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TRACED Act Pt. 2: Who's Robocalling Us and When Are They Stopping?

Following up from our previous post, we'll be taking a look at who's getting targeted and who's doing the targeting. We'll take a look at companies that have been caught and punished, and also look at the timetable for the TRACED Act to be completely implemented.

Predatory Robocalling Industries

They make it difficult, but those pesky robocalling companies have names and addresses, and we're learning more as regulation is further imposed. There is a wide swath of industries represented, but they all have one consistent feature– they prey on the vulnerable. Some of the most common we've seen are interest rate reduction, weight loss schemes, and medical alert system scams. Identity theft is a major feature as well, wherein a scammer will have some personal information about a caller, but will then try to get them to reveal more important info like a social security number.

All these scams target your wallet– 'Get Rich Quick!', 'Solve Your Problems the Easy Way!' and 'Save Money Now!'. Here's a variety of cases that have been shut down along with their FTC reports via links:

  • In one case, an organization known alternately as “8 Figure Dream Lifestyle,” “Millionaire Mind” and “Online Entrepreneur Academy” enticed consumers to buy memberships to gain access to a “franchise-like opportunity” to sell the organization’s “proven business model” or “blueprint for success”. Members paid between $2,395 and $22,495 to join, and the business claimed they could earn $5,000 to $10,000 in the first two weeks, followed by similarly large sums. The robocalls assured them others were already making millions, so act now before it's too late.

  • In another case, a company called Redwood Scientific sold dissolving oral film strips that were billed to treat everything from smoking to obesity to sexual performance. The calls attempted to auto-enroll victims into subscription plans for the strips. As you can imagine, the product did not deliver on its promises.

  • The FTC also looked at an organization called Life Management Services, which allegedly netted $15.6 million from consumers who thought they were reorganizing their credit card debt through an interest rate reduction service. This organization originated tens of millions of calls claiming they were from a generic department like “bank card services” or a “credit assistance program.” In others, the group said they represented a “licensed enrollment center” for companies such as Visa or Mastercard.

Some companies were not explicitly scams and even provided a valuable service, but their brute force cold calling methods were disruptive and they got shut down as well:

  • An organization, called Media Mix 365, generated “leads” for home solar energy companies. They would go by other company names and they were relentless with calling their leads. They called a single number 1,000 times in a year and placed millions of nuisance calls to others.

  • A company called Lifewatch was a prolific spoofer, the FTC said, sending calls to consumers’ phones that looked like they may have been coming from familiar numbers or numbers within the same area code. Their product is a health monitoring system that certainly provides a positive impact, but deceptively targeting elderly is not the way you help people.

  • One group sold a “free” medical alert system and fraudulently claimed the system was endorsed by the American Heart Association or AARP. On the calls, people were told that they wouldn’t be charged for the product unless it was “activated,” but their credit cards were charged immediately

In the first group of cases involving fraud allegations, such as the 8 Figure Dream Lifestyle case, the FTC is able to freeze defendants’ assets and work to attempt to get money back for victims. In the other cases, where consumers may have been receiving real products but spammers were violating robocalling rules, the FTC usually seeks to simply fine the organization in question. Hopefully, these actions will act as a great enough deterrent to any copy cats.

Other Robocalling Industries

Not all industries using robocalling technology are predatory though, and they have been pushing back against these regulations. These legitimate company's are angered that their auto-dialing features are now be labeled as 'Telemarketer'- one of the features of the STIR/SHAKEN call authentication framework. The Credit Union National Association (CUNA) along with similar financial trade organizations filed formal comments to the FCC. Their concerns are legitimate as there have already been specific examples of robocall notifications being blocked while serving their customers. Other industries that have made similar complaints include healthcare providers, security services, and food deliveries. These complaints will be reviewed and considered over the eighteen month roll out of this law.

There is another space where these robocalls have played a part that could debatably be considered predatory, that's politics. In one operation revealed at the end of 2019, a company allegedly spread misinformation about a political candidate in California. The Federal Communications Commission proposed a nearly $10 million fine for the suspected originator of the calls made shortly before California’s 2018 primary election for the state assembly. Robocalling and robo-surveys have been a longstanding feature of election season, so you can imagine specific provisions for these cases will be monitored by the lawmakers closely.

Target Markets

As we've mentioned before, these robocalling companies use elaborate networks of forwarded calls and virtual private networks. Automated dialers, many originating in India, deliver a phone call that appears to be from America. After these deceptive tactics are in place, it appears that the majority of callers were technically based in Florida and California. Once they're dialing from an american number, there's still methods to make the number look local, spoofing as we've mentioned before. These tactics instill a false sense of trust for those that are targeted. The targets, like all direct marketing, can come from informed data models and trend analysis. There are proven, legally compliant methods that many marketing agencies use to build a targeted database. Older, lower income people will often be the target of predatory scams, unfortunately.

With scammers, the legal targeting method is often not their primary approach. Many of these robocallers use information gathered about the person from data breaches to appear as an authentic source. From Equifax to Facebook, we know there's many ways millions of records have slipped into the black markets of data. Victims of these scams said the callers knew their home address, usernames, passwords and even their entire Social Security Number. With increased scrutiny on these companies, hopefully we'll see the government shut down these operations and get to the source of these data breaches too.

So who gets the most robocalls? We have data from a tech startup that helped people stop robocalling before the TRACED Act was passed. Alex Quilici, CEO, created YouMail, a robocall blocking app, and from their efforts we can see who and where the scammers are targeting.The data indicates that the southern U.S. is being targeted by scams more than any other region, with five southern states making the YouMail Robocall Index’s top 10 list and 53 southern cities making the top 100 list. Alex Quilici says this is for a number of reasons: The median age in the South is older, and scams tend to target older individuals; economic conditions are worse in the South, making get rich schemes more attractive and loan scams more believable; and because Southerners are “more polite” and “answer the phone more.”

Southern hospitality apparently has its downsides and that's unfortunate, but hopefully the regulations put in place will put a stop to this. “The evidence we’ve started to gather is the more you answer the phone, the more calls you get; and in the South, they answer the phone more,” said Quilici. Let's hope our friends in the South have fewer disruptive phone calls and more time on their great southern cooking.

Schedule for Change

As mentioned in the previous post, many features of this law will come in phases. We should be optimistic as the SHAKEN/STIR framework is already getting implemented and the deadline isn't til the end of the year. Nowadays, we don't always hear about laws being ahead of schedule. When there's bipartisan support and overwhelming popular backing, it's refreshing to see positive change happen so smoothly. Here's the official schedule for the TRACED Act:

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