Adam Garfinkle: I’m speaking with Jason Flaks, the director of engineering at Marchex in beautiful downtown Seattle, about new FCC regulations concerning robocalling that are about to kick in. Jason, before we get down to the nitty-gritty, tell is a little bit about what Marchex actually is, and what it does, please?

Jason Flaks: Sure, Marchex is a call analytics company. Our platform helps businesses and advertisers understand the performance and efficiency of advertising by measuring the phone calls that result from their marketing programs. As result of what we do, we know a fair bit about robocalling, and the technology that has come into play in recent years.

AG: OK, so let me just ask you first about the new adjustments to the Telephone Consumer Protection Act, which directs the way the FCC deals with robocalling. Could you tell what the main changes are, and why you think they have come about?

JF: Sure. The primary change the FCC is instituting is that it’s telling the phone carriers that they now have the legal right to block robocalling before calls ever reach the consumer. This basically has to do with a class of calls that we call auto-dialers, which is technology or equipment that dials thousands of numbers more or less indiscriminately to play automated messages, or silence, or noise, or a variety of nuisance-type material to consumers. So, what the FCC is now saying to the carriers—because it’s been legally ambiguous in the past—is that you do not have to let these calls go through. You can offer technology solutions to block these calls from reaching end consumers.

AG: Well, if the carriers are now permitted to spend money on technology to be able to do this, and offer a new robocall-blocking service to consumers, they’re obviously in a position to charge consumers for that service, right? Do you have any sense yet of what the technology is, and what it would cost a typical landline consumer like me to stop that “Bridget from card holder services” from pestering me?

JF: We don’t know what the carriers would charge, or even if they would charge anything. They might just offer this as a service to their end customers as part of a normal package. It would amount to carriers adopting solutions like those Marchex itself offers to businesses, which is really about identifying fraudulent callers or spammers and blocking those calls from reaching the consumer before their handset rings. The point is to intervene technically so that the end consumer isn’t faced with the nuisance of either having to answer the call or deal with the ringing in their house. I’m sure you’ve experienced this personally in your own house.

AG: Well, I just want to say from personal experience that in recent years it’s gotten much, much worse. There was a time, pretty recently, when “card services” was calling me two or three times a day, and scammers from India were calling me trying to take control of my computer, and lord knows what else. Since I work mostly from home these days, it was getting to be a serious nuisance. And I know other people, older folks, for whom getting up to answer the phone—thinking it might be a grandchild or someone else they really yearn to talk with—is tantamount to an extreme sport. I signed up on the FCC’s “no call” list, and it did absolutely no good whatsoever—and that leads me to my next question. A lot of people I think don’t realize it, but the Telephone Consumer Protection Act dates from 1991. 1991 is a reasonably long time ago, and yet it seems that this Act hasn’t done a whole lot of good during the 24 years of its existence. Is that mistaken?

JF: What you’re really highlighting is that the Act is old and technology has dramatically changed. That has given the robocallers a distinct advantage over time. As technology has advanced it has become incredibly trivial for really any wrongdoer to install some simple software that can easily robodial thousands of people, and on top of that as VoIP technology has become more commonplace it’s becoming very easy to spoof your caller ID. What that allows people to do now is drive tens of millions of phone calls masked behind a caller ID that looks legitimate to you, or is unrecognizable; so you wind up answering the phone. That’s become very easy and inexpensive to do with off-the-shelf technology, which is why you’re seeing increases in this type of thing.

AG: So what you’re saying is that there really wasn’t anything wrong with the law in 1991; it’s just that the law hasn’t kept up with the bad guys?

JF: That’s exactly correct.

AG: Has this kind of very annoying thing become as prevalent in other countries? If I were living in Britain, or Denmark, or Chile, or South Africa, would I be subjected to this kind of pestulance? Or are the perpetrators really aiming only at the U.S. consumer market?

JF: Marchex is an international company, and we have seen some types of traffic like this in other countries. We operate in Canada, and there’s certainly calls like this that happen in Canada as well, especially since they’re on a similar number dialing plan as we are, called NANPA. But we’ve also seen some type of traffic like this in European countries, as well. The scale of it over there isn’t quite as clear to us, but it’s not uniquely an American problem.

AG: I read a few weeks ago that the Marketing Research Association’s director of government affairs, Howard Feinberg, warned that the best-case scenario is that the new technology “will block out most autodialed research calls.” The intimation here is that the new FCC rules would harm the ability of scholars to research Americans’ opinions on various political issues. Have you detected any reaction in the Congress or at the FCC to that complaint?

JF: No, but that complaint strikes me as somewhat questionable, just in the sense that phone surveys based on robocalling are going to get biased results because of who answers the phone and who doesn’t. There are better techniques to use, so I’m not sympathetic to that line of argument.

AG: I’m not either, because it turns out, if you dig a little deeper, that most of the people for whom Mr. Feinberg is speaking are not academic researchers but political consultants of various sorts, who want this information in order to offer their services for large sums of money to politicians. So this is not a selfless scholarly endeavor.

