September 1st, 2020

Vetting Key to Keeping Fraudsters out of Trusted Phone Ecosystem

When it comes to trust in the phone channel, admitting a bad actor into the ecosystem can have crippling effect. Call spoofers, robocallers, and fraudsters that take advantage of loopholes in the system to line their pockets impact players across the ecosystem – including carriers, enterprises, and consumers. 

While progress has been made to combat the problem, it sometimes feels like we’re plugging one hole in the dam only to have a new one pop up. In addition to automatic robocall blocking technologies used by carriers like AT&T, Verizon and others; STIR/SHAKEN call authentication; and FCC Safe Harbors Rulings, several recent high-profile legal cases have demonstrated that the authorities mean business when it comes to carrying illegal calls.  

There’s also been industry-wide support for the FCC’s announcement that USTelecom will lead a new initiative called The Industry Traceback Group. Its mission is to trace the origins of robocalls suspected to be unlawful to ensure carriers and their partners keep them off the cellular network.

All of these actions will help move the needle. But, there’s still more work to be done. Success will require collaboration across the telecom ecosystem, with a focus on thorough vetting to ensure accountability.

What happens when bad actors are provide access to the trusted ecosystem?
A jarring example of fraud on a grand scale is the case of Nick Palumbo. Authorities say that his two small carriers, which he ran out of his home with his wife, together represented one of the most frequent channels through which Social Security imposter calls were funneled into the U.S. from overseas. 

The story exemplifies how phone companies exploit anticompetitive legislation to direct overseas scam calls to smaller VOIP U.S. carriers, who then pass the calls on to bigger carriers. Nick, who amassed a small fortune of $3.2 million through hundreds of millions of calls run through his telecom operation, argued that he was unaware that he was passing along scam calls. 

FTC data and government officials show that scams like this one accounted for at least $38 million in losses by U.S. consumers in 2019. In the end, he was hit with a civil law suit, and arrested.

Because the business model used by these small domestic telecom carriers can support fraud on a massive scale and US law enforcement cannot pursue outside their jurisdiction,  authorities are now targeting these small US carriers for investigation. 

And, they’re trying out an innovative legal approach based on the theory that carriers should be held responsible for enabling bad behavior that passes through their networks. Unsurprisingly, smaller carriers have complained that the government should be targeting the originators of the robocalls, officials say carriers should vet customers before accepting their traffic.

Federal agencies are on board with this approach, recently won injunctions putting the kibosh on two other Internet-based carriers, as well as writing warning letters to dozens of others in the past year.

The Traceback group identify bad actors and those that abet them.
According to Patrick Halley, senior vice president of policy and advocacy at USTelecom, an industry trade group that leads the Industry Traceback Group, expounded, "The combination of the technological ease of making illegal calls — especially outside the U.S. but even within the U.S. — and the fact that there's profit to be made, that's why this keeps happening."

The group will trace back robocalls, starting with where the recipient's carrier that received the calls, then working backwards through all of the carriers that passed it along, until it finds the originating provider.

If the calls are found to be illegal, the Industry Traceback Group will collaborate with government agencies to take action against the robocallers, and every provider that enabled them. Another role of the group is to warn other network providers down the line not to accept certain traffic from known bad actors.

Though USTelecom has been working on the issue for years, Halley said the FCC's official recognition of the group has helped legitimize its work and make it more effective. "Two years ago when we were doing this, a lot of the reaction was, 'Who are you and why are you bothering me?'" Halley said. "Now it's: 'I know who you are, I'm going to respond, I want to help, and I'm going to take action.' It's been a really positive evolution and the government's focus has been really helpful."

Thoroughly vetting customers is vital to the process.
In spite of efforts by authorities, and by carriers and enterprises to embrace new regulations and technologies like STIR/SHAKEN for the greater good, without a serious commitment by all parties to join forces in vetting customers and verifying legitimate traffic, bad actors will continue to destroy trust in the phone ecosystem.

A critical step for carriers or enterprises is to validate their business details, assign a legitimate call purpose, confirm ownership, and associate caller data to each telephone number used to make outbound calls. A third party like Neustar can ensure this information is registered, closely monitored, and updated across the vast ecosystem of voice service providers, call analytics programs and mobile apps. There are many questions to vet enterprise customer before allowing them into this trusted society, including:

  • Are you a valid business that can be trusted by others?
  • Do you have the right to use these telephone numbers and are they valid?
  • What is the intent of these calls?
  • Has there been a change to your reputation?

Neustar is uniquely positioned to provide authoritative insight into caller identity. As a trusted, neutral provider, our stringent Vetting Services ensure the distribution of legitimate call originator data used to assess the authenticity of billions of calls each month. Today, we provide Vetting Services to verify caller identity for hundreds of leading enterprises and brands. Our services are underpinned by Neustar OneID Identity Graph, which serves 8,000 of the leading brands worldwide, including 60 of the Fortune 100. Visit our Trusted Call Resource Center to learn more, or contact us.

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