The FCC Fined Robocallers $208 Mil. It’s Collected $6,790 Ajit Pai, FCC Chairman Is Incompetent (#GotBitcoin?)
America’s telecommunications watchdogs have levied hefty financial penalties against illegal robocallers and demanded that bad actors repay millions to their victims. But years later, little money has been collected. The FCC Fined Robocallers $208 Mil. It’s Collected $6,790 Ajit Pai, FCC Chairman Is Incompetent (#GotBitcoin?)
U.S. telecom regulators impose penalties and seek to recoup ill-gotten gains from robocallers, but have struggled to collect.
Since 2015, the Federal Communications Commission has ordered violators of the Telephone Consumer Protection Act, a law governing telemarketing and robodialing, to pay $208.4 million. That sum includes so-called forfeiture orders in cases involving robocalling, Do Not Call Registry and telephone solicitation violations.
So far, the government has collected $6,790 of that amount, according to records obtained by The Wall Street Journal through a Freedom of Information Act request.
The total amount of money secured by the Federal Trade Commission through court judgments in cases involving civil penalties for robocalls or National Do Not Call Registry-related violations, plus the sum requested for consumer redress in fraud-related cases, is $1.5 billion since 2004. It has collected $121 million of that total, said Ian Barlow, coordinator of the agency’s Do Not Call program, or about 8%. The agency operates the National Do Not Call Registry and regulates telemarketing.
“That number stands on its own. We’re proud of it; we think our enforcement program is pretty strong,” Mr. Barlow said.
An FCC spokesman said his agency lacks the authority to enforce the forfeiture orders it issues and has passed all unpaid penalties to the Justice Department, which has the power to collect the fines. Many of the spoofers and robocallers the agency tries to punish are individuals and small operations, he added, which means they are at times unable to pay the full penalties.
“Fines serve to penalize bad conduct and deter future misconduct,” the FCC spokesman said. A spokeswoman for the Justice Department, which can settle or drop cases, declined to comment.
The dearth of financial penalties collected by the U.S. government for violations of telemarketing and auto-dialing rules shows the limits the sister regulators face in putting a stop to illegal robocalls. It also shows why the threat of large fines can fail to deter bad actors.
“It’s great that we have these laws; it’s great that we have public enforcement, but because there are so many calls and so many callers, the public enforcement is a joke,” said Margot Saunders, senior counsel at consumer advocacy group National Consumer Law Center. “It doesn’t even make a dent.”
There were 26.3 billion unwanted robocalls made to U.S. mobile phones in 2018, by one measure from robocall-blocking app Hiya. Another company that offers such services, YouMail Inc., puts the number of unwanted and illegal robocalls made in the U.S. last year even higher, at nearly 48 billion.
AT&T Inc. and other large wireless carriers are currently working to implement a call-verification system by the end of the year that regulators and telecom industry executives say will help consumers identify legitimate calls. That system won’t block calls, but will signal that the caller has the right to use a given number and that it hasn’t been spoofed.
The FCC and FTC say there are challenges to collecting penalties for robocall-related wrongdoing. Small illegal operations can quickly close up shop and change their names, enforcement officials say. Some are based overseas, making it difficult to identify or seize assets.
Fines are “a deterrent on legitimate companies that have real assets in the U.S.,” said Daniel Delnero, a senior attorney at Squire Patton Boggs in Atlanta that advises companies on consumer class-action suits related to the Telephone Consumer Protection Act.
For a spam caller or overseas operator, “that’s really just pushing for Social Security numbers or bank account information—it’s less of a deterrent, because they don’t really have anything that could be collected anyway,” Mr. Delnero said.
In many FTC cases involving civil penalties, the agency secures judgments for large fines and settles for a smaller sum, contingent upon the accused person or company being transparent about their assets, Mr. Barlow said. Congress requires the agency to consider an individual’s ability to pay.
In the 2017 case of a “recidivist robocaller” that placed illegal robocalls for nearly a decade, for example, two defendants faced civil penalties of $2.7 million in a California suit filed by the FTC. They were each ultimately ordered to pay $225,000 or less, if their financial disclosures were complete and accurate.
