April 9, 2013

Don't Hang Up Yet: Hope for the Future of Illegal Robocalls

Seller Beware: Consumer Protection Insights for Industry,

The Federal Trade Commission (FTC) announced the winners of the FTC Robocall Challenge, a contest designed to tap into the technologically-savvy Millenial generation by soliciting ways to block illegal robocalls on landlines and mobile phones. The FTC launched the challenge in October 2012 as part of its ongoing battle against illegal, prerecorded telemarketing calls. The FTC offered a cash prize of $50,000 and received almost 800 eligible submissions.

The FTC launched this challenge in response to a growing number of complaints by American consumers facing a tireless barrage of unwanted, and often deceptive, prerecorded telephone messages called robocalls. Companies today are using sophisticated computer software, namely autodialers, to send thousands of these prerecorded telephone calls every minute for a low cost. Both the FTC and FCC regulate robocalls.

In 2012, the FCC adopted changes to its telemarketing rules to align them with the FTC's rules. (We blogged about these proposed changes here.) In short, companies who want to make prerecorded commercial telemarketing calls must have written permission to do so even if there is an established business relationship. Some calls, such as purely informational calls, political calls, and calls from charities themselves, for example, do not fall under the robocall rules. Not only are commercial robocalls illegal and annoying, but the FTC warnsconsumers they may be scams offering fraudulent credit card services, auto warranty protection, or grant procurement programs. What about the national Do Not Call Registry, you might ask? According to the FTC, scammers ignore such social conventions.

With new technology making illegal robocalls pervasive comes the possibility of innovative ideas to combat the problem. Serdar Danis and Aaron Foss tied for the grand prize of Best Overall Solution, after an evaluation based on three criteria: (i) whether the proposal works (ii) whether it is easy to use, and (iii) whether it can be implemented. Each will receive $25,000 for his proposal, which both work by intercepting and filtering "blacklisted" robocaller phone numbers, thus preventing the illegal calls from ringing through to the end user. Mr. Danis's proposal, Robocall Filtering System and Device with Autonomous Blacklisting, Whitelisting, Graylisting and Caller ID Spoof Detection, uses software which could be implemented as a mobile app, an electronic device in a user's home, or a feature of a provider's telephone service to analyze and block illegal robocalls. Mr. Foss's proposal, Nomorobo, suggests using a cloud-based solution with "simultaneous ringing," allowing incoming telephone calls to be routed to a second phone line that would identify and hang up on illegal robocalls before they reach the end user.

Additionally, Daniel Klein and Dean Jackson from Google won the Robocall Challenge Technology Achievement Award, a non-cash prize available to organizations that employ 10 or more people, with their Crowd-Sourced Calls Identification and Suppression Solution. All three winning proposals would use automated algorithms to identify spam callers. It is unclear at this time whether any of the winning ideas will be developed to combat the problem of illegal robocalls.

© Arnold & Porter Kaye Scholer LLP 2013 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

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