month is fairly steady-state Why is it so hard for smart people to mitigate this scourge? Because unlike the moon landing, we have a small global army fighting very hard to keep making and facilitating these calls 17

Perspectives from the Robocalling Ecosystem For a telemarketing firm making millions of calls each week this is how they make a living For phone companies serving the telemarketing companies this contributes to THEIR livelihood They focus on the dozens or hundreds of people that respond to their calls, not the millions that are annoyed They view themselves as white-collar savvy business professionals The people in these businesses are not about to willingly give up the income they are relying on to pay their mortgage and send their kids to college. 18

Progress! Ten years ago, the sources of these robocalls were a mystery Caller-ID was rampantly spoofed Callers and their facilitating providers were obfuscating their whereabouts Now in many cases we know who they are and where they are We trace back sample calls to their origin STIR/SHAKEN requires originating providers to sign each call Yet the callers and their providers persist They ll claim they have consent to call (obviating many of the rules) And/or a provider terminates a relationship, only to have it pop up elsewhere Enforcement community FCC, FTC and especially State AGs are on it Warning letters, fines and lawsuits still working to address the scale of the problem 19

Power to the victims The Telephone Consumer Protection Act requires that the caller have consent to make prerecorded calls to cell phones And written consent to send prerecorded calls that include solicitations to buy goods or services to both cell phones and residential (landlines). Every call made in violation of these rules entitles the person called to $500 per call, or $1500 call for intentional violations. The problem is finding the caller and collecting from them. Scam callers are well hidden by their originating providers, but complaints may trigger enforcement 20

Dealing with illegal calls On a telemarketing call, try to find out the name of the seller of the goods or services. On any unwanted robocall clearly and unmistakably say Stop calling me This acts as an automatic revocation of any consent that has supposedly been provided Contact an attorney expert in the TCPA area use the website of the National Association of Consumer Advocates https://www.consumeradvocates.org/findanattorney/ 21

A Word About Text Messages There are some similarities between robocalls & robotexts There are also some important technical differences SOME of the anti-robocalling rules also apply to texts Industry is being more aggressive and creative in their attempts to stop spam texts By volume texting is a far smaller problem, but it will grow if left unchecked NEVER, NEVER, NEVER press on a URL on a text unless you are sure you know the source of text this can be the start of a scam interaction. Because of the extensive scams employed through the P2P platform known as Zelle, we recommend against keeping the app on your smartphone. Report illegal texts to 7726 (S-P-A-M) copy the text and send it to that number. 22

Helping people who have been scammed There are significant tools Banks must refund moneys stolen by scammers directly from bank accounts under the Electronic Funds Transfer Act Almost all thefts from credit cards are recoverable Both require quick action See this article for more information: https://library.nclc.org/article/getting-money-back-scammed- consumers Also report to the FTC, the FCC, your local AG s office -- everyone 23

Long Term Protections Put All Your Numbers on the Do-Not-Call List Federal plus your state if it has its own DNC list DNC won t stop most calls but it does provide much better legal standing against the telemarketers Report violations via the web to the FCC, FTC, your state AG > aggregated complaints drive action by enforcers Be Skeptical Don t share any information with a caller you do not know or expect Do not ever, ever provide payment information to any caller (or texter) unless you are positive you know who they are (scammers imitate your bank all the time) Ask the caller to send their message in writing (either email or snail-mail) Do not click on links in text messages Avoid on-line teasers that lead to robocalls When surfing for insurance or other services, you call them vs. signing up for their calls Do not engage in on-line sweepstakes, secret-shopper services, claim your prize and other come-ons 24

Long Term Protections - 2 Do not enter your phone number and email on to websites Here is why -- https://www.nytimes.com/2019/08/15/technology/personaltech/i- shared-my-phone-number-i-learned-i-shouldnt-have.html Better to get a Google Voice extra number, the messages for which you can check online, but which does not ring on your phone. 25

Additional resources For attorneys you can join NCLC s Robocall listserv go here to apply: https://nclc.salsalabs.org/ListservSite/index.html -- for timely information on robocall updates For attorneys NCLC s online treatise Federal Deception Law manual includes two up-to-date, detailed chapters on the rules for and litigation strategies to deal with illegal calls. Subscription is required. 26