Ajit Pai, chairman of the FCC since January 2017, said in an interview on robocalls earlier this month that in the past, few financial penalties have been collected, but that he is working to change that. It is “important to send a signal to other would-be robocallers that you’re not going to be able to get away with it,” Mr. Pai said.
Still, none of the $202 million demanded in what the FCC calls forfeiture orders against alleged rulebreakers during Mr. Pai’s tenure has been collected.
The agency in May 2018, for example, fined a Florida-based company and its top executive $120 million for making 100 million illegal robocalls during a three-month period in 2016. Agency records as of late December indicate that no funds had been collected.
Robocall Scams Exist Because They Work—One Woman’s Story Shows How
A caller impersonating an FBI agent persuaded Nina Belis to drain close to $340,000 from her bank accounts.
The FBI agent sounded official on the phone. He gave Nina Belis his badge number and a story about how her identity had been compromised. She gave him her life’s savings.
For most Americans, robocalls are an annoyance. For Ms. Belis, an oncology nurse in her 60s, a law-enforcement impersonation scam that appeared to have started with a robocall drew her into financial losses that sapped her family’s nest egg and derailed her retirement.
The scale of her loss—nearly $340,000—and the ease with which the money was moved out of her accounts show why scam calls persist. They work, even on people who think they would never fall for one.
The caller preyed on what psychologists describe as a habitual reliance on people in authority, and kept Ms. Belis in a state of isolation and heightened emotion to cloud her judgment. He told Ms. Belis her Social Security number had been stolen and that crimes had been committed under her name, and persuaded her to transfer assets to accounts he controlled on the pretext of protecting the funds.
He coached the New York-area resident on how to satisfy compliance questions at financial institutions as she moved the funds and kept her on the phone for hours at a time.
Law-enforcement, telecom executives and psychologists who have reviewed Ms. Belis’s case say it is unique given how much money was lost. It also has all the hallmarks of government impersonation scams that have snared thousands of other consumers. [See Tips On How To Avoid Robocall Scams Below.]
In the first nine months of the year, the Federal Trade Commission received more than 139,000 reports of fraud in which people claimed to be from the Social Security Administration, with losses totaling nearly $30 million.
In New York City alone, consumers lost $5.8 million in 523 Social Security Administration impostor scams between January and late October, according to the New York Police Department. Many of those used law-enforcement impostors to help facilitate the fraud.
The department began tracking that type of theft in greater detail this year for the first time because reports of them spiked. Victims in New York City ranged in age from teenagers to octogenarians.
The uptick in such theft speaks to a dangerous truth for consumers: It’s inexpensive and easy for fraudsters to blast out thousands of internet-based phone calls, and hard for law enforcement to trace those calls back to their origins. Even calls from overseas can be made to appear to be from a local area code.
Scammers benefit from the sheer volume of low-cost calls they can make with web technology, which has become ubiquitous in the past decade, as well as a trove of information on consumers’ email and physical addresses online, and on the dark web from data breaches, according to cybersecurity and law-enforcement officials.
Banks are required to have procedures in place to flag suspect transactions to regulators, but they have some flexibility to set those parameters.
And the coaching many scammers give their victims provides them with plausible answers to questions raised. In general, there are few limits to a customer’s ability to move funds at will.
Ms. Belis knew about phone-based scams, but thought they had to do with fake insurance companies or callers who claimed a relative was in the hospital. “I never heard about things like what happened with me,” Ms. Belis said.
Ms. Belis had just started her morning shift at an ambulatory care center when she got a voice mail on Feb. 27, a Wednesday. It was from someone who claimed to be part of the “attorney general’s Social Security office” and said there was an issue with her identity.
“I was terrified, of course,” she said, and quickly called back. She gave the operator her name, and she was connected with the man posing as an FBI agent. He verified Ms. Belis’s name, address and email address and said her identity had been stolen.
Crimes ranging from drug deals to illicit money transfers had been committed under her name, the man said, and while he knew she wasn’t responsible, she would have to cooperate with the FBI and help with their investigation or be arrested. The agency would help her erase her current Social Security number and set up a new one. The combination of threats and assurances of help is common and convincing, law-enforcement officials and psychologists say.
