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How Do Robocalls Work?

It takes sophistication, investment and a diversity of skills to run this fraud. Here are the key steps

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Buy lead lists

The calling operation can do a Google search to find brokers who sell phone numbers. Some are legitimate, in the business of selling lists to legal telemarketers. Some lead brokers are shady operators. Robocalling operations can purchase as many as 1 million phone numbers for a few thousand dollars, says David Frankel, a telecom entrepreneur who founded ZipDX, an audio conferencing company.

Get a phone provider

Despite the Federal Trade Commission's efforts to crack down on robocalls, dozens of small phone companies happily take the robocallers’ money and place the calls into America's phone network. “Until recently, the FTC's mentality had been not to go after these little providers,” Frankel says. “But recently, enforcers are getting more aggressive and filing lawsuits against them.

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Run computer software

A computer program can operate in a loop, dialing through the list and attaching a spoofed phone number to each call, making it appear on caller ID as if the call is coming from a number within the recipient's area code. Robocalling software can make as many as a million calls in an hour. “From a technological standpoint, all this is very trivial,” Frankel says. “It's very easy to get software to do almost all of this.”

Operate a phone bank

Because it's cheap to place robocalls, the fraud operation is able to search for the small number of respondents who will listen to the recording and press “1” for more information. According to some reports, about 3 percent to 5 percent of targets respond. When one does bite, the call is patched through to a person in a call center, who then makes the pitch to get information or money from the victim.

Manage the money

Incoming payments from victims must be transferred quickly to other forms of money to make them more difficult to trace. For example, many fraud operations will traffic in gift cards or other types of anonymous currency to shield their activities. After payments are “washed” and transferred, all the participants can get their share of the take.

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Have you seen this scam?

  • Call the AARP Fraud Watch Network Helpline at 877-908-3360 or report it with the AARP Scam Tracking Map.  
  • Get Watchdog Alerts for tips on avoiding such scams.