The FTC Robocall Challenge: Innovative, but Ultimately Ineffective

On Thursday, October 18th, the Federal Trade Commission (FTC) held a “Robocall Summit” to address the issue of illegal robocalls.  The summit consisted of several panel discussions that discussed the history and legal framework of automated voice messages, and the technical challenges of combatting their illegal use.  The summit was attended by telecommunications professionals, attorneys, government officials, industry stakeholders, and consumers.

Of particular interest was a panel consisting of the Indiana Attorney General, and attorneys representing the FTC and the FTC.  Those worthies discussed their efforts to enforce state and federal laws limiting the use of robocalls, most notably the Telephone Consumer Protection Act and the government’s enforcement efforts.  The FTC representative focused on his agency’s recent enforcement actions, stressing the fact that they resulted in the imposition of over $60 million in fines and penalties.

At the conclusion of the summit, David Vladeck, Director of the FTC’s Bureau of Consumer Protection announced an agency first: the FTC Robocall Challenge– a contest offering a $50,000 cash prize for the best technical solution to the robocall problem.  The Robocall Challenge is to be hosted on Challenge.gov, an online initiative that empowers the U.S. government and the public to bring the best ideas and top talent to bear on our nation’s most pressing issues.

While Director Vladek’s announcement was unprecedented, after the day-long discussion on the pernicious nature of robocalls; how easily they can be spoofed, and how difficult it is to identify the perpetrators, the Robocall Challenge seemed more like an act of desperation than a search for innovative solutions. 

Regardless of how one interprets the Robocall Challenge, any industry insider will tell you that it will ultimately prove fruitless.  If current telecom technology could solve the problem, someone would have doubtless offered one before now, and even if the Robocall Challenge results in an effective technological solution, the Gangster Dialers would find a way to circumvent it by the time it is implemented.  And when many perpetrators are located overseas and hidden beneath a bewildering web of dummy corporations, effective enforcement requires an extraordinarily high level of international cooperation and coordination.  One glance at the meager results of the 25 year long war on drugs illustrates the difficulty of such efforts. 

Like the war on drugs, the true answer to the robocall problem is for the government to focus its efforts on eliminating the demand for the product.  As detailed in an earlier post, telemarketing in general, and robocalling in particular, is a difficult business that depends entirely on a reaching a threshold level of consumer responses in order to make campaigns profitable.  The lower the response, the higher the cost of the leads.  Lower responses by 20%, and the per lead cost rises by  20%.  Lower response rates 50%, and the leads will cost more than those generated through the Internet and even television marketing campaigns.

How to lower response rates?  The answer is simple: a national marketing campaign, targeted to those most likely to respond to an illegal robocall: people over the age of 55.  Convince that segment to hang up on any robocaller who hasn’t been granted permission to call, and response rates would drop by as much as 50% overnight.   After a month or two of such a targeted campaign, robocalling operations would drop like flies as their client base seeks other methods to peddle their wares. 

How best to target this vulnerable segment cheaply and effectively?  The answer is both innovative and satisfyingly ironic: a robocall campaign.



Author: Seth Heyman
Seth D. Heyman is a California attorney with extensive experience in advertising and marketing law, corporate law, contracts, governmental regulations, international business, and Internet law. He has counseled numerous successful companies, both public and private, and was responsible for regulatory compliance, contract management, corporate governance, and HR best practices for multiple organizations in many diverse industries, including marketing, telecommunications, energy, and technology development. He offers insight and guidance on federal and state direct mail, TV, radio, telemarketing, and Internet marketing laws, as well as online promotions, Internet privacy, data protection regulations, and similar matters.

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