To do that, he told her she would have to move her money out of existing accounts to ones he said were protected by the government or her assets would be frozen permanently.
A few years from retirement, Ms. Belis had emigrated from Eastern Europe, where she was a doctor, about 20 years ago with her husband, who had been a surgeon there. She said she was fearful her savings would become inaccessible.
The scammer asked Ms. Belis about her financial assets, and she told him where her accounts were and the amounts they held.
That conversation set off a string of phone calls and text messages between Ms. Belis and the scammer that spanned 50 of the next 72 hours, and extended further into the following week, records from her wireless carrier show.
The voice mail that started the scam came at a difficult time for Ms. Belis. Her husband was recovering from cancer treatment and one of her daughters had recently suffered a stillbirth.
“What’s being played on is a habitual or socially imposed reliance on people in authority,” Stephen Lea, professor emeritus at Exeter University and a psychologist who has studied fraud, said of law-enforcement-impersonation scams. “That uniform or that representation elicits trust in a situation where you might be less likely to trust.”
In some such frauds, scammers give victims phone numbers of accomplices who they say are local law-enforcement agents to help them navigate the process, sometimes using real officers’ names. That added verification contributes to their believability.
The scammer told Ms. Belis to remain on the phone, leave work and not discuss the problem with anyone.
She worried about her patients, but asked her manager for permission to leave, staying on the phone with her maroon folding phone case closed over the face of the smartphone while it remained connected.
Doug Shadel, state director in Washington for AARP, an organization that educates and assists retired people, spent more than a decade as an investigator in the state attorney general’s office and said criminals in theft cases capitalize on pulling victims into the “ether”—a mental state of heightened emotion, whether it be fear or excitement, that clouds rational judgment.
The scammer told her to make sure she had her driver’s license, pen and paper and phone charger, then told her to get in a cab.
Ms. Belis kept receipts for her taxi rides and an eventual two-night hotel stay and texted them to her scammer at his instruction. He would submit them to a courthouse for reimbursement, he said, a lie that gave her comfort he was who he claimed to be.
Her first stop was a Manhattan credit union where she and her husband had accounts including certificates of deposit.
Stand outside the bank, the scammer told Ms. Belis, don’t talk on the phone in the branch and don’t hang up. Send him a photo of the transfer request. If the teller asks, say the money is for apartment renovations.
Law-enforcement and bank officials said it can be difficult for banks to strike a balance between allowing consumers to do what they want with their money and asking questions to help them avoid scams, particularly when they are coached on how to answer compliance questions.
Many bank efforts to fight fraud take place after a transaction already goes through. In general, banks are required to report transactions of $10,000 or more. They must also report suspected money laundering or other crimes.
Many banks flag suspicious transactions of more than $5,000, and they must report certain types of activity that are atypical for a given customer. International transfers are typically blocked if the recipient is on a sanctioned list but otherwise usually proceed, even if they involve large amounts of money.
Ms. Belis initiated two transfers that February afternoon to accounts given to her by the scammer at Bank of America that totaled $40,450, her financial records show.
The scammer told Ms. Belis she was being watched by another agent and, as the bank closed for the day, instructed her to rent a hotel room. She told her husband she had to stay the night at work.
Instructions resumed early the next morning. The scammer told her to take a taxi to a credit union where she had an account in New Jersey.
She waited for an hour outside the bank for instructions on where to send the next chunk of money—an account at Panamanian bank Banistmo SA. Ms. Belis bought the taxi driver a cup of coffee and doughnut while they waited.
After sending $19,950 from the New Jersey credit union to the Panamanian account, Ms. Belis headed to Citibank, where she sent $30,500 to a Bank of America account—a different account number from those used the day before but carrying one of the same names.
Her family, meanwhile, was growing worried. She had never spent a night at work and hadn’t been in touch that day with her elderly mother, whom she called daily.
Ms. Belis asked the scammer for permission to call family members, and he told her that her cellphone was wiretapped. She should only use her phone to call him. She stayed another night in the hotel.
