Big Telecom Companies Ignore Phone Scammers

Last week, one of my colleagues posted an urgent message on our internal idea-sharing group.

She’d received a robocall from someone purporting to be from the Social Security Administration.

It said: “We had to suspend your Social Security number for suspicious activity. Press 1 to continue.”

Her heart skipped a beat, she said … and she’s decades away from reliance on Social Security.

Fortunately, she didn’t “press 1 to continue.” She realized she was being scammed.

She wanted to warn us.

Imagine how a retired person would react if a caller said they would lose their Social Security benefits, unless they handed over personal information. Or if they were threatened with arrest, deportation or loss of their driver’s license unless they paid “back taxes” to the “IRS.”

All too often, vulnerable people fall for it … and the price is reckoned in more than mere money.

The Wall Street Journal recently reported that 82-year-old Marjorie Jones of Moss Bluff, Louisiana, depleted her retirement savings, took out a reverse mortgage and cashed in a life insurance policy.

She gave it all to a scammer who promised her a multimillion-dollar sweepstakes jackpot if she paid the taxes on it upfront.

When she realized what had happened, she committed suicide.

Marjorie is one of tens of thousands of elderly Americans losing everything to a scam … and it’s getting worse by the day…

The Scum of the Earth vs. Grandma

Telephone scammers steal $37 billion a year from elderly Americans.

And it’s about to get much, much worse.

I speak from experience. Two older relatives contacted me in the last few days about suspicious calls.

I get dozens of scam calls every day on my own landline and mobile phone. I even get scam calls on my private, unlisted Skype number.

It’s gotten so bad that I barely answer any calls anymore unless it’s a number already in my address book.

I’m not alone.

Online caller-ID and call-blocking service provider First Orion recently released a report on the state of phone scamming.

First, it said, nearly 70% of frauds in 2017 were perpetrated by phone. Email and web fraud, once ubiquitous, are now less than 10% of the total. Spam filters are working.

Reflecting this shift, First Orion found that scam calls in the U.S. rose from 14.4% of all calls in the second quarter of 2017 to over 31% just a year later.

It predicts scams will rise to over 42% of all calls by March 2019.

Let that sink in: Just a few months from now, nearly half of all calls in the United States will be from scammers.

A 1-Armed Race

There’s an arms race on between scammers and U.S. phone companies.

The scammers are winning … because the phone companies aren’t really fighting back.

For example, First Orion found that when U.S. carriers adopted technology to block landline scams, scammers quickly shifted to mobile.

As carriers tried to catch up, scammers adopted “neighborhood spoofing.” This uses a number matching the area code and three-digit prefix of the target, increasing the likelihood of an answer. By early next year, over 90% of scam calls will use neighborhood spoofing.

To make matters worse, the “spoofed” numbers are valid numbers owned by real mobile customers. The scammers use technology that presents these real numbers as their own caller ID.

As disgusted recipients report these “spoofed” numbers to one of the growing number of services that offer personalized call blocking — I use this one — millions of innocent people will be shut out of the U.S. phone system.

If We Can Send a Man to the Moon…

Why on Earth is this happening in the most advanced country in the world?

From the scammers’ perspective, the answer is simple. They want to get vulnerable people like Marjorie Jones on the line so they can steal their money.

But to get through to them, they must robodial thousands of numbers until someone answers.

With the latest technology, doing that is practically costless. That’s why the entire nation faces an epidemic of calls from increasingly sophisticated scammers.

But that doesn’t explain why neither U.S. phone companies nor the U.S. government has done something to stop this.

Let’s dispense with the government angle first.

Under Chairman Ajit Pai, the Federal Communications Commission is chiefly concerned with rolling back regulations that impede the monopoly profits of Big Telecoms. Consumer welfare is a distant second … if that.

U.S. telecoms companies, on the other hand, suffer no real harm by allowing the scammers to dial their customers. It doesn’t cost them anything … whereas adopting the technology to block scammers would.

Big Telecoms can afford to ignore the problem. Most Americans have a choice of only one or two mobile providers. It’s not like people are going to stop using their phones, right?

Even if 90% of the calls they get are scams, they reckon, people will continue to pay their fat monthly contract fees so they can call friends and family.

In other words, with no real consequences facing them, U.S. telecoms companies are essentially ignoring the problem.

Which means it’s up to you to solve it.

And next week, I’m going to tell you how.

Kind regards,

Ted Bauman

Editor, The Bauman Letter

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