Why Robocalls Are Morphing Unrecognizably … and Coming to Get Us All

By John F. Wasik

When the phone rings, there’s a better chance than ever that a robocaller is on the other end, industry experts say: Automated calls are up 92% since 2017.

More than half are legitimate calls — from, say, your school district or doctor’s office, or politicians running for office (which you can expect more of in the months ahead). But about 44% of the estimated 59 billion robocalls made last year – approximately 26 billion – were placed by scammers, according to the Robocall Index, a national database of autodialed calls compiled by a company that sells services to block them.

Making matters worse, many scam robocalls today are disguised to display local area codes to trick people into picking up the phone.

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What the … ? Did this call come from across the street or around the world? Robocalls and efforts to stop them have both spawned cottage industries, as illustrated by screenshots (above and top) from a lawyer’s video primer.

YouTube/AttorneySteve.com

Many are variations on themes specifically geared to get people to volunteer personal financial information, which can open a door to a swindle:

      “You are being sued…”

         “The IRS has a warrant for your arrest…”

Other recorded calls involve the tantalizing offer of a “free” trip or cruise or a quick and easy way to save on credit card balances. In robocall land, simple, money-saving solutions are delivered right to your phone, as are threats of legal action. Both the light and dark pitches are deceptions.

According to the Federal Trade Commission, law enforcement and consumer agency reports say these scams cost Americans more than $400 million in 2018 – the real number is certainly much higher. Financial institutions usually cover some losses when customers are scammed, particularly on credit card transactions. It’s not known how many consumers are completely out of pocket on these frauds.

Robocalling operations are the latest version of boiler rooms. But instead of shady brokers sitting in cubes dialing for dollars to sell dubious stocks, these operations use technology to find billions of active phone numbers and then place calls to them. While the dialing and initial contact are usually executed by a computer,  real people do the actual pitching and “hooking.”

Like every other aspect of human behavior, technology is transforming fraud. As RealClearInvestigations has previously reported, high tech has given thieves precision tools to target an individual’s bank accounts and other financial records. Robocalls reflect how new technology also allows bad actors to cast wide nets among millions of potential marks, in the hopes of snaring a few. They are working the law of averages.

While recent state and federal legislation may curtail these operations, they won’t shut them down, largely because they are so cheap and easy to launch and run. Access is also a snap: Anyone can set up an Internet-based autodialing system with relatively inexpensive autodialing software and services, ranging from $30 to $170 per month (per user). Other plans offer billing rates of 0.7 cents to 3 cents per minute. Another option for scammers is to buy a VOIP-ready phone, from $90 to $130, and phone service, which starts at $20 a month. Set-up instructions are found by a simple online search. In other words, you, too, can become a robocaller!

“Anyone with no software development experience can set them up,” says Alex Quilici, CEO of YouMail, (Pictured here) which compiles the RoboCall Index. “And you can make 1 million calls for $100 to $200. So there’s a tremendous incentive to annoy millions of people to get your money back.”

VOIP technology and super-fast computers have triggered an explosion of robocalls. Swindlers quickly adopted VOIP because it multiplies their opportunities and makes it hard for spam- and caller-ID software to detect where the calls are coming from – next door, or overseas. They all look the same.

As with any new technology, the cost of using it drops over time as more people adopt it. That’s good for non-profits that want to reach more potential donors. But that also goes for crooks.

With an estimated four out of 10 calls promoting frauds, Quilici says, his company is tracking 1,500 different swindles or “campaigns (pitches),” which he believes are being run by about 750 groups.

“The same group can do multiple campaigns,” Quilici notes, “so it’s up to 750 scammers behind those campaigns, but realistically, we think it’s right now less than 50 that account for the vast majority of calls.” He says the majority of the top robocalling frauds – pitching lower-interest credit cards – are based in India. Travel scams are often pitched from Mexico, Guatemala, the Philippines and Costa Rica.

“Spoofing” — or the ruse of displaying caller IDs that appear to be local, although they could be coming from another continent – is designed to increase the odds the call will be answered. The readily available software programs can typically create the first six digits of the target’s own phone number.

Unlike phishing emails with “get-rich-quick” pitches that can be easily spotted in subject lines, spoofed calls are harder to dismiss, experts say.

“You’re more likely to answer an unfamiliar number if it looks close to yours,” according to AARP, “thinking it could be coming from your doctor’s office, or your child or grandchild’s school.”

Spoofing is hard to stop because it has legitimate purposes, including security. Professionals who want to keep their direct phone numbers private, for example, can use the software so that when they make a call, their company’s main phone number will appear on caller ID instead of their private number.

Quilici, whose company uses an algorithm to extrapolate the amount of fraud based on its customer base of 10 million users, says spoofing “is the biggest problem now,” although he said new federal legislation enacted in January will “make it easier to authenticate calls.”