The next morning, Friday, brought what appeared to be good news: The agent said he had started to cancel the arrest warrant and the process would be complete once the transfers went through. He asked her to stay at the hotel for another two nights.
Ms. Belis said she became angry and so upset that she shook and asked to go back to her family. She told him she would rather be arrested than stay away from home longer.
The scammer eventually agreed but said she must not discuss the Social Security number issue.
When she returned home, her husband met her at the bus stop and said she looked pale. He had called her co-worker to ask if spending the night at work was normal, and the colleague said no, but he trusted his wife. He thought about going to see her, and then decided that she would likely be home in the morning.
Inside their apartment, Ms. Belis told him her identity had been stolen. While he had some doubts, he believed her and saw that she was scared. She didn’t tell him anything about moving money out of their accounts.
He told her that law-enforcement officials were responsible for investigating the identity theft she described, but she wanted to clear her name. His wife continued to receive calls from a person she said was investigating her case.
Later, at journalist’s request, executives at robocall-blocking services that study telephone network traffic looked at records tied to the phone number Ms. Belis’s caller used. The number was linked to other user-reported scams around the same time, they said.
Jim Tyrrell, senior director of product marketing at TNS Inc., said his company, which works with large carriers, detected about 100 calls from the number in February and a smaller number since then. That is a sign that the number was used for what is called “snowshoe spamming,” he said, in which scammers originate a small number of calls from a large group of phone numbers—spreading out calls to avoid detection, the way a snowshoe spreads a person’s weight out to make it possible to walk on top of snow.
The calls in question appear to have originated in India, said a spokesman for AT&T, Ms. Belis’s carrier at the time, and the number had previously been reported to law-enforcement officials.
Internet-calling technology helps facilitate another tactic popular with scammers: “neighbor spoofing,” in which scammers spoof or fake the number appearing on your smartphone screen to make it look like the caller is close to you. That makes many people more likely to answer the phone.
The number used to scam Ms. Belis was disconnected on Sept. 18 after the Journal notified the company that controlled it that the phone number had been used in a scam. Legitimate companies that sell phone numbers and low-cost internet-based calling services can sometimes be used by scammers to acquire the loads of numbers needed for fraud. Ride-sharing services, school-closure robocalls and businesses often legitimately use the services.
Over the weekend, the scam against Ms. Belis continued. The person called her to ask about her retirement savings, and she filled him in with the details. He told her she had to transfer that money to the government-protected accounts, too.
She needed her husband’s authorization to withdraw those funds and persuaded him to sign, telling him that she would go to jail if she didn’t move the money. She told him about the transfers from the prior week but didn’t show him the documents, so he didn’t know some of the funds had been sent to Panama.
A customer-service representative at her retirement-account administrator asked why she was withdrawing the $273,000 in her account, but the scammer had prepared her to answer questions. She said she was using it to open a business—the fake agent had made her believe that everything about the purported identity-theft investigation had to remain secret. She paid more than $50,000 in taxes when she withdrew the retirement funds on Tuesday, and transferred the rest to her account at Citibank.
On Wednesday, Ms. Belis sent $190,000 from her Citibank account to a second account at the Panama bank Banistmo. She believed the ordeal was over.
After dinner on Sunday, she thought the transaction had cleared and told her husband she was feeling better. He asked to see the paperwork, and she showed it to him. When he saw that the money had been moved to a bank in Panama, alarm bells rang.
“I lost my speech,” he said.
He realized it was fraud, and the couple went to see one of their daughters. They called Citibank that night to stop the transfer, but the fraud department was closed.
They went to the police and filed a report at 8:30 p.m. It was 12 days since she first received the scammer’s voice mail. Ms. Belis’s losses, including taxes she paid when withdrawing her retirement funds, the banking fees and hotel and taxi costs, totaled $337,105.
A Citibank spokesman said the bank encourages customers to be alert to confidence schemes. “In this instance, the beneficiary bank reported that the recipient received the funds on the same day they were sent,” he said. Customers who receive unsolicited and suspicious requests should file reports with law enforcement and contact the bank, he said.