Let me now ask about the business-model angle of robocallings. I’ve got a landline; I’m just an ordinary consumer. But you have suggested that the new regulations could, if extended further, go some way to protect businesses from harassments that cost them more than $100 billion a year—costs that, of course, get passed on in one way or another to everyone in the economy. I’d like to know more about the small business and business angle of this problem, and what new regulations might do to help resolve that problem.

JF: The main point is that the basic law is called the Telephone Consumer Protection Act, and the keyword there is “consumer.” Right now the law does not help businesses at all. And the new FCC rules changes do not actually change anything in terms of working with businesses. The key thing to note here is that businesses own hundreds of millions of toll-free lines, and these lines receive tons of robodial traffic as well, that amounts to upwards of $1 billion dollars each year—not $100 million—in phone charges as well as lost productivity just to answer those calls. It’s a big deal for business; the FCC could definitely be doing more to help protect businesses as well.

AG: Do you have language to propose to the FCC to amend the law or create a new bill in order to protect business? It seems like a “no brainer” that we should do something like that.

JF: It would be easy to do: Just extend the current Telephone Consumer Protection Act to work for business to business phone calls as well.

AG: That would not help Marchex much, would it? I’m assuming that, if robocalling is such an expensive nuisance for businesses, many avail themselves of your services. I’m assuming too that larger business have the funds to do this, while a lot of smaller businesses may not, right?

JF: Many companies do come to a company like Marchex, and we do offer technologies like our Clean-Call technology that can find robocalls, and automatically detect the signatures of these spammy-type phone calls, and block them from reaching the end customer. There are several products out there that are quite effective at blocking these types of calls, even when the perpetrators are using caller ID spoofing technologies. But many businesses either don’t know about or choose not to afford these fixes. So the FCC could help everyone by extending the law, and companies like ours would still have plenty of business. We’re for an extension of the new regulations to protect businesses.

AG: I remember reading on the FCC website, maybe a year or so ago, that some of the “card services scams” were found out, and indictments were brought, and some of them were shut down. But they didn’t seem to stay shut down for very long. Can you explain the business model of these scammers? People would not persist in this if they weren’t making some money out of it. So what’s the dynamic here? For example, is this a centralized effort, or more like a distributed system, with the technology out there so that eight or twelve or fifty people, perhaps in a dozen different countries, are doing this? How many Bridgets are there, in other words?

JF: There are multiple business models that drive the various amounts of robocalls and spam in the market today. Some of it is pretty straightforward in that it is basically aggressive tactics trying to get people to buy into something, and the bad guys are basically trying to dial as much possible with some known odds that a certain percentage of customers will fall for a scam. There are other models out there built around telecommunications laws that allow some people to collect money from any kind of transaction or transfer down the pipe, and that incentivizes some types of illicit calling as well. In all these cases it is highly distributed. There are lots of bad actors and the truth is that the government is not really capable of going after all of them, because it’s very complicated for them to do it, and they don’t have the resources to do it. So like a lot of fraudulent activities that you see in the world, they knock one down and ten more pop up around the corner.

AG: I wonder how many of these calls actually originate from outside of the United States? I guess a lot of them do, don’t they?

JF: We have been made aware that some of these calls do appear to be coming from overseas. That is definitely an easier thing to do nowadays thanks to some of the VoIP technology. Calls can originate from outside of the United States and appear to look like they’re coming from within the United States. But some of them happen domestically as well.

AG: Well thank you very much for clarifying a lot of this. I do hope that the new rules help people, and I certainly agree with you that business needs protection as well because those costs get passed on to everybody when business suffers from this kind of stuff.

Just one more question, if I may—a kind of philosophical question. When I first started getting these calls, I thought “what a bunch of assholes these people are; they’re trying to take advantage of people who are credulous and gullible.” But then I remembered the old saw that “a fool and his money are quickly parted”, and I wondered if maybe people dumb enough to fall for such scams deserve to be robbed. After all, hucksterism is as American as apple pie. But I’ve since come around full circle, and I’m now just as outraged by robocalling scams as I was to start with. Do you have any philosophical advice for how we think about this problem?

JF: Well, I think of it this way. Suppose you’re at a retail business somewhere waiting in line to purchase something, and the guy at the register has to take time to answer the phone to deal with some robodialer—and you have to wait an extra five or ten minutes because he’s dealing with all that: That’s not the end of the world, but that’s also just not right. It’s less about the people who fall for the scam, it seems to me; it’s about all the innocent bystanders who are impacted by these calls. Whether that’s the guy that’s waiting on hold because there’s somebody else spam-calling a business, or it’s my wife and kids who are annoyed because I went to go answer the phone, leaving in the middle of a scintillating board game we’re playing. The implications of what happens for some small set of people who answer the phone, I think, is less important than all the implications of lost productivity and telephone costs and everything else that traverse the system, that are completely unnecessary and really do no good for society or anybody.

AG: That’s a very helpful insight. Thanks very much, Jason, I really appreciate your talking with us. Maybe this will help persuade the FCC to take the next, useful step to protect businesses from the robocalling epidemic.

JF: Yeah, it was great chatting with you.