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Departments: Washington Notebook

Do Not Call

The list is leaking like a sieve, and Massachusetts residents are among those complaining the loudest

BY: Shawn Zeller
Issue: Summer 2014

the federal trade Commission’s Do Not Call Registry, once an effective deterrent to unwanted telemarketing calls, is now a toothless tiger. Telemarketing scam artists have found ways around the registry, as reflected in the rising number of complaints from angry consumers. Americans filed more than 3.7 million complaints about unwanted phone calls last year, more than twice as many as were filed in 2010, and no quick fix appears to be in sight.

Massachusetts residents are among those complaining the loudest. According to FTC records, Massachusetts ranks fourth in the nation in terms of per capita Do Not Call registrations, with more than 85 percent of the state’s residents signed up. Only New Hampshire, Connecticut, and Colorado have a higher percentage of residents on the Do Not Call list.

The problem for Congress and the FTC is that there’s little government can do to block the rising tide of calls. Few of the complaints pouring into the FTC are about calls from legitimate companies. Instead, the complaints are mostly about calls from companies using cheap Internet-based calling technology to make millions of calls without much fear of consequence. The scam artists are offering to help reduce credit card interest rates or to fix computer virus problems, but typically provide no service after consumers provide a credit card number.

The FTC is hoping that new technology—allowing people to filter calls the way they filter spam emails—is the answer. But phone carriers are reluctant to offer the new call-blocking technology. They make big money carrying telemarketing calls and even the most optimistic prognosticators think it may be years before most Americans gain access to call filters. For the short term, then, expect the evening disruptions to get worse, before they get better.

“The problem is so pervasive that even if we threw every law enforcement resource at it, we couldn’t stop the gigantic tidal wave of calls,” says Bikram Bandy, the coordinator of the FTC’s Do Not Call program.

By routing their calls through a variety of phone networks and faking the information that appears on caller ID machines, the scammers are making it nearly impossible for the FTC to track them down. Even when the agency figures out who the culprit is, the FTC is finding that many of the call centers are overseas in poor, English-speaking countries such as India and Pakistan, beyond the reach of US law enforcement.
Phone carriers say proposals have flaws.
“Because of the evolving technology, the challenge is keeping up,” says Delara Derakhshani, who is a policy counsel for Consumers Union, an advocacy group that supports tougher Do Not Call Registry enforcement. Her group put together a petition signed by more than 100,000 consumers demanding that regulators crack down on companies who “robocall” consumers using automated dialers and recorded voices to market scams. Those tactics keep costs low for the telemarketers (the FTC estimates robocallers are paying as little as a penny a minute), since only consumers who agree to be connected to a live operator hear the full sales pitch. “With the advent of robocalling, it’s become easier and cheaper to harass consumers,” says Derakhshani.

She is hoping for an “all-of-the-above” response from Washington that would include new enforcement powers as well as incentives for phone carriers to adopt call-filtering technology. But, like much else in Washington, potential solutions are caught up in partisan gridlock.

During a Senate Commerce Committee hearing on robocalling last year, the top Republican on the panel, Nevada’s Dean Heller, said he saw private sector solutions, such as call-filtering technology, as the best approach. By contrast, the committee’s chairwoman, Democrat Claire McCaskill of Missouri, wanted to make it more difficult to fake caller ID information and to increase criminal penalties for telemarketers engaging in fraud. She also said Congress should ban anyone from calling numbers on the Do Not Call Registry, including the politicians, charities, and research firms that Congress exempted from the do-not-call rules.

For its part, the FTC says it needs more powers to regulate phone carriers. Currently, the FTC says it has no authority to do anything about carriers it believes are complicit in the sudden rise in unwanted calls. As of now, no one in Congress has introduced legislation to make these changes.

Since 2003, the FTC has brought 105 enforcement actions against companies and telemarketers and resolved 80 of them so far. The agency has assessed more than $41 million in civil penalties and confiscated another $33 million in profits from the firms who made the illegal calls. Last year, the agency said it exacted its largest fine ever for Do Not Call Registry violations, hitting the Florida-based Mortgage Investors Corp., which refinances veterans’ home loans, with a $7.5 million fine.

The agency is encouraging the private sector to take matters into its own hands, urging an Internet industry group to set engineering standards that would make it harder to fake caller ID numbers. The agency also sponsored a contest last year, offering prize money for the best idea to stop robocalls. It gave out three awards, two $25,000 prizes to independent software developers and one large company prize, with no cash award, to two Google engineers. All of the ideas focused on crowd-sourcing the problem, using consumer complaints and call patterns to identify robocalls and block them.

“A decade ago, people’s inboxes were barraged with unwanted spam emails. But the industry created pretty good spam filters that keep most email users relatively spam free. This is the same idea,” says Bandy, who is pressing phone carriers to make call-filtering as ubiquitous as voice mail and caller ID.

One of the software developers who won the FTC prize, Aaron Foss, has begun to market his product, Nomorobo, to phone carriers. The software flags numbers from which thousands of calls are being made in quick succession, or from which calls to many similar phone numbers are made at the same time. The numbers are added to a blacklist and all calls from them are subsequently blocked. The consumer’s phone never rings.

Foss, who lives on Long Island, admits it’s possible for legitimate calls to get caught in the system, so any blocked caller is given an opportunity to enter a two-digit code to be put through. That would allow human callers to get through but would stymie dialing machines.

So far, though, only Internet-based phone carriers have bought the system. Foss says he suspects other phone carriers haven’t purchased his software because robocalls are too lucrative for them. It’s akin, he says, to the way the Postal Service doesn’t want to cut back on the junk mail it’s paid to deliver.

But the carriers contend that widespread adoption of call filtering would put them in legal jeopardy because of the potential for blocking legitimate calls. They also say the technology would likely fail to stop the problem.

“Today’s solution could very well turn into tomorrow’s Maginot Line,” Kevin Rupy, the senior director of law and policy for the major phone carriers’ trade group, the United States Telecom Association, told McCaskill’s committee last year about the notion that new technology can fix the problem. “It could have unintended, adverse consequences.”

Rupy says that all of the proposed ideas have serious flaws. Blacklists based on calling patterns could block legitimate calls, such as those from an airline seeking to alert passengers to weather-related delays. Since the filters use the fake numbers appearing on caller IDs to create blacklists, they will also block calls from the legitimate callers who own those numbers. Rupy says the current regulatory regime works well enough, by targeting bad actors.

But Foss and other companies offering filtering technology, such as Primus Canada, a phone carrier in Ontario that has its own system, say the risks are overstated and that any snafus would be caught and corrected quickly. To rely on the Do Not Call list and the FTC’s enforcement means it will only get worse, says Foss. “The Do Not Call list was set up to solve a different problem than our current problem,” he says. “A lot of reputable companies were doing telemarketing to drum up business and there was no way to tell them you didn’t want to be called. The FTC solved that problem pretty well. But then this new breed of illegal robocallers came up and that is the scourge we face right now.”
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