Self Reliance New York Federal Credit Union didn’t respond to requests for comment. Val Bogattchouk, chief executive of Nova UA Federal Credit Union, the New Jersey credit union, said: “Our credit union is very concerned about the ever increasing frequency of fraudulent financial schemes impacting unknowing individuals, including a member of our institution,” adding the credit union works to educate its staff and customers to be vigilant and encourages international regulators to investigate and pursue scammers.
A spokesman for TIAA, the retirement-account administrator, said “customer security is a top priority, and we have robust processes in place to authenticate clients’ transactions.”
A spokeswoman for Banistmo declined to comment.
Ms. Belis said the FBI and NYPD have so far helped her recover about 8% of her money, and she recently learned she may be eligible for part of an additional $10,000 that law-enforcement officials recovered.
The family is in touch with a Citibank manager who works on security and investigations after emailing top executives about the scam. Law-enforcement officials have told her it is unlikely she will get back additional assets, particularly money sent overseas. The FBI declined to comment on the investigation.
The family has changed Ms. Belis’s phone number and purchased a robocall-blocking app. The police told them victims of fraud are far more likely to be approached by new scammers, and to fall for fraud again.
Ms. Belis said she is embarrassed but decided to share her story to help others avoid becoming victims. She had hoped to help raise her grandchildren and travel in retirement but knows those things are no longer possible. She will have to keep working.
“I know my kids won’t leave us alone, but I don’t want to use their money,” she said. “I pray to be able to work full time as long as possible.”
How To Avoid Robocall Scams
Social Security Administration employees do contact citizens by telephone—typically people who recently applied for a benefit or who have requested a call—but never threaten people for information, an agency spokesman said. The agency won’t tell you your Social Security number has been suspended, threaten you with arrest or ask for personal information over the phone, he said. Many agencies, like the Internal Revenue Service, will never call consumers.
Don’t Answer Calls From Numbers You Don’t Recognize
If you receive an unexpected call from a government official, call the agency directly to verify that the individual works for them and that their call to you was legitimate.
Don’t dismiss scams as impossible. While many are skeptical that they would ever fall for such scams, Deputy Inspector Jessica E. Corey, commanding officer of the NYPD’s crime-prevention division, said she reminds them to “think about the people it could happen to in your sphere.”
Read warnings. The NYPD’s Deputy Inspector Corey met with the New York Bankers Association in September to discuss what questions retail bankers should ask customers making transactions that are unusual in scale or destination. The organization made scam warning materials available to its members to show their customers.
Victims of phone-based law-enforcement impersonation and other scams can report incidents to the Federal Bureau of Investigation by calling 1-800-CALL-FBI (225-5324) or going to https://www.fbi.gov/tips, an agency spokeswoman said.
When you report crimes to the FBI include as much detail about the incidents as possible, such as that you have been harmed by a “government official impersonation telephone scam,” and include screenshots or other documents you may have.
The Social Security Administration recently launched an online form at https://oig.ssa.gov to allow consumers to report social security-related scams. The website creates a personal identification number so that if investigators contact the consumer who filed a report, they will know the call is legitimate.
The Federal Trade Commission and Federal Communications Commission also offer websites where consumers can report unwanted calls (https://donotcall.gov/) and consumer complaints (https://consumercomplaints.fcc.gov).
Washington’s New Anti-Robocall Law Won’t Stop the Calls. Here’s Why
Some robocalls are legitimate, and additional prosecutions doesn’t prevent more bad actors from popping up.
In a rare bipartisan achievement, Congress has moved to combat the scourge of robocalls inundating Americans.
Just don’t expect the phone to stop ringing any time soon.
The robocall law, which passed both the House and Senate by wide margins, prods phone companies to cut off illegal marketers or scammers before the phone rings by spotting suspect traffic.
The legislation also boosts penalties for breakers of telephone consumer-protection laws and mandates that government agencies and companies work more closely together in stemming robocalls. The bill must still be signed by President Trump, which is expected given the near-unanimous support by both parties.
Lawmakers, industry and consumer groups say the bill represents significant steps forward, but they also concede that the calls are likely to continue—a reflection of how a lasting solution continues to elude the companies and regulators that control the telephone system.