While the number of people who actually lose money to robocall scams is low – Quilici estimates it at 3% to 5% of total call volume – crooks’ rate of return can still be high since the cost of setting up an automated calling operation is so cheap.

Illegal Pitches

A common robocall scam sends out a message that some service – phone, electricity or water – will be “cut off unless you pay your bill.” Those who get hooked by this swindle wind up sending money to a fraudulent third party.

And you thought Lily Tomlin was annoying: Robocalls are up 92% since 2017.

~Wikipedia

Other scams are aimed at acquiring Social Security, bank account or credit card numbers. One common type of call promises a lower interest rate on a credit card. Just to get things started, potential victims are asked to “confirm” or “verify” the card number, which gives the criminals the opening to steal the card themselves or sell the information to other thieves.

The credit-card pitch is enticing to many Americans, who hold a record $444 billion in card debt, according to NerdWallet. U.S. households on average hold about $7,000 in revolving debt, costing them more than $1,000 a year in interest.

According to Quilici, his company’s tracking list of scams is dominated by debt/interest-rate reduction offers; 10 out of the top 15 fraudulent offers are immediate appeals to save money.

Other robocalls promise a free service or product; “free” medical devices and prizes are popular come-ons. The FTC sued Grand Bahama Cruise Line LLC in January, over its telemarketing operation that promoted free cruises.

The FTC accused the Grand Bahama of violating the decades-old federal Telemarketing Sales Rule, which prohibits making deceptive or misleading claims, and of ignoring the National Do Not Call Registry, established under 2003 legislation. The registry often cannot protect consumers who sign up from unwanted calls, mainly because of their increasing volume (and business-to-business solicitation calls, hugely time-wasting, are exempt).

“After asking several automated survey questions wholly unrelated to the cruises,” the FTC complaint alleges, “the [Grand Bahama] pre-recorded messages typically informed consumers that they were entitled to `two free boarding passes for an all-inclusive cruise to the Bahamas,’ which would cost (an initial) $59 per person in port taxes. Consumers who confirmed their interest in the `free’ cruise offer either received a subsequent call within 24 hours or were immediately transferred to a telemarketer at a telephone call center.”

The FTC, which has partly settled the complaint, alleges that the initial $59 was a come-on often leading to several hundred dollars in additional fees.

From a Federal Trade Commission robocall infographic.

consumer.ftc.gov

The nation’s oldest consumer protection agency, the FTC fields more than 10,000 robocall complaints per day and has filed more than 100 lawsuits against more than 600 companies to date. Still, the agency reports:  “We’ve seen a significant increase in the number of illegal robocalls because Internet-powered phone systems have made it cheap and easy for scammers to make illegal calls from anywhere in the world, and to hide from law enforcement by displaying fake caller ID information.”

New Law and a ‘Robocall Strike Force’

The Federal Communications Commission, which launched a “Robocall Strike Force” four years ago, receives more than 200,000 related complaints a year. The group began working with telecom providers and cellphone manufacturers to begin protecting customers, but disguised calls have put investigators and enforcers at a disadvantage. Although several providers and third parties offer call blocking and caller ID verification products, there is no ubiquitous solution that spans wireless communication networks. To date, the strike force reports robocall abuses are “the No. 1 source of consumer complaints.”

Many hopes are riding on the TRACED Act (Telephone Robocall Abuse Criminal Enforcement and Deterrence), signed into law by President Trump in January. The new law restricts the kinds of calls and pitches that can be made. It requires telecom companies to block robocalls without charge to consumers and ensure that the calls are coming from legitimate numbers. Scammers now face fines of up to $10,000 per call.

The new legislation, however, does not prohibit VOIP calling. While consumers can report the calls, it  is unlikely there will be much enforcement due to the sheer number of them.

Last year, the FTC began a crackdown called “Operation Call it Quits” that shut down four operations responsible for one billion robocalls and 87 new actions with law enforcement agencies in states and counties.

And the FCC, empowered through the recently passed TRACED Act to be the prime enforcement agency on robocalls, is required to write and enforce rules that will quickly identify robocalls.

But few if any are under the illusion the new steps will wipe out the scams. And at least one consumer advocate complains the legislation is weak.

“Although the TRACED Act will help authenticate robocall numbers – and provide a bump in the road for these scams – it won’t require the callers to disclose the names of the companies calling,” observes Margot Saunders, chief counsel for the National Consumer Law Center, a consumer protection group. “And there’s no limit to the amount of numbers that can be used for calling through the Voice Over Internet Protocol (VOIP).”

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(TLB) published this article from Real Clear Investigations with permission and our gratitude for making it available.

Emphasis and some pictorial editing by (TLB)