“This isn’t going to eliminate every robocall,” said Sen. John Thune (R., S.D.), one of the bill’s prime sponsors, in an interview. “But we think it will go a long way toward getting at some of these not only annoying nuisance calls, but more importantly a lot of scam artists that prey on vulnerable populations.”
Even the new law’s name—the TRACED Act, for Telephone Robocall Abuse Criminal Enforcement and Deterrence—makes clear the goal is to deter robocallers rather than eradicate them.
Lawmakers have previously tried and failed to stop robocalls, most prominently with the opening of the National Do Not Call Registry about 15 years ago. (Criminals ignore the list of off-limits numbers.)
Implementing this latest anti-robocall law is likely to take years, telecom industry executives and robocall experts say. New consumer-protection rules will take months to craft and longer to implement. Lawmakers also left aspects of the problem for future study, calling for eight new reports and two new working groups.
Some of the billions of robocalls Americans receive are legitimate, such as calls from a pharmacy telling a customer a prescription is ready. The calls are illegal when used for scams, or when they violate consumer-protection rules such as those against calling someone without their permission using a recorded message.
Here Is A Look At What The Traced Act Does, And What It Doesn’t Do:
What the act does: The Federal Communications Commission now has a longer shot clock to bring a robocall case—up to four years, instead of one or two currently. In an effort to speed up enforcement, the agency also now may take legal action against violators without issuing a warning first, as they have previously been required to do.
The law is designed to push prosecutors to jail violators of telephone consumer-protection laws, recognizing that the government struggles to collect on big-ticket fines from civil litigation. The new law requires the FCC to share evidence of robocall violations with the attorney general, and to disclose how often it does so.
What it doesn’t do: More prosecutions won’t necessarily solve the “Whac-A-Mole” problem: Mass dialing with internet-based technology is so easy that bad actors pop up constantly using new names or locations.
The FCC doesn’t shut robocallers down immediately, instead following an enforcement process that takes months, if not years to play out while authorities gather evidence and make legal filings. On Dec. 12, the agency proposed a roughly $10 million fine for calls that occurred in May 2018. An FCC official said the agency must follow due process.
What the act does: The FCC must empower phone companies to block more calls without fear of a lawsuit, all while not adding new line items on consumers’ bills. The agency has already written some rules with these goals in mind.
The law also backs new requirements to prevent “spoofing,” a practice where robocallers mask their identity with a faked caller ID. Major phone companies have already promised to use call-authentication technology, known as Stir/Shaken. Under the new law any laggards who don’t adopt this technology would have to show the FCC how they are mitigating robocalls.
What it doesn’t do: It isn’t known yet whether the bill will overcome carriers’ historic fears about blocking legitimate calls. For example, phone companies are loath to stop emergency calls, but those calls can be hard to identify.
Curbing “spoofing” also won’t stop swindlers entirely, experts say. Robocallers could obtain blocks of real phone numbers, which are available for rent, and make millions of calls. The new law leaves this issue for future study and gives the FCC regulatory authority to address it.
Lawmakers also dropped from the final bill a provision clarifying the legal definition of “auto-dialer” technology, the equipment used to make robocalls. Proponents of that provision said it would resolve conflicting court rulings about how businesses can legally contact consumers and ensure robocallers can’t tailor their dialing technology to get around telemarketing rules. Mr. Thune believes the FCC should address this issue, a spokesman said.
What the act does: The new law tells the FCC it may publish a list of phone companies found to be facilitating robocalls and “take appropriate enforcement action.” Scammers rely on such companies, paying them fractions of a cent for each call they send through.
What it doesn’t do: Publishing the list isn’t mandatory, and authorities have generally been reluctant to hold phone companies accountable for things their customers do.
In one recent exception, the Federal Trade Commission and Ohio attorney general moved to shut down an internet-based phone company for allegedly participating in a robocall scheme—a first-of-its-kind action.
A senior FCC official said the agency is weighing what it can do when a company is found to be facilitating illegal calls. Options under consideration include taking enforcement action against the firms, or greenlighting phone companies to block calls from problem companies, the official said, without giving a timeline for drafting